I just saw an banner advertisement suggesting you 'Talk to a State Farm Agent today about a Rollover IRA'. My first thought was that they were going to try and sell you an insurance policy or variable annuity for your IRA. Well its not that bad but their investment options are not good. The State Farm rollover site talks about their investments and their mutual funds all seem to have 5% loads and moderately high expenses. For example the State Farm S&P 500 index fund (SNPAX) has a 5% load and a 0.76% fee. Thats particularly bad for a index fund. I can see the argument that a load might be worth it if the fund manager does a great job of selecting stocks and out performs the market. But with an index fund you're paying for a simple index and the manager isn't doing anything special. Theres zero reason to buy a index fund with a load versus one without. On top of the load the State Farm fund has a relatively high 0.76% fee. That may not seem like a lot but it adds up and there are index funds with much lower expense fees.
Instead of buying such a fund through State Farm you should instead seek out a cheap index like the Vanguard 500 Index fund (VFINX). The Vanguard fund has no load and a very low 0.17% expense ratio. Lets say you have $10,000 to rollover and you are 35 years old. If your investment grew at annual rate of 7% a year then here is how the load and expenses for the SNPAX and VFINX funds would compare :
| State Farm | Vanguard | |
| $10,000 | $10,000 | |
| less load | $9,500 | $10,000 |
| 30 yr @7% | $ 54,531 | $ 65,840 |
With that Vanguard fund you'd end up with 20% more money at retirement compared to the State Farm fund.
You should avoid putting your retirement with a company that only wants to sell you funds with sales loads and high fees.
Do not rollover your IRA to State Farm or any other company with similar investment options. Instead go with a company like Vanguard that offers very low expense funds or Scottrade, Schwab or Fidelity if you want a wider variety of investment options.
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