How to Roll-Over your 401k to a Roth IRA

Retirement 401k to Roth IRA Roll-Over

Before you continue reading, the primary requirement for you to roll your 401k into a Roth IRA is that you must have left your employer.

Do I need to transfer all of it or can I transfer some?

You can roll-over a portion of your 401k in a Roth IRA and a portion into a Traditional IRA or all of it into a Roth IRA or Traditional IRA. A traditional IRA is similar to a 401k in that it is also tax-deferred (which means you would be able to reduce your current taxable income, but you’ll be taxed when you take withdrawals). Therefore, the initial tax implications are fewer than that of if you were to roll directly into a Roth IRA.

How much should I allocate to Roth IRA versus Traditional IRA?

You will have to consider your current and future income sources and whether or not you would expect to more taxes now or more taxes later. If you expect to pay more taxes later than I would allocate more to a Roth IRA, which allows you to pay taxes upfront and then your withdrawals will be tax free. Alternatively, if you believe you will pay more taxes later on, I’d lean towards the Traditional IRA. Of course part of your future tax rates depend on whether or not the government will reduce or raise taxes.

What are the general tax implications?

Because you are rolling from a tax-deferred 401k, to a Roth IRA (which is after tax contributions) there are certain tax implications you need to consider.

Namely, the fact that you will have to pay income tax on the amount rolled to the Roth IRA. If possible, it is advantageous to use funds outside of your 401k/Roth IRA to pay the tax because that way you will be able to grow your funds within the fund versus drawing from your contributions. Furthermore, if you take money out of your fund before 59 and a half you will be penalized.

How do I roll it over to an IRA?

Some companies will not provide the option to roll-over to an Traditional IRA or Roth IRA via their plan administrator, therefore you will need to go through an IRA plan administrator. These include Vanguard and T. Rowe Price. Specifically through Vanguard’s ‘Open Account’ site, you will have the option to roll-over to an IRA.

After you’ve completed the steps, it will ask that you have the 401k administrator transfer the fund or write a check to the IRA administrator. A direct distribution, whereby funds are sent from the 401k directly to the IRA without you touching the money, is definitely highly recommended as this simplifies the paperwork and reduces further tax implications.

Finally, you’ll need to find out what you need to provide to your former employer to complete the process. As this information is specific to each 401k administrator, my suggestion is to call your former employer’s plan administrator. 

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Compare Business Banking Checking Accounts For Top Banks

Comparison of Basic Business Checking Accounts

Bank of America vs. JP Morgan Chase vs. Wells Fargo vs. HSBC vs. Citibank 

A friend of mine is starting his own international business and was looking at opening up a business account with a top bank. 

Of the five mentioned above, three of them have a focus that is more domestic than international. These include Bank of America, JP Morgan Chase, and Wells Fargo. HSBC and Citibank both have branches in China. 

The business has no revenues and is practically a start-up. His criteria is a bank that has banking relations overseas thereby reducing the costs of doing business overseas and the account has to have a low to no maintenance fee. 

When we looked for banks that fit what he needed, we noticed that the terms of banks vary depending on where you open the account. For example, the fees could vary if you opened an account in New York versus California. The below is a summary of what we found if you were to  more or less open an account in California. Banks will change their fees from time to time, therefore it is important that you visit their official website for the most current rates/fees.   

Conclusion: For my friend’s purposes, I would say HSBC is the way to go because of its no maintenance fee and no minimum. Furthermore, they have a presence in China. 

Business Economic Checking
Actual Account Fees

Monthly maintenance fee 

Approximately $15 is waived when a specified balance requirement is met.

Specified balance and maintenance fees vary based on state. For example, in Maryland, Tennessee, Virginia and Washington, D.C. if the following criterion are met the fee will be waived.

How to waive maintenance fee 

Maintain at least one of the following balances:

• $3,000 minimum daily balance

• $10,000 average monthly balance

• $10,000 combined minimum daily balance

• $20,000 combined average monthly balance OR Enroll your Business Economy Checking account in Business Fundamentals and make qualified monthly purchases with your Bank of America Visa Business debit card

Account Features 

• No fee for first 150, then 45¢ per item 

• No fee for ACH, debit card, Online Bill Pay debits and ATM withdrawals Deposit tickets

• No fee Cash deposited

• No fee for first $10,000, then 20¢ per $100

BusinessSelect Checking

Monthly Service/Maintenance Fees 

Check Safekeeping – $15

Image Statement – $17

Check Return – $21

How to waive maintenance fee 

Meet any of the following:

•Maintain an average daily balance of $7,500 or more in the account

•A relationship balance of $25,000 (all linked business checking/savings/CDS)

•Maintained a linked Chase qualifying personal checking account (Chase Premier Plus Checking, Chase Premier Platinum Checking and Chase Premier Platinum Asset Management Account)

•Make $1,000 in purchases on your linked Chase Business Credit Card during the monthly checking statement cycle

•Pay $50 or more in qualifying checking account fees (not including the Monthly Service Fee) 

Account Features

•200 transactions per monthly service cycle (includes all customer-initiated debits and credits and deposited items)

•$0.40 for each transaction that exceeds 200 transactions in the month

•No Cash Deposit Processing Fee for the first $7,500 per month

•FREE Chase Business Debit Card Overdraft protection Business online services 

•Package of additional benefits for business savings, CDs and personal checking

Wells Fargo Business Checking

How to waive maintenance fee 

The $12 monthly service fee is waived when you meet any of the following:

•Maintain $3,000 minimum daily balance,

•Maintain $6,000 average ledger balance,

•Have a Wells Fargo Business Payroll Services transaction from this account each month. 

Account Features

The following account transactions are included free of charge:

Up to 150 combined paid and deposited items.

Up to $5,000 cash deposited.

HSBC Business Direct Checking

Actual Account Fees

How to waive maintenance fee

No Maintenance Fee

Transaction Fees (each statement cycle) 

See link above.

Account Features/ Services

Unlimited monthly transactions at HSBC ATMs No HSBC fees when using non-HSBC ATMs Free HSBC Debit MasterCard BusinessCard®

10 free wire transfers per month (5 incoming, 5 outgoing)

Business Internet Banking with free online Bill Pay

No monthly maintenance fees

No minimum balance requirement

CitiBusiness Streamlined Checking Account

Maintenance Fee $10

How to waive maintenance fee

Monthly Fee Currency Deposits $5,000

Minimum Average Monthly Balance to Waive Monthly Fee $5,000 Monthly

Account Features

Monthly Free Transactions 100

NO monthly maintenance fee when you maintain the minimum balance. 

Free U.S. dollar deposits and monthly transaction allowances up to applicable limits.

Fee-free withdrawals at Citibank ATMs.

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Looking at Antares Pharmaceutical, Inc. (ATRS) from a technical perspective

Antares Pharmaceutical, Inc. (ATRS)

Background 

Undoubtedly, Antares (ATRS) is a pharmaceutical company. Their focus is on developing  efficient and effective methods in which drugs can be given/taken. The result is a safer and more efficient way of giving a dosage and a reduction of side effects. Antares’ products include self-injection devices and topical (applied to the skin surface) gel-based products. Their self-injection products in essence look like thick highlighter pens. They are designed to make taking drugs easier and more comfortable. 

Medi-Jector is used to take TEV-TROPIN® brand human growth hormone

Current and future financial outlook

The company has not been profitable in recent years. This is to be expected as they are still largely in their research and development phase. Still they have products currently selling and many more products in the pipeline. As a result, Antares has been able to reduce loss over the past three years from $10M in FY 2009 to $6M in FY 2010 and finally to $4M in FY2011. That is an over 50% reduction in losses in two years. While you may argue that this is evidently possible if you don’t spend any money, but the company has a number of products with significant partners in the pipeline. These partners include Jazz, Watson, TEVA, and most notably Pfizer. Also, a quick look at the 2011 10-K, shows that they do not have any long term debt. In fact, they have assets of $40M versus liabilities of $10M.

ATRS Product Pipelines (from the company’s website)

Certainly when we check their stock price, it is evident that their progress has been reflected in their stock price. ATRS has been on an incredible run the past two years. It has gone from about 1.30/share to 5.25/share that is about a 323% return. 

ATRS recently announced positive result from their VIBEX MTX usability study. In laymen terms, the VIBEX is an auto injector designed to self-administer a weekly injection of methotrexate for the treatment of rheumatoid arthritis. In the past few days it popped just above $5/share and recorded a 50% increase in stock price. For the month it looks like it almost doubled from 2.77/share to 5.25/share.

The question now is when would be a good place to get in on the stock. Right now it looks like it is overextended and would be optimal to enter in at around 4.25/share. That way the gap will fill and hopefully it will be oversold by then. This would be just around a 38% retracement from the high. But, if it breaks through that 5.25 resistance, we could be in for a wild ride upward. My outlook is that when a stock goes up this much in such a short amount of time, there will be profit takers and when the dust settles that is when it is a good time to enter. But, these pharmaceutical stocks are very volatile and at any FDA failure could drop 50% within days. 

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Disclosure: I am long ATRS.

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Breakdown of Barclays Scandal of Fixed LIBOR/Interest Rates

Summary

Barclays, UK’s second largest bank by assets, has been targeted for manipulating the London interbank offered rate (LIBOR) during the time before the financial crisis and through the height of the financial crisis (2005-2009). The bank was fined 290 million pounds or $453.4 million USD. In addition, under public pressure, a number of upper management resigned including  Bob Diamond, CEO, Jerry del Missier, COO, and chairman Marcus Agius all resigned within a week of each other. Furthermore, the bank lost an estimated $5B in market capitalization. The British parliament’s Treasury Select Committee is currently involved in this matter.

What is the LIBOR Rate?

The LIBOR rate is the average interest rate estimated by large volume banks participating in the London wholesale money market. In essence, it is the interest rate at which reputable banks can borrow from other banks. Each bank will submit their rate and the average is the LIBOR rate. From that rate, banks determine what the credit card interest rates, mortgage and loan interest rates, and most anything dealing with interest rates is calculated.

These nineteen banks are involved in determining the LIBOR rate:

The Bank of America, JP Morgan Chase, Citibank, NA, Bank of Nova Scotia, Bank of Tokyo-Mitsubishi UFJ Ltd, Barclays Bank plc, BNP Paribas, Credit Agricole CIB, Credit Suisse, Deutsche Bank AG, HSBC, Lloyds TSB Bank plc, Rabobank, Royal Bank of Canada, Société Générale, Sumitomo, Mitsui Banking Corporation, The Norinchukin Bank, The Royal Bank of Scotland Group, and UBS AG

What is the evidence?

An investigation took place over Barclay. Investigators found emails (see below) that there were traders fixing inputs that factored into the calculation of a higher LIBOR rate. Part of Barclay’s defense is that they felt they were pressured by the UK government. 

In one email dated November 22, 2005, a senior trader in New York wrote to a trader in London: “WE HAVE TO GET KICKED OUT OF THE FIXINGS TOMORROW!! We need a 4.17 fix in 1m (low fix) We need a 4.41 fix in 3m (high fix).” 1m and 3m refer to one-month and three-month Libor rates. 

 “For you … anything. I am going to go 78 and 92.5. It is difficult to go lower than that in threes,” a submitter wrote to a trader in response to his request for a high one-month and low three-month U.S. Dollar Libor. 

Responses from two other submitters read: 
“Always happy to help, leave it with me, Sir,” and “Done … for you big boy … ” “[Senior Trader] owes me!” reads another. It seems that the rewards were tasty. 

Champagne was popped, judging from another email: “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.”

What were the actual rate submissions of Barclays?

We can see from the below chart that Barclay’s interest rate submissions were higher than those of the Libor rate in red. In grey, we can see rates of other banks. As you can see, there is a high volatility during October. There were a lot of banks below the Libor rate and even some including Barclay above.

What do we make of all this?

From an ethical and fraudulent perspective, I have no doubt in my mind that what Barclay has done is unacceptable, unethical, and could be argued as fraud. Evidence suggests that traders knowingly manipulated the inputs of the Libor calculation, which resulted in skewing the Libor rate. They should and will most probably be punished.

However, from a financial perspective, a $453M fine is not a big hit to Barclays. This is a multi-billion dollar company. How much did Bank of America lose as a result of acquiring Countrywide? I’d wager a bet to say at least more than a couple billion.

As for the Libor rate, it is an average of rates from other banks. Although Barclay’s rates were higher than the actual Libor rate, it isn’t higher by much (not even close to half a percent). Also, as we can see from the chart above, it looks like other banks could be accused of manipulating the rate as well. In fact, the Royal Bank of Scotland sacked four of their own traders over allegations of a similar event.
The long and the short of it is there will be punishment and the market may react negatively in the coming days/weeks as a result, but Barclay could come out of this okay.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice. Disclosure: I am long BCS.

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Bank of America (BAC): How Do the Next Couple Weeks Look?

Bank of America performed strong the first part of the year by nearly doubling it’s stock value in less than three months from about $5.5 to $10. We all knew that this was not sustainable. Sure enough, by the end of March, the stock began to reverse and took a big tumble back to below $7.

The 20 day moving average crossed the 50 day moving average on the last week of April. There was a downward trend, which began during the last few weeks of March and continued until mid-May. The third week of May provided the first indication of a reversal. Since then it has moved up against the 20 day moving average of approximately 8.18. The move has been relatively strong, as indicated by the on balance volume or OBV. However, in comparison with the OBV earlier in the year, it does not look strong.

Below is the eleven month BAC weekly chart.

   

From the below daily chart, we can see that there is strong resistance at just below $8.5. Furthermore, we can see that it is overbought at the moment with the Stochastic Oscillator at 81. In the short term, there might be some tough headwinds to overcome for this stock to shoot up. But, we will find out soon enough as earnings reports are in early July.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Disclosure: I am long BAC.

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Dangdang.com (DANG) Takes NYSE by Storm – Other Chinese IPO Stocks to Follow

Since 1999, Dangdang.com has been focusing on selling books via e-commerce methods in China. Inspired by unorganized New York bookstores, Peggy Yu and her husband started Dangdang.com in hopes of creating an organized online bookstore. Since then it has become the largest bookseller in China and that is taking into account both stores online and brick and mortar shops. 

This was done through understanding the customer’s needs and wants. Also, Peggy reduced the learning curve through learned lessons from other existing companies such as Bertelsmann book club and Amazon. However, Amazon has since entered the market through an acquisition of a local Chinese company (Joyo).

With all this hype, last year (2009) Dangdang made a mere $2.5M USD profit. It also recorded losses in 2007 and 2008. Dangdang faces tough competition with other top online retailers including Vancl. While its competitors have focused on building market share, Dangdang has been focused on making profit. Despite all of this, stocks were up 87% today from its IPO offering amount of $16 USD.

If anything, I’d imagine you’d want to play the hype. In that case, Lentuo International Inc. (LAS) and Sky-mobi Ltd. (MOBI) are due to sell shares tomorrow. LAS is an Chinese auto dealer and  MOBI is a Chinese mobile application company. LAS posted a profit of approximately $10M USD last year. Whereas MOBI posted a loss of $8M USD.

Disclosure: I do not own DANG for my accounts. 

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What does ZAGG stand for? (Zealous About Great Gadgets)

Essentially, ZAGG’s primary source of revenue is from selling protective covers for electronics devices.

ZAGG’s strategy involves providing alternatives to bulky protective cases. Not only that but they allow you to customize the design of such protective “skins”. To me, they look more like protective films, which leads me to believe there are few barriers to entry. More on this later. 

Sales are made through their website as well as indirect channels (“big box retailers, domestic and international distributors, independent Apple retailers, university bookstores and small independently owned consumer electronics stores”) Indirect channels of distribution accounted for 58% of 2009 sales, while website sales accounted for 29%. About 4% of net sales was generated from shipping charges.

ZAGG has managed to increase sales from $19.8M in 2008 to $38.3M in 2009. It is anticipated that this year will be even better. This is based on the belief that in 2010 there is increased demand from products such as the iPad. Although their gross profit margin was approximately 57% of sales. Their net income as a percentage of sales was only 8.8% in 2009.

ZAGG will continue to experience increased competition as Bestskinever, Protechy, and BodyGuardz try to steal “market shares” from ZAGG. None of the aforementioned competitors are publicly traded, therefore it is difficult to find comparatives. For now, it seems that as long as ZAGG can maintain it’s market share, it will continue to be a leader in these type of product sales.


As of March 2010, ZAGG has not packaged their product along side any manufacturer’s electronic devices. There is potential to do so and in doing so, their product brand will be more well recognized and could lead to an increase in sales.


Disclosure: I do not own ZAGG for my accounts. 

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The One That is Getting Away – Netflix (NFLX)

Not the best way to start off this series of “Successful Unknown Companies”, but I could not resist doing an article on Netflix (NFLX). Probably about a third of my earnings this year has come from NFLX.

This company basically took out Blockbuster.  Twenty five years of glory and now its been replaced by Netflix (thirteen years and counting). With more than twelve million subscribers, it is the world’s largest subscription service streaming movies and TV episodes. For one reason or another the stock has been going bonkers lately. I can think of a couple reasons why this might be the case. About a week ago, it raised its subscription fees a dollar per month. Furthermore it announced that it would be providing a streaming-only subscription.

Call me crazy, but that sounds like cannibalization. Online streaming will take away from DVD subscription packages. However, I believe this is the right thing to do as the world is definitely moving away from DVDs and more focus has been placed on the Web. Amazon and Hulu are a couple players already in the market. Though I’d argue Amazon’s streaming content is limited. Firms that provide streaming web content have entered into agreements with studios to provide content weeks after the release of the DVD. Evidently, studios DVD sales are declining and this is namely due to content being streamed online. If we bring this full circle, you can understand why it makes sense that the studios are limiting and delaying the release of content to streaming media providers.

In late November, NFLX gapped up approximately $10. Since then it has continued to climb hitting $200. In the last three months and six months its been up approximately $58% and 80% respectively. Since inception it has been up over 2000%. How insane is that? How is it possible that a service that simply provides streaming media and DVDs suddenly have a market value past $10.4 billion?

I’d have to say that their competitive advantage is branding. It is highly recognized across the nation. A recent survey conducted by an independent party determined that over 90% of Netflix subscribers would recommend Netflix to a friend.  Blockbuster had tried to retain its market share by providing DVDs by mail, but Netflix’s branding was far superior and eventually over took Blockbuster. This is despite the fact that Blockbuster also had brick and mortar operations across the nation.

How do you get to the point where your branding is far more superior compared to your competitors? You build that brand/reputation through providing convenience, fast delivery, and variety of selections. Since entering the Web to compete against YouTube, Amazon, and other streaming content providers, Netflix has increased its library by an estimated twenty six folds!

Sadly, like all things, I believe at some point this will come to an end. The stock will drop and the hype will drown with it. Until then it is best to ride the wave and catch as much of it as possible. Beware as this seemingly one trick pony could flip out at any moment. Still it looks like a fantastic party right now.

The writer does not own NFLX. The information provided on this site is not advice to buy, sell, hold, trade, or invest in any securities. I am not a financial professional. Do your own research before acting on any information provided on this site.

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Successful Companies You’ve Never Heard Of

In light of the new Green Lantern movie coming out next summer, I’ve decided to start off my Monday with Blake Lively. Until I read Blake Lively‘s wikipedia, I had no idea that she was so young. For one reason or another, I feel like she’s been in the industry for a while now. But, the point is she is pretty.

Anyhow, I digress, it is Sunday night and as always I get my best ideas the night before I have work the next day. I’m looking to kick-off a series of analyses of companies that have been performing well the last three to six months in the stock market. My analyses will primarily be focused on fundamental analysis, as we all know in the long run the stock price is more or less driven by fundamentals. It will include and is not limited to what makes each individual company so profitable, the competition, barriers to entry, products/services the company provides, and if there is potential for further growth. I’ll primarily be focusing on companies that are not typically on people’s radars. 

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FDIC Insurance Coverage Essentials

The Federal Deposit Insurance Corporation protects depositors of insured banks. Should a bank fail, the U.S. government cover your amount in the bank.

What is covered? 

Essentially, cash and cash equivalents. Stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities are not insured.

What amount is covered? 

$250,000 per depositor, per insured bank. That means you can have multiple accounts with $250,000 be insured as long as they are at different banks.

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