My husband and I set up Roth IRAs early in our careers, but quickly reached above the salary maximum, so we can't fund these accounts. We are now left with two accounts with high fees and low performance. Do we have any rollover opportunities into alternate account types that would allow us to continue to build the assets or are we better off taking the 10% penalty and just cashing them out?
-- Name withheld

First things first: It may not be a good idea to completely cash them out. While you can withdraw without penalty the contributions you have made to your Roth IRAs, unless you're at least 59 1/2 years of age, withdrawing earnings will likely subject you to a 10% early withdrawal penalty in addition to taxes.

A far better option is to keep your money growing tax-free in Roth IRAs, but simply choosing different investments—perhaps not with the fund company or brokerage where your money is now. At Morningstar.com, you can search for funds by numerous criteria, including type of holdings, expense ratio, performance and risk. Once you find one that you like, you can get the necessary paperwork from the firm where you want to move your Roths to arrange for a rollover. The safest way to do that is a trustee-to-trustee transfer directly from one IRA to another. That way, you can avoid the risk of a tax hit you might incur if you take possession of the money yourself: If the money comes directly to you but you don't complete the transfer within 60 days, the IRS will want its share in penalties and taxes.

-- Jeff Wuorio

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