Thread: Bonus for TSP rollover to IRA

I'm currently in the process of doing an Age-Based In-Service withdrawal from my TSP. I'm withdrawing about 90% of my TSP funds and rolling them over to an IRA.
I chose Fidelity for the IRA over my second choice, Scottrade, for several reasons. Fidelity's bonus offering of $1,200 or 100 free trades was better than $1,000/50 that Scottrade offered. Although Fidelity charges about a dollar more per trade, it also offers a few extras that Scottrade does not. I also prefer Fidelity's mobile app over Scottrade's.
It seems to me to be a no-brainer to choose the bonus $ over the free trades since it appears that would be worth about $400 more. But maybe I'm missing something there. I asked the rep why someone would choose the free trades over the bonus $ and all he said was, "Some people just prefer to have free trades".

$1200 is only 0.24% of $500k, which you said was the minimum to get that bonus.

That's like 2 months in the G-fund.

Originally Posted by k0nkuzh0n

$1200 is only 0.24% of $500k, which you said was the minimum to get that bonus.

That's like 2 months in the G-fund.

True. But I didn't do the rollover just to get the bonus. It was just that...a bonus.
My IRA's have consistently out-performed my TSP over the years, primarily due to the TSP's restrictions. I plan to continue to actively trade my IRA's with an expected better performance than my TSP.

Originally Posted by ripper

True. But I didn't do the rollover just to get the bonus. It was just that...a bonus.
My IRA's have consistently out-performed my TSP over the years, primarily due to the TSP's restrictions. I plan to continue to actively trade my IRA's with an expected better performance than my TSP.

I know. I certainly wasn't saying you should have kept it in TPS. The point is, the bonus shouldn't decide where you open your IRA; the functionality should. Whichever functions are most important to the individual; whether it be extended-hours trading, types of trades (execute on-close/open, limit, trailing limit, etc.), trading types (options, FOREX, etc.), real-time quotes vs delayed quotes, margin and margin rates, useability of software/apps, tax tools, performance tools, customer support/physical locations, commission-free trading options, etc.

Originally Posted by k0nkuzh0n

I know. I certainly wasn't saying you should have kept it in TPS. The point is, the bonus shouldn't decide where you open your IRA; the functionality should. Whichever functions are most important to the individual; whether it be extended-hours trading, types of trades (execute on-close/open, limit, trailing limit, etc.), trading types (options, FOREX, etc.), real-time quotes vs delayed quotes, margin and margin rates, useability of software/apps, tax tools, performance tools, customer support/physical locations, commission-free trading options, etc.

Totally agree. I probably should've mentioned that many of the reasons you mentioned were the reasons why I went with Fidelity, not because they offered a better bonus. I would've still went with Fidelity if the bonuses were reversed.

Great topic

IMHO, if I were an infrequent trader, then I'd take the cash over the trades.

Having said that, you've been in the game for a long time, so I'm sure you could calculate your cost basis based on:

1) How often you trade
2) Trading cost
3) Number of trades

Using this data, you could calculate how long, or at what point in time the the free trading cost will exceed the 1200.

If I were a long-term investor, then I'd estimate it's better to let the 1200 compound with your returns.

But if you were a short-term trader, then the free trades could easily overcome the 1200 (if you'r a good trader)

Is the $1200 bonus added to your taxable fund or to your IRA?
Also, I would think the bonus would be taxable income that Fidelity would report on a 1099.

Originally Posted by Skorcher

Is the $1200 bonus added to your taxable fund or to your IRA?
Also, I would think the bonus would be taxable income that Fidelity would report on a 1099.

The way I understand it, it's added to my traditional IRA. It becomes taxable when it's withdrawn, like the rest of the IRA funds.