Pros/Cons on keeping 401k with Employer or move to an IRA

[GenXguy]

Quote:

Originally Posted by pb4uski Perhaps nobody mentioned that because the OP and title of the thread refers to pros/cos of keeping 401k.

I'm guessing the OP isn't the only one reading responses to this thread and that I'm not the only one with this choice/option. It's just another type of employee retirement program that I bet others here have. In fact, you often see people use the term "401k" loosely when they mean the host of other employer based plans, such as 457B, 401a, 403b. Over the last 18 years, I've even heard fellow employees often call our plan a 401k. We don't even have a 401k. Happens all the time.

The FEE FREE fixed interest fund that I mentioned isn't unique to 457B and can exist in 401K plans as well.

[GenXguy]

Quote:

Originally Posted by pb4uski I've never beeen sued (I've also never sued anyone).

I've never had my house burn down, but that doesn't keep me from protecting myself against the possibility. The fact it has never burned down in the past is irrelevant.

[Bamaman]

When I retired, my MegaCorp required that all ex-employees must move their 401K accounts out of Fidelity.

That indicates that MegaCorp was picking up some of the service fees associated with the account.

I had long moved out of the standard 401K program to a self directed 401K where I paid expenses. But that was when the price of the stock market was going up more steadily than the meandering of the stock prices we're presently experiencing. Over the years, I came out far ahead by getting out of their somewhat conservative stock offerings to MegaCorp's 401K.

[pb4uski]

Quote:

Originally Posted by GenXguy I've never had my house burn down, but that doesn't keep me from protecting myself against the possibility. The fact it has never burned down in the past is irrelevant.

You needed to read the whole post ...

Quote:

Originally Posted by pb4uski I've never beeen sued (I've also never sued anyone). I have $2m in umbrella coverage that I would carry irrespective of whether or not my IRA is available to creditors. ...

I still carry umbrella insurance in case I do get sued, but the fact that I never have been is relevant to assessing the risk.

So your point is pointless... you seem to be on a roll.

[pb4uski]

Quote:

Originally Posted by GenXguy I'm guessing the OP isn't the only one reading responses to this thread and that I'm not the only one with this choice/option. It's just another type of employee retirement program that I bet others here have. In fact, you often see people use the term "401k" loosely when they mean the host of other employer based plans, such as 457B, 401a, 403b. Over the last 18 years, I've even heard fellow employees often call our plan a 401k. We don't even have a 401k. Happens all the time. The FEE FREE fixed interest fund that I mentioned isn't unique to 457B and can exist in 401K plans as well.

In a previous post #13 I mentioned that a stable value fund would be a good reason for staying in the 401k.

Quote:

Originally Posted by pb4uski +1 access to a stable value fund is a great reason to stay with a 401k. Dtail is lucky to have access to a stable value fund that pays a very handsome rate... I'm jealous.

Reading comprehension is hard.

[COcheesehead]

Quote:

Originally Posted by gauss I have posted in the past that for a 401k plan, the plan administrator is responsible for tracking and reporting any after tax basis in the account. Once the funds are transferred to an IRA, the responsibility falls to the individual. The transactions that make up this tax basis often take place decades in the past. I see this all the time at our volunteer tax site. The widows often have no idea if there is any taxable basis in the IRA so 100% of their withdrawals are taxed. This is not an issue with 401k/DB pension plans. -gauss

You can make after tax contributions to a 401k? I didn’t know that.

[pb4uski]

Yup, and there is separate tracking of pre-tax and after-tax accounts.

I never saw much point to making after-tax contributions and just had after-tax investments.... if I had only know that they would someday allow those after-tax 401k accounts to be rolled into a Roth I would have put a lot more in there.

[ychuck46]

As long as your options are attractive in the 401k it is really a toss up between moving the funds or leaving them where they are. We have done both and I still have the 401K from my final employer with Fidelity, even though all our others investments are with Vanguard and TD. If you want the convenience of having the funds in one account, then by all means move them.

Regarding the Fidelity "adviser" - ignore him. I have a similar situation with TD in that they know I have IRAs with other firms, so their Nashville office calls me periodically wishing to "update" with me. I ignore the calls since I have no need for them or their advice, which will likely be the same as you are getting from Fidelity, namely to move the funds to them and to also look at annuities, which I despise. I use TD for any stock trades, and all my ETFs and mutual funds are with Vanguard.

[mckittri2000]

I retired at 56 and rolled over my 401K to an IRA so I could get SEPP payments for the next 5 years. My 401K plan did not allow me to take out a portion of my balance (55 yr old rule). They allowed full payout, rollover to an IRA or leave it as is. Check with your employers plan to see what is available. Full payout was not an option for me due to the taxes that would have been owed and the amount going against my ACA adjusted gross income number.

[neihn]

Quote:

Originally Posted by pb4uski +1 access to a stable value fund is a great reason to stay with a 401k. Dtail is lucky to have access to a stable value fund that pays a very handsome rate... I'm jealous.

Yes, access to a stable fund is the reason that I stay with my mega-corp 401k, however, it only pays 3%.

[Murph]

Quote:

Originally Posted by whatnot DH retired 1 1/2 years ago and has left 401k in the employer sponsored Plan at Fidelity. We have low cost index funds available via the Plan. He has approximately 1.5 mill.. We met with a Fidelity advisor when we retired to discuss our retirement plan. This was our 1st time meeting a Fidelity advisor. He recommended us rolling 401k To an IRA, The argument was we would have more options to invest in. We are happy with the funds available in the 401k so not an issue. We were hesitant because it is my understanding that investments held in a 401k have more protections than those held in an IRA. We are in the state of Georgia. Our Fidelity advisor calls regularly to meet with us, and I know it is to try and have us move funds to an IRA. He also was recommending us to use some funds to buy an Annuity. I told him we don’t need an annuity because DH gets approximately $50k in a pension and we will both have SS in a few years. So I am a little skeptical of his advice. So basically, I am looking for guidance on the Pros or Cons in leaving DH investments in the Employer Plan at Fidelity vs rolling it to an IRA. Thank you in advance!

I left my 401K in place with Fidelity (65-35% conservative-aggressive) and fought off all the calls from "fiduciaries" trying to get me into annuities. I am extremely pleased with my results so far.

[Dtail]

Quote:

Originally Posted by neihn Yes, access to a stable fund is the reason that I stay with my mega-corp 401k, however, it only pays 3%.

My 3.83% is definitely unusual. MassMutual has a heavy percentage of investments in Mortgage Back securities.
Unfortunately, based on the current interest rate scenario, I expect there to be a decent yield cut when the investment adjusts this Dec.
Nevertheless, there are lot worse Stable Value rates out there than 3%.

[hpnutty]

My Vanguard Stable Value Fund in my 401K has done 2.57% over the past year. Not exactly stellar.

[GenXguy]

I have one those funds that earns 3%, absolutely no expenses or fees applied to that fund.

It had been 4%, but they lowered it quite a few years back to 3%, and that's where it's stayed.

[Hermit]

I kept my 401k funds with megacorp until I was about 68. I then rolled them over to a Vanguard IRA. The 401k was about the same costs as Vanguard with the added legal protections. Withdrawals were as easy as Vanguard too. My switch to IRA was preparation for executing my plan to do Qualified Charitable Distributions instead of RMDs at 70.5. You cannot do QCDs from a 401k.

[jazz4cash]

Quote:

Originally Posted by hpnutty My Vanguard Stable Value Fund in my 401K has done 2.57% over the past year. Not exactly stellar.

Ours barely pays 2%. It went all the way down to 1.6% before recovering a bit.

[Perryinva]

Just rolled my 401k in to my Fido IRAs. Pre tax to tIRA & post tax to my Roth. Our stable fund was poor, less than 2 %, and all trades on company stock (free) were end of day. The gains I make selling the stock on threshold easily exceed the gains for tax savings on basis. I got lucky in timing as I cashed out near the recent high, and its been sitting in a cash account making 2% while I decide how to redeploy it.

[Old Microbiologist]

We took all of our various 401k's and rolled them over to accounts at (then) Scottrade which is now TD Ameritrade. I had several small ones accumulated over the years from various jobs I worked outside the government. Combined they were roughly $90k for me and $125k for my wife. There are zero fees now since they removed trading fees and we control what stocks are invested in. My wife has tripled those accounts (and hers as well) over the past 10 years by actively trading them. I don't think you can see that kind of performance in a traditional IRA. Yes, she is more successful than most and it is somewhat time consuming but the trading is slower at 3 day intervals. Mine are now combined $360k and hers less at $325k. She traded differently between the accounts but half of hers are Roth's. Your mileage will vary and there is risk but the zero fees is attractive and taking complete control is something we value. We are 100% cash now waiting for the Trump debacle to reach some kind of resolution. The market is too insane to try and trade in.

[big-papa]

My wife and I both have rollover IRAs at Fidelity. After leaving each employer (and they were numerous), we've made it a regular practice to roll over our 401Ks, primarily for the purposes of decluttering. That said, our 401Ks usually had 'good enough' choices, but our preferred funds are at Fidelity. We still have too many other accounts floating around today for our taste and have a long term plan to reduce the number of them over the next few years. One, a deferred comp account, will finish paying out in 2 years. When I leave my current company, I'll roll my current 401K over. And we have a straggler taxable account with one fund in it with too much capital gains to sell right now. Once those are out of the way, we will only have our rollover IRAs, my HSA, and a taxable account.

[SonofCohoes]

We are leaving some money in a 401k until DW turns 59.5 then we’ll roll over to an IRA. We left it because we’d have options for withdrawals that aren’t available in an IRA between 55 & 59.5.