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

[Murph]

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]

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]

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.

 

[Sirka]

401K Fees can also be excessive

When you leave it in an employers 401K plan, it can be embezzled, loans and withdrawals delayed, and more cumbersome all around. Fees can also be excessive. Investment options are more limited.

Put it in an IRA account, so all you have is your own signature to get it out.

Don't kid yourself by thinking that an employer plan at Fidelity is the same as an IRA at fidelity. The employer makes the rules, and sets the fees.

+1
Fees are unknown & IRA is easy to manage. I would go with IRA ASAP!

 

[kgtest]

Don't kid yourself by thinking that an employer plan at Fidelity is the same as an IRA at fidelity. The employer makes the rules, and sets the fees.

Sooo True! For example, I have a Workplace Schwab 401k plan with my employer, I own one single ETF in that SCHA. My employer and it's plan charge me a $15 quarterly "fee" to have this plan. So $60 a year fee to own a single ETF... while my own IRA (Individual Retirement Account) over at Schwab (notice the difference between WORKPLACE and INDIVIDUAL) charges me nothing, zilch, $0 to hold that EXACT SAME SCHA ETF.

I always ask for the information and details on the workplace 401k plan before I accept a job offer, my family depends on that knowledge I gain from that information to make the best financial decision. It is...what it is!

 

[Winemaker]

I left my 401k with my employer because of the legal protections and the Vanguard Institutional choices. I also have a $5 million umbrella policy, and several rentals, and in case I get sued for $10 million.

 

[kgtest]

I left my 401k with my employer because of the legal protections and the Vanguard Institutional choices. I also have a $5 million umbrella policy, and several rentals, and in case I get sued for $10 million.

Do tenants sue for $10MM and actually win?

 

[SumDay]

Do tenants sue for $10MM and actually win?

Not in my experience. He only sued for possession of the house (way < than $10MM), and my attorney provided by State Farm Umbrella policy took care of it in short order.

 

[pc95]

As some have mentioned, if you're employer does not choose to cover once you leave, you can get stuck with a quarterly fee -- ours came to $160/quarter which compelled us to move over to Fidelity's IRA which had the same funds without the quarterly fee. We had about a 60/40 mix of Roth/Traditional.

 

[Henry Lili]

As some have mentioned, if you're employer does not choose to cover once you leave, you can get stuck with a quarterly fee -- ours came to $160/quarter which compelled us to move over to Fidelity's IRA which had the same funds without the quarterly fee. We had about a 60/40 mix of Roth/Traditional.

Kept megacorp 401k for access to stable value fund, still paying north of 2%, as mentioned earlier. Fees to stay in 401k are a modest $10 a quarter.