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Opinions sought: What to do with 401k
Old 05-31-2019, 09:02 AM   #1
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Opinions sought: What to do with 401k

I really like this forum and am looking for some opinions from the really smart people who frequent it.

My situation:

Will be retiring and the end of this year. Most of my retirement assets are in 2 accounts:

Fidelity 401k - 700k
Vanguard IRA - 600k

While working being in the 401k was a no brainer even if only for the company match. What was really nice though was initially the company paid the Fidelity fees. That has changed the last couple of years and now we are paying some of the fees. The account has done well and I am grateful to have been able to take advantage of it.

Now that I am facing retirement though, what do do with the 401k?

Should I hold my nose, pay the fees and keep the 401k as is?
Should I convert it to Fidelity IRA?
Should I close the Fidelity account and transfer the funds into the Vanguard IRA?

Considerations:

I live in Florida so I believe our state laws protect retirement assets equally regardless of if they are in a 401k or an IRA

My self-directed Vanguard IRA account has no fees. Would the same be true with a Fidelity self-directed IRA?

Is there a benefit to not putting all your eggs in one (Vanguard) basket?

Currently, I am a Vanguard "Voyager" customer. Combining everything into Vanguard would qualify me to be "Flagship" customer. Does this make a big enough difference to sway me into doing the consolidation?

Am I missing any other considerations?

What would you guys do in my situation?
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Old 05-31-2019, 09:06 AM   #2
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If your 401K has things like a Stable Value fund, and if that investment is of interest to you, then leave it as SVFs are not available in IRAs.


Fee comparison: for apples-to-apples, are the investments the same?

eggs in one basket: it depends on how the rest of your finances are arranged. But should you want to have access to funds "now", having multiple institutions can be handy if one is having an "IT problem" or daily withdrawal limits that are confining.
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Old 05-31-2019, 09:31 AM   #3
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How much are the fees in the 401k, and what investment options do you have? I've left all my $ in my 401k since I ERd, but only because my options include several index funds with fees almost the same as what Vanguard charges.
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Old 05-31-2019, 09:49 AM   #4
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Having a SVF with a good rate is a no-brainer for keeping it open. But let's say that's not the case. Then it becomes more of a matter of preference.


If you look up the cost % of funds you're using in the 401k, multiply by your balance, then add the explicit fees charged by your company, you might find in simple dollars and cents, it's not that bad. Or you might find it's quite bad. There's no way to know without looking up the fees and doing the math. Of course you'd compare to the expenses of a similar fund available in an IRA.


How big is the company that you work for? Smaller companies tend to give workers a worse deal. And they legally can tap your money to pay for administration of the 401k, beyond the fees that they disclosed. This actually happened to me, and it was annoying because many people got word and got out before they hired the administrator and the smaller pool meant more expense for each remaining. But I digress.


Personally, I like being diversified between Vanguard and Fidelity, but knocking down the number of institutions you deal with can simplify. That's personal preference.
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Old 05-31-2019, 10:00 AM   #5
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Check your 401K Summary Plan Description. You may be able to withdraw 401K funds without penalty if you separate from service in the year or after you turn 55. You still need to pay Federal Tax, but there is no 10% penalty.


The IRA has different rules, and generally you cannot withdraw until you are 59 1/2 unless you setup a 72T plan with equal payments until you reach 59 1/2 or 5 years, whichever is longer.
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Old 05-31-2019, 10:33 AM   #6
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First and foremost, how old are you when you retire and end service with your employer? And do you plan use that 401k/tIRA money between when you ER and 59 1/2?

One big advantage of a 401k is the ability to take penalty free witdrawals earlier than with a tIRA if you leave between 55 and 59 1/2. After you are 59 1/2, that advantage of the 401k goes away.

The other is access to a stable value fund which you can't get in an tIRA. That might be another reason to stay.

Being Flagship probably does have some benefits over Voyager, but probably not compelling. Most of mine is at Vanguard, however out HSAs are with Fidelity and about 20% of my IRA with with Fidelity.
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Old 05-31-2019, 02:10 PM   #7
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Quote:
Originally Posted by almost_there View Post
Should I convert it to Fidelity IRA?

Considerations:

I live in Florida so I believe our state laws protect retirement assets equally regardless of if they are in a 401k or an IRA

My self-directed Vanguard IRA account has no fees. Would the same be true with a Fidelity self-directed IRA?

Is there a benefit to not putting all your eggs in one (Vanguard) basket?

What would you guys do in my situation?
Of the options you've chosen, I'd convert it to a Fidelity IRA. We have Roth IRAs there, no fees. Schwab is also a good choice, if you're looking to diversify among firms.
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Old 05-31-2019, 04:26 PM   #8
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Quote:
Originally Posted by almost_there View Post
Now that I am facing retirement though, what do do with the 401k?

Should I hold my nose, pay the fees and keep the 401k as is?
Should I convert it to Fidelity IRA?
Should I close the Fidelity account and transfer the funds into the Vanguard IRA?
Since you're over 59 1/2, you can access the funds now, without penalty, whether they're in a 401(k) or IRA. I'd transfer them to an IRA with Fidelity (if you like their service better than VG) or transfter them to VG. Either way, the only fees you should be paying are the expense ratio fees, and hopefully, you're invested in funds with low fees in the 0 to 0.17% range.

Enjoy!
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Old 05-31-2019, 06:13 PM   #9
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Originally Posted by HNL Bill View Post
Since you're over 59 1/2, you can access the funds now, without penalty

Did I miss something, how do you know the OP is over 59 1/2?
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Old 05-31-2019, 06:19 PM   #10
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Did I miss something, how do you know the OP is over 59 1/2?
I went to his profile, and looked at his intro post...he was 59 in 2014: "59 Year Old Who Could Go Tomorrow Except For One Thing" Feb 27, 2014.
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Old 06-01-2019, 03:08 PM   #11
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Originally Posted by HNL Bill View Post
I went to his profile, and looked at his intro post...he was 59 in 2014: "59 Year Old Who Could Go Tomorrow Except For One Thing" Feb 27, 2014.
Yep. that was me. Thought about going 5 years ago but I am basically a chicken. Kept finding excuses:

Let me pay off the house first - check
Let me build up liquid assets to > 1.5M - check
Let me get the last couple of bonuses - check
Let me build up one year of expenses in saving account - check

So I find that all that stuff is done but now I am also no longer 59

Fortunately, I am in good health

Running out of excuses though.

End of this year for sure (of course it is hardly an early retirement at this point)!!!
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Old 06-01-2019, 03:29 PM   #12
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Fidelity rollover IRA is a fine option, with no extra fees. And you get that little bit of financial institution diversity. I have most of my accounts at Fidelity, but keep a little bit left over at E*Trade just in case Fidelity is shut down for a few days (and E*Trade is not).

I'd probably go for simplicity and roll it over to Vanguard. That cuts down on the number of funds and accounts you have to coordinate.
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Old 06-01-2019, 04:34 PM   #13
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Quote:
Originally Posted by almost_there View Post
Now that I am facing retirement though, what do do with the 401k?

Should I hold my nose, pay the fees and keep the 401k as is?
Should I convert it to Fidelity IRA?
Should I close the Fidelity account and transfer the funds into the Vanguard IRA?

...

What would you guys do in my situation?
I'm coming up on a similar decision. Mine is more complicated, with Vanguard, Schwab, 401k.

You can avoid the Fidelity fees by rolling over to a Fidelity or Vanguard IRA. If it were me, I would prefer to rollover to Fidelity IRA. In another thread there is discussion about Fidelity cash advantage. That is worth looking into.

For now I stick with 401k (not current employer) because the funds are broad and low fee. They recently deducted very small fees, too. So I know eventually I may have to rollover, but it is not a decision that has to be made quickly (at least for me).
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Old 06-01-2019, 05:12 PM   #14
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I was faced with the same decision. I had both pre and after tax contributions in my 401(k) and Fidelity was very helpful in rolling the after tax stuff into a Roth. I later moved some of the stash to Vanguard as I liked some of their funds better, at the time.
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