Expert: Paul Henneman - 3/7/2008

Question
Hi Paul,

I already have an account with T.Rowe Price that handles my 401K and Roth, but was thinking about investing in additional mutual funds and stocks.  In being a DIY, I know I need an online brokerage firm like Scottrade, Ameritrade, etc. for stocks, but what about for purchasing additional mutual funds?  Some funds I'm looking at are managed by T.Rowe Price, but some are not.  So, is it best to buy the the T.Rowe Price mutual funds with my current account and other mutual funds through an online brokerage firm?  Thanks.

Answer
Jeremy,
  Thank you for your question!

Yes, an online brokerage firm could certainly offer you the ability to buy and sell those T.Rowe Price mutual funds. This would be an option for you.
However, if you want to do this, you will likely need to roll your 401k and Roth over to an online brokerage firm. This should be done if you want to maintain control over your investments yourself, and have the ability to buy just about any stock or mutual fund you want.  You cannot have multiple 401k or Roth accounts, so the only other alternative would be to keep our 401k and Roth where it is, and use additional funds to open an individual trading account online. This individual account will not have the tax advantages as your retirement accounts do.

Ulitmately, if you are looking to diversify your investments and are looking for the ability to buy or sell just about any stock or mutual fund, then yes it would make sense to move your retirement accounts over to an online brokerage firm. The Roth should be fairly easy, the customer service centers at any of the brokerage websites can help with that. The 401k may be more difficult. If you are currently working and contributing to your 401k, you may not be able to move it depending upon how your work place administers their 401k plan. I would start by contacting whoever handles Human Resources at your place of work if this is the case.

I hope that this helps! Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com