reassure me

[yak651]

I left money in a previous employerrs 401k plan w/Fidelity, the choices weren't bad but they have now sold and are going to a different plan provider to a complany I haven't heard of and the options look limited. Today I called Vanguard to roll it into a IRA with them, approx. $140k. I know this isn't much to some of you, but it's a large chunk of money for me, so a little nervous "handing it over" to someone else. Just looking for a little reassurance. Now I just have to wait the 5-7 days to get the check to send off to Vanguard and wait for their financial plan since I'm rolling over more than $100k. Any advice for a 35 year old to look at before I get their plan?

 

[Gumby]

They should do a direct custodian to custodian transfer. You definitely should not get the check, because the 401k custodian will need to withhold 20% for taxes. Direct custodian to custodian transfers don't need to have the tax withheld.

I rolled my old 401k to Vanguard and it was quite easy. Just tell Vanguard and they will take care of it.

 

[golfnut]

I rolled over a similar amount to Vanguard a few years back. Suggest you direct your rollover to Vanguard's money market fund (returning about 5%) or their Wellington Fund (65% equity/35 % bonds) until such time you've had a chance to review their financial plan.

Rest easy, Vanguard is superb! Once you receive their plan, they will go thru it with you on the phone.

 

[Bultacoman]

Yak651 will not have to have the tax withheld even if he receives the check if the check is made out to Vanguard and not to him. My last employer would not allow a direct rollover and insisted that I had to send the money to Vanguard. The check was made out to Vanguard but sent to me. I simply sent the check to Vanguard.

Bultacoman

 

[Gumby]

Good point. I was making the unwarranted assumption that the check was made out to him.

 

[yak651]

No, the check will be made out to Vanguard, I just have to send it to them once it arrives. I'm surprised they just can't transfer the money from one place to the other, is this just a safety feature? Seems like it would save a lot of time and money (paperwork).

 

[jazz4cash]

No, the check will be made out to Vanguard, I just have to send it to them once it arrives. I'm surprised they just can't transfer the money from one place to the other, is this just a safety feature? Seems like it would save a lot of time and money (paperwork).

This is nealy identical to our situation and that's EXACTLY how we handled it, except we downloaded paper application and sent it together with the check to VG. VG gave instructions for how to make check payable, etc. It all worked out very well.


As for your concern with a direct transfer, I agree, but we've done several of these and one thing I detected is each custodian wants to initiate (control) the transaction, so in the long run it better/easier to just let Fido cut a check payable to "Vanguard, FBO: yak"

 

[AlmostDone]

No, the check will be made out to Vanguard, I just have to send it to them once it arrives. I'm surprised they just can't transfer the money from one place to the other, is this just a safety feature? Seems like it would save a lot of time and money (paperwork).

They can just transfer from one place to another. I did it from Fidelity to VG and I've done it before between two other companies. Perhaps your current company won't do it for some reason. I've been very pleased with Vanguard.

 

[Andre1969]

If you're happy with the Fidelity account, couldn't you just keep your money there? I have a 401k from one of my previous employers at Fidelity. The only thing that Fidelity suggested was that I move it to a rollover IRA with them, because while the 401k has maintenance fees, the rollover IRA doesn't.

My uncle went through a similar situation, where he had to move some 401k money from a previous employer. The paperwork got botched up (partly because of him, partly because of his employer), so they accidentally sent him a live check with taxes taken out instead of rolling it over. He sent the check back, corrected the paperwork, and in about 3 weeks, the full amount of his old 401k showed up in his new rollover IRA.

 

[Empty Pockets]

I'm 41 and have rolled my IRA 3 times since I took it out 20 years ago. All went smoothly, just make your intentions clear to the new custodian. You may have never done this before, but I'm sure the folks at Vanguard have.

Oh, $140k is nothing to sneeze at, there are plenty of people at any age, let alone 35, that wish they had that in their retirement plan.

 

[slepyhed]

If you're happy with the Fidelity account, couldn't you just keep your money there? I have a 401k from one of my previous employers at Fidelity. The only thing that Fidelity suggested was that I move it to a rollover IRA with them, because while the 401k has maintenance fees, the rollover IRA doesn't.
...

I also have a 401k from a previous employer that is held by Fidelity.

What are these maintenance fees? Where do I see them in my statement? Because if I can find them in my statement, I'm sure I'll want to roll the money elsewhere!

 

[SC]

We rolled over two Fidelity retirement accounts into Vanguard, one for each of us. Mine transferred without a hitch, directly from Fidelity to Vanguard. Hers required about a half-dozen phone calls, where she often got conflicting instructions, and most of the Fidelity reps wanted to send her a check and have us forward that to Vanguard. ALL the Fidelity reps grilled her about WHY she wanted to transfer. In the end, I politely told the rep that I was tired of explaining why we wanted to move to Vanguard, and gave them the choice between a direct transfer of her 401K or a transfer of ALL our Fidelity funds. Her 401K was quickly transferred directly to Vanguard.

I guess what I wanted to say was, if you can find someone at Fidelity who is more familiar with these types of transfers, they should be able to transfer the assets directly to Vanguard without using you as an intermediary.

(Fidelity also forgot to transfer some interest, so we still get 401K statements showing an account balance of $1.07. Maybe $1.08 next quarter. I'm not tracking those in Quicken.)

 

[Randyb]

Have you thought about putting your IRA money into California real estate. 9 out of 10 fortunes have been mad through investing in real estate that has major population density and is in the path of growth. Where would your IRA be today if the growth had been equal to the appreciation of California homes.
[MODERATOR EDIT]

 

[dusk_to_dawn]

Vanguard will probably give you more options and at a lower cost than any 401K plan. I have rolled over every 401K plan from previous employers to Vanguard without a problem. The only one I didn't roll over was already in vaguard in a closed fund, so I left it there. You shouldn't have any problem. Oh, and 140K is a lot of money for almost anyone. Maybe not Bill Gates or the Sultan of Baharain, but most everyone else.

 

[Andre1969]

I also have a 401k from a previous employer that is held by Fidelity.

What are these maintenance fees? Where do I see them in my statement? Because if I can find them in my statement, I'm sure I'll want to roll the money elsewhere!

I don't have a fidelity statement handy, but whenever there's activity on it (mainly just fees, dividends, capital gains these days), I always record it. It looks like it's just certain accounts that get hit with a fee. Their Aggressive Growth fund hits me for 7 bucks in early March/June/Sept/December. However, their Freedom 2030 fund doesn't get hit with a fee.

Originally, I only had money in those two funds. However, the Aggressive Growth fund hadn't been doing so hot, so I diversified it, transferring some money into their Diversified international and Utilities. Utilities just hit me with a $6.00 fee on March 1. However, none of the other accounts have. At least, not yet!

I wonder then, if these fees will go away if I transfer to a rollover IRA, or if they're actually built into the funds themselves? Guess I need to read up on it!