canceling an IRA

A Rollover would work without too much issue. Tell Fidelity what you need, give them the account information, and they might be able to do the rollover for you, or at minimum guide you through the paperwork.

Fidelity's rollover web site

But he still has to say goodbye to the 5.75%. This was an upfront fee, not an annual expense. If he already bought the fund, it's gone.

JOE

American funds is a Mutual Fund company just like Fidelity, Oppenheimer, Vanguard, and a couple hundred others. They are not responsible for the outrageous charges placed by your bank, nor are they to blame for any of this. They simply buy and sell MFs based on the instructions of your custodian.

If the investments are sound (American funds has historically had good funds), you should consider rolling over your bank Roth to you new Fidelity Roth "in kind" and still hold the American funds MFs inside of your Fidelity account.

All mutual funds have fees, although they vary from fund to fund (2-3% is not uncommon). They also have different class structures which impose those fees, to differing degrees of severity, at different times. Depending on the share class your bank sold you it may be in your best interest to transfer "in kind" to avoid paying these fees at liquidation. I would also openly ask Fidelity about this, as a transfer in kind does not make them as much money either (it really only benefits you) and therefore they are less prone to point that out to you if you don't ask.

Talk to Fidelity about the rollover, but FYI you can withdraw contributions to an IRA in the year they were made without penalty.

Oh yes they are. American funds are load funds. Whether you invest through a bank or not, you still pay that load up front to American funds.

Not all mutual funds have loads. There are so many no load mutual funds that it's a mystery why anyone would invest in a load fund.

Sorry about that. You are correct, thay do charge a 5.75 front-end load on class A shares. However, don't blame them for it. The fees were clearly stated in the prospectus. They are actually within the first 8 pages (not diluted deep in the middle). Fees should have been discussed and evaluated before purchase not after.

I didn't say "loads", I said fees. "No load" MFs still have all sorts of fees embedded in the fund.

According to the SEC a no-load fund is permitted to charge purchase fees, redemption fees, exchange fees, and account fees, none of which is considered to be a "sales load." Also a fund is permitted to pay its annual operating expenses and still call itself "no-load," unless the combined amount of the fund's 12b-1 fees or separate shareholder service fees exceeds 0.25% of the fund's average annual net assets.

Even no-load funds aren't in the business of working for free.

First of all, I deeply appreciate the help.

Someone said that I could withdraw my money without penalty in the first year. There's a early withdrawal fee on the mutual funds I invested in. I assume this means that if I take out the money and try to put it into my Fidelity Funds, I will end up losing even more of my original investment. So, I probably should not do that, right?

The reason I don't like American Funds is that my bank called them and they said they would "try" to stop the paperwork from going through when they received it in the mail. Of course, I got a envelope a few days ago telling me all about my new account that I have opened with them. It's because of this that I am upset with both American Funds and my bank. I don't feel that either of them "tried" or else, I wouldn't be in this pickle.

Now, If I rollover to the Fidelity account, what exactly does that do? Can I use the money that was originally invested with my bank and invest it into some Fidelity Funds, without penalty? I noticed on all funds that there seems to be a fee for taking money out of the fund within a year or two. Does this mean that I can rollover the funds to Fidelity, but they must stay in American Funds (that is, if I don't want to pay any fees)?

**If you don't want to read a commercial, then stop reading** I figured that this is a good place for investors, so I thought I'd talk about my new ING direct savings account. To make it short, they give you 4.5% APY (which fluctuates, and seems to be getting higher), it's insured, and, If someone refers you, you get 25 bucks for opening a new account with at least $250 in it. So if you don't have one already, leave me your name and e-mail address (I get $10 for each referral).

Again, thanks for all the help,

Skyman

People say a lot of things.

That's correct.

That's a decision only you can make.

You don't know what they said, you only know what the person at the bank told you they said. And even if they did say it, they only said what the person at the bank wanted to hear, knowing full well that it meant nothing, and that your account would be opened as routine.

Of course you did. See my previous statement.

The real reason you are in this pickle is because you invested in something without reading the prospectus, and without investigating your options. This is not a criticism of you as a person (we've all made mistakes), but you should learn from your mistakes.

It transfers your account to Fidelity. Once at Fidelity, you can choose which fund you want to invest in. And please research the fund this time BEFORE you buy it. Read the prospectus and the annual report, especially the part about fees.

No, you have already paid a front end load, and you may also have to pay a penalty to transfer the money, depending on the terms of the fund that you bought.

This is most definitely NOT true. There are several very reputable fund companies, such as Vanguard, Fidelity, T Rowe Price, Schwab and a few others who have many funds with no front end or back end loads and relatively low expense ratios.

No. Fidelity does not offer American Funds. They are two different fund families. Fidelity only offers Fidelity funds.

You're welcome.

Here's my opinion; I am not an expert at such things, but do have some experience.

That 5.75% is a sunk cost. You will not get it back, so don't factor it so much in your decisions what to do with that account. Since this is an IRA, the most we could be talking about is $230 (.0575 x $4000, the maximum you can invest in an IRA in a tax year.) You learned a lesson for $230, probably less. That's pretty cheap.

I can't tell if the .7% was a bank-imposed account fee or a fund-imposed fee. Reputable front-end load funds have very low management fees (because they charged you up front for the management) so you might as well leave that money in the find that it's in if the investment was reasonable to begin with. You don't have to ever put another penny in the account. Open another IRA somewhere else that offers lots of different fund families, and some day you might want to roll over that bank IRA into the discount broker IRA (especially if it gets rid of any annual account maintenance fees charged by the bank.)

Don't let this discourage you from saving and investing for your retirement. I opened an IRA back in the 1980's just a couple of months before the stock market crashed. It scared me away from the markets, and I didn't start saving for retirement again until 1998. Now I'm trying to catch up for those lost 10 or 12 years.

Good luck, and best regards, Bob

I think what (someone) meant by this is there is no _IRS_ early withdrawal penalty if a contribution to an IRA is withdrawn before the due date of your tax return for the year that the contribution was made, and if you file for an extension it can be withdrawn tax free up to the extended due date.

For example, if you made your investment sometime in 2006, you have until April 15, 2007 (or later if you file for an extension) to withdraw your 2006 contribution without being subject to the IRS early withdrawal penalty.

This has nothing to do with the separate penalty that many (most?) funds charge for redeeming the fund less than 180 days from the time the fund was purchased -- it doesn't matter if the fund was part of an IRA or not.

Very fortunate of me to have come across this post, I was actually going to try to open an ING account here shortly! Please "refer" Joseph DeGroff at snipped-for-privacy@gmail.com

Thanks so much, and God Bless,

--Joseph DeGroff

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For God so loved the world, that He gave His only begotten Son, that whosoever believeth on Him should not perish but have everlasting life. John 3:16