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401k Rollover
Old 08-25-2011, 04:22 PM   #1
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401k Rollover

I'm retired almost 3 months now and I have been working on a plan to roll my large 401k balance into my IRA. I automatically figured that was the best choice for me as I would have many more investment options at a lower cost. I don't intend to touch these funds for many years, so the pre-59.5 withdrawal tax issues aren't important to me.

Over the last few days, I have compared returns from each of the funds I currently own in my 401k to an index or a similar ETF index fund. I found that the actively managed funds in my 401k are beating their indices (or the ETF I would use) in most cases over 1, 3 and 5 years.

So the question is, am I missing out on anything by leaving the funds in the 401k? It's been drilled into me for so long that actively managed funds just don't consistently beat their benchmarks, but apparently most of these do (they include some TRP funds, American Europac, PIMCO and Mainstay Large Cap - almost all have expense ratios under 1%). Thoughts?

Retired on 5/31/2011 at 54
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Old 08-25-2011, 05:04 PM   #2
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IRAs and 401(k)s do have some important differences. It may be worthwhile to peruse this book when making your decision. You might find it at the library or used on line. The Retirement Savings Time Bomb . . . and How to Defuse It: A Five-Step Action Plan for Protecting Your IRAs, 401(k)s, and Other RetirementPlans from Near Annihilation by the Taxman (9780143113362): Ed Slott: Books

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Old 08-25-2011, 05:56 PM   #3
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Beneficiary flexibility (I know that none of us are going to die, but some folks manage to make it happen ). Do some research on stretch IRAs and non spouse beneficiaries for 401ks. Lots of 401ks have restrictions.

You can probably find the same mutual funds in an IRA (heaven knows the mutual fund companies would gladly manage the money in an IRA too).

Just remember this: your company chose that 401k provider without ever asking your opinion, so don't think they don't have the power to change again some day without your approval.
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Old 08-25-2011, 09:40 PM   #4
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You may also want to consider creditor protection features esp. if you don't need to take distributions for a long time. My impression is that this protection is generally much more robust for 401Ks than IRAs...although the IRA protection is state-dependent and so can be very different for different folks.
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