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Moving Keogh money
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February 14, 2000: 5:38 p.m. ET
Switching money in a Keogh plan to more productive investments
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NEW YORK (CNNfn) - What's the best move when an investor wants to switch the money in a Keogh plan to an online brokerage firm?
In response to a reader's question, Heather Locus, a certified financial planner and a member of the Financial Planning Association, suggests two ways to move money into either an IRA or a brokerage. But she also strongly recommends working with a qualified advisor.
Ask the expert a question.
I have a one-member Keogh Plan for myself that is held by a bank. I am the administrator. I would like to move this to an online brokerage firm, such as Schwab or Datek. There are no deposits into this each year, as it was set up when I practiced law. It has around $350,000 in it, in mutual funds and stocks. Can I move it?
You can move your Keogh from the bank to an IRA or brokerage in one of two ways. The first would be to open a new Keogh at the brokerage firm and transfer the assets over.
The benefits of doing this are that you'd have the existing plan to start making contributions to if you began practicing law again, and also that if you quit practicing law after the age of 55, you could begin one-time distributions from the plan at age 55 (rather than waiting until 59 1/2), without incurring a 10% early withdraw penalty. The disadvantage is that you maintain the extra administration requirements of a qualified plan.
The second option is to roll it from the Keogh to an IRA at the brokerage. If you don't intend to begin practicing law again, and so don't need to maintain the qualified plan, rolling the funds to an IRA will provide the same investment flexibility with less administrative requirements.
However, you must be older than 59 1/2 (or meet one of the other restrictive
exceptions) to avoid the 10% early withdraw penalty on the IRA where as qualified plans allow you to take penalty-free withdrawals beginning at age 55 if you retire after your 55th birthday.
We'd highly recommend that you work with a qualified advisor to prepare a LifeStyle Analysis/Retirement Projection, which will dictate the level of risk you need to take in your portfolio to meet your specific retirement goals. That knowledge in conjunction with your risk tolerance will enable you and your advisor to construct an appropriate asset allocation for the
new brokerage account. Good Luck! 
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