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Leave 401K in Vanguard or roll over to Vanguard IRA?
01-11-2019, 08:09 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Posts: 1,089
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Leave 401K in Vanguard or roll over to Vanguard IRA?
DW and I left megacorp recently. Our 401K are in Vanguard. Our funds in 401K are:
Vanguard institutional 500 Index Trust
Vanguard institutional Total Bond Market Index Trust
Vanguard institutional Total International Stock Market Index Trust.
Megacorp is quite stable. Is there a benefit to roll over to Vanguard Rollover IRA accounts?
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01-11-2019, 08:19 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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I left my 401k at Mega unitl RMD time approached. Then I converted to a Rollover IRA at Schwab (any major brokerage house would do) because they offered nice features for calculating and tracking your RMD's and QCD's. That also made it super easy for the RMD (net of QCD's and withholding tax) to transfer to my main brokerage account.
You'd likely have a much greater choice of investments with the Rollover IRA than with the 401k, but it sounds like your 401k in adequate as long as you don't do any individual issue trading, etc.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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01-11-2019, 08:36 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,876
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Institutional funds available within a 401k can have lower expense ratios than funds accessible by an IRA. If not, moving to a IRA can make sense.
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01-11-2019, 08:48 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
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Quote:
Originally Posted by GrayHare
Institutional funds available within a 401k can have lower expense ratios than funds accessible by an IRA. If not, moving to a IRA can make sense.
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+1
It's not an either/or decision. You can have both! Leave enough in the 401k to take advantage of whatever funds/features that are better than Vanguard offers in their IRA option. Does the 401k have a good stable value option? Rollover enough to take advantage of whatever funds/features offered by Vanguard that are not available within the 401k.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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01-11-2019, 08:56 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Aug 2012
Posts: 1,862
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I'm wrestling with this myself. However, I'm considering moving my 401(k) TO Vanguard.
You may want to consider that you'll loose your ERISA protection if you leave the confines of the 401(k). I'm pondering this too...
https://www.investopedia.com/article...-creditors.asp
https://www.irahelp.com/slottreport/...ou-roll-it-ira
May not be a consideration for you, but I worked in this field for years so it is on my radar screen. Let us know what you decide (if you want).
__________________
FIRE Class of 2018 @ 61
Old men and women sit in the shade of trees they planted long ago
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01-11-2019, 09:05 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,331
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Look at the fees you're paying in the 401K, both the individual fund expenses and any overall fees. I had a student in my investing class that had nice low fund expenses but was getting whacked with a fee, IIRC 1.25% in addition. Look for "404a-5 Participant Fee Disclosure" and make sure you're good.
Edit: An example.
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01-11-2019, 09:14 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Posts: 1,089
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Quote:
Originally Posted by SumDay
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Since our current 401K is managed by Vanguard, and the funds we hold are in Vanguard index funds, there might not be any difference between our Vanguard 401K and Vanguard Rollover IRA.
We have no debt, and have a 2M Umbrella insurance policy so the chances of being pursued by creditors for IRA money is likely small.
The only question unknown to me, is if we chose to leave 401K, when we begin Roth IRA conversion, can we withdraw funds from 401K directly (we are older than 59 1/2) and convert to Roth IRA (from Vanguard)?
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01-11-2019, 09:15 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Posts: 1,089
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Quote:
Originally Posted by OldShooter
Look at the fees you're paying in the 401K, both the individual fund expenses and any overall fees. I had a student in my investing class that had nice low fund expenses but was getting whacked with a fee, IIRC 1.25% in addition. Look for "404a-5 Participant Fee Disclosure" and make sure you're good.
Edit: An example.
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Thanks, I will do some homework on both our Vanguard 401K and potential Vanguard Rollover IRA on fees.
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01-11-2019, 09:24 AM
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#9
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Full time employment: Posting here.
Join Date: Jun 2017
Posts: 504
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I plan on keeping my megacorp 401k (no fees, low expense, amazing options) and I can roll over future 401k into it. Don’t want IRA while working (backdoor)
If you retired at 55 from the company, you can access those funds penalty free. May be worth keeping.
If fund selection and fees aren’t a problem, no real reason to change
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01-11-2019, 09:42 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 3,165
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Quote:
Originally Posted by youbet
I left my 401k at Mega unitl RMD time approached. Then I converted to a Rollover IRA at Schwab (any major brokerage house would do) because they offered nice features for calculating and tracking your RMD's and QCD's. That also made it super easy for the RMD (net of QCD's and withholding tax) to transfer to my main brokerage account.
You'd likely have a much greater choice of investments with the Rollover IRA than with the 401k, but it sounds like your 401k in adequate as long as you don't do any individual issue trading, etc.
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QCDs can only be done from IRA. 401k offers more protection from law suits.
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01-11-2019, 09:44 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Jan 2018
Location: Elyria, OH
Posts: 1,937
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01-11-2019, 10:05 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Location: North
Posts: 4,029
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Quote:
Originally Posted by fh2000
DW and I left megacorp recently. Our 401K are in Vanguard. Our funds in 401K are:
Vanguard institutional 500 Index Trust
Vanguard institutional Total Bond Market Index Trust
Vanguard institutional Total International Stock Market Index Trust.
Megacorp is quite stable. Is there a benefit to roll over to Vanguard Rollover IRA accounts?
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My medium-corp charges me a $15 quarterly maintenance fee, to hold a single SCHA ETF in the account. Soo yes, when I quit or get laid off, I plan to rollover and save myself the $60 a year charge. Its not a lot, but I don't like throwing money away if I don't need to.
__________________
Time > $$$ ~ 100% equities ~ FIRE @2031
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01-11-2019, 10:08 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,150
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Also keeping the funds in A 401K allows you to keep the backdoor IRA gate open.
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01-11-2019, 04:36 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,533
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Since you're 62, the penalty-free withdrawals if you retire between 55 and 59.5 rule don't matter to you.
Does your state tax the employer match portion of the 401(k) contributions? Mine (Hawaii) does not. Keeping it in the 401(k) might make the tax accounting on this easier (the employer match contribution basis is maintained in the account, rather than you having to track it), if a similar law applies to you.
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01-11-2019, 07:00 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Posts: 1,089
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Quote:
Originally Posted by HNL Bill
Since you're 62, the penalty-free withdrawals if you retire between 55 and 59.5 rule don't matter to you.
Does your state tax the employer match portion of the 401(k) contributions? Mine (Hawaii) does not. Keeping it in the 401(k) might make the tax accounting on this easier (the employer match contribution basis is maintained in the account, rather than you having to track it), if a similar law applies to you.
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I am in California. I believe they tax everything.
I did a google search, and found below link:
https://www.retirementliving.com/taxes-by-state
Here is California portion for retirement income taxes:
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. There is a 2.5% tax on early distributions and qualified pensions. All private, local, state and federal pensions are fully taxed.
I also looked up Hawaii:
Retirement Income Taxes: Social Security, first tier Railroad Retirement benefits, military, federal, state/local, and some private pensions are exempt. All out-of-state government pensions are exempt. Also, employer-funded pension plans are exempt. Distributions from private employer pension plans received upon retirement are partially taxed by the state if the employee contributed to the pension plan.
Maybe what you described in Hawaii is what is highlighted portion.
So, for me, there is no difference between 401K and Rollover IRA in terms of state taxes.
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01-11-2019, 07:05 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,533
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Quote:
Originally Posted by fh2000
I also looked up Hawaii:
Retirement Income Taxes: Social Security, first tier Railroad Retirement benefits, military, federal, state/local, and some private pensions are exempt. All out-of-state government pensions are exempt. Also, employer-funded pension plans are exempt. Distributions from private employer pension plans received upon retirement are partially taxed by the state if the employee contributed to the pension plan.
Maybe what you described in Hawaii is what is highlighted portion.
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My former boss was also a paid tax preparer for Hawaii and Federal returns. He said "Company contributions would not be taxed by Hawaii. They would be considered payment for past services calculated as a percentage of the distribution." Sorry, CA is a tax-heavy state, for sure! I lived there most of my life, then moved back briefly to Monterey...I was shocked when I bought a new car there!
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01-11-2019, 08:29 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,307
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Quote:
Originally Posted by jazz4cash
+1
It's not an either/or decision. You can have both! Leave enough in the 401k to take advantage of whatever funds/features that are better than Vanguard offers in their IRA option. Does the 401k have a good stable value option? Rollover enough to take advantage of whatever funds/features offered by Vanguard that are not available within the 401k.
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That entirely depends on the plan. Once retired, I can no longer withdraw anything or rollover anything from the 401k unless it is total. No partial withdrawals or rollovers any more (I could do them while employed). Right now I don't need the money in the 401k and the investment options are adequate so I am doing that. At some point, I may need to rollover to an IRA though so I can get more flexibility to split up the money. I have several years before I have to take RMDs.
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