On Monday, I decided that it was finally time to open my very own Traditional IRA. I made this decision for two reasons, the first and most important of which was to finally start tucking money away for my retirement. I’m still only 26 years of age but those next 35 have a way of sneaking up on you. The second reason I opened an IRA was to alleivate some of my tax burden for this year. Self employment taxes are gonna put a dent into my savings come tax time but with this move, I stand to save at least $1,000 in taxes paid.
I chose OptionsHouse for my IRA because I’ve worked closely with them over the past few years in advertising their online discount broker accounts and liked what I saw in terms of technology and pricing. All of my trades can be made at a flat rate of $3.95 and there are absolutely no fees to house my IRA. Some other brokers charge pesky maintenance fees or annual fees just to have an IRA but OptionsHouse is satisfied with just earning commission.
Filling Out My Application
I wasn’t entirely sure how simply or complex an IRA application would be compared to a regular trading account application, but the process seemed smooth enough. I answered a few questions about my trading habits, entered my personal information and scheduled an ACH transfer for $5,000 (which is the max I can fund my IRA every year). Once I reviewed all of the information I entered, I signed the application electronically and awaited the two micro deposits into my checking account so my ACH relationship was established.
The next day, I decided to login to OptionsHouse to check out my new duds, as I saw two deposits for a total of $0.44 enter my Chase checking account. After logging in, I could not find the area to enter the mirco-deposits, so I contacted customer service through the live chat. The agent’s name I was connected to was Nora and she told me something very interesting. After asking her about the micro-deposits, she said:
Unfortunately those were sent to you in error. With an IRA account, in order to establish an ACH relationship, we will need an ACH form and a copy of a voided check.
The Problem with Funding an IRA
Nora went on to tell me that when initially funding an IRA, the deposit I thought I made through the application was a bug in their system. IRAs must have extra paperwork before funding and even though OptionsHouse takes you through the process of setting up a transfer, it’s apparently all for fun. When asked if this bug would be fixed for future IRA account holders, Nora’s response was “This is a bug in the system, which our Tech Group will have fixed sometime in the near future.” Not the urgency I was looking for.
To proceed, I needed to send OptionsHouse a copy of a voided check, as well as an ACH transfer worksheet. Once received, it would take up to 3 business days to establish my relationship, then another three days to process my $5,000 ACH request. That meant more than a week to fund my OptionsHouse IRA, which I wasn’t thrilled about. Nevertheless, I filed my paperwork, rescheduled my transfer and today, had $5,000 in my IRA account.
Outside of the funding hiccup, the process in opening the account was easy. I didn’t like the surprise of scheduling a fake transfer and I also didn’t like that this problem is not a priority to fix but now that I’ve cleared this hurdle I hope to enjoy a long successful relationship with OptionsHouse. My next problem is what to invest in …