Previous employer Rollover

[SSMRI74]

Ok, I’ve been at my new job for almost 4 years and have been hesitant to rollover my 401k to my new job due to their lack of fund choices. They have only one Vanguard index fund choice and the rest are mutual and target date funds.

My question is should I roll over to my present employer plan or open up a vanguard or fidelity account and rollover there? I was there for almost 18 years and has about 500k.

Thanks everyone in advance for your important

Scott

 

[DrRoy]

Fido rollover.

 

[SSMRI74]

Thank you, also Any less security or risk with that money not being in a employer plan?

 

[njhowie]

Does the old and/or new employer plan offer a stable value fund? If so, it may be worth consideration. Other than that, Fidelity is the way to go.

 

[PaunchyPirate]

First off, you likely don't have to do anything with the 401k if you don't want. If the previous employer's 401k has good investment options, you're usually permitted to keep your money in that plan as long as you have more than a minimal amount in the account, which it sounds like you do.

Or you may prefer to sever all ties with the former employer. In that case rolling the 401k to either Fidelity or Vanguard as a Rollover IRA seems like the thing to do if your current 401k investment options are not acceptable to you.

I rolled mine over to a Vanguard IRA and have no regrets. I'm sure Fidelity would have been good too.

 

[SSMRI74]

These are previous employer funds

 

[SSMRI74]

Current employer funds

 

[SSMRI74]

First off, you likely don't have to do anything with the 401k if you don't want. If the previous employer's 401k has good investment options, you're usually permitted to keep your money in that plan as long as you have more than a minimal amount in the account, which it sounds like you do.

Or you may prefer to sever all ties with the former employer. In that case rolling the 401k to either Fidelity or Vanguard as a Rollover IRA seems like the thing to do if your current 401k investment options are not acceptable to you.

I rolled mine over to a Vanguard IRA and have no regrets. I'm sure Fidelity would have been good too.

Awesome thank you for the input, I listed my options thanks again

 

[SSMRI74]

Fido rollover.

Thanks [emoji1360]

 

[pb4uski]

Ok, I’ve been at my new job for almost 4 years and have been hesitant to rollover my 401k to my new job due to their lack of fund choices. They have only one Vanguard index fund choice and the rest are mutual and target date funds.

My question is should I roll over to my present employer plan or open up a vanguard or fidelity account and rollover there? I was there for almost 18 years and has about 500k.

Thanks everyone in advance for your important

Scott

Unless your former employer offers a good stable value fund, I would roll over the former employer 401k to a traditional IRA. If you don't already have a tIRA, then Vanguard or Fidelity or Schwab are good choices.

A reason for rolling it over to your new employer is if you plan to retire after 55 but before 59 1/2 .... you can take advantage of the rule of 55 to have penalty free withdrawals with a 401k but not with a tIRA. But OTOH, its a moot point as long as you have more than 4 1/2 years worth of withdrawals in the 401k or you can always transfer tIRA money to your 401k if you need to and your 401k plan allows it.

 

[teetee]

You shouldn't roll over your 401k to your current employer sponsored 401k. You should roll it over to a rollover/traditional IRA and then in most cases convert all balance in that IRA account to Roth IRA in 5 annual conversions before retirement.

This way you take total control of your retirement account with more fund selections, no more 401k admin fee which has incurred for the past 4 yrs since you left the previous employer, and with Roth IRA you don't have to worry around RMD in your retirement.

Be prepared with some tax liability when you do the tIRA to Roth conversion for that 5 years.

I had a couple of 401k and have a Roth 401k from my work and they will all eventually go into the same Roth IRA account. When I retire, there will be just one Roth IRA, one HSA, one 529, one taxable account, and a bank checking account.

If I can consolidate them further, I would. I don't want to confuse myself if I don't have to.

 

[pb4uski]

You shouldn't roll over your 401k to your current employer sponsored 401k. You should roll it over to a rollover/traditional IRA and then in most cases move to Roth IRA in 5 annual conversion before retirement. ....

I agree with the first part on rolling over your 401k money to a tIRA but totally disagree with the advice to convert it to Roth while you are still working.

That is foolish because you will pay much more in tax on the conversion because the Roth conversion is added to your employment earnings. The wiser play is to do Roth conversions after you retire when you don't have earnings anymore and are in a lower tax bracket... ideally before other retirement income streams like pensions, SS or RMDs start.

I've done a lot of Roth conversions since I retired and paid on average less than 9% of the amounts converted in tax... if I had taken teetee's advice and converted in the 5 years before I retired I would have paid 28% or more!

 

[SSMRI74]

I agree with the first part on rolling over your 401k money to a tIRA but totally disagree with the advice to convert it to roth while you are still working.

That is foolish because you will pay much more in tax on the conversion because the Roth conversion is added to your employment earnings. The wiser play is to do Roth conversions after you retire when you don't have earnings anymore and are in a lower tax bracket... ideally before other retirement income streams like pensions, SS or RMDs start.

I've done a lot of Roth conversions since I retired and paid on average less than 9% of the amounts converted in tax... if I had taken teetee's advice and converted in the 5 years before I retired I would have paid 28% or more!

Thanks everyone for all he advice.
I do not have a traditional IRA yet, only a Roth IRA. I do like the idea of using the 55 rule with my current employer.
I have to find out if they will allow me to do that. I’ve got about 8 years to go.

 

[N02L84ER]

If you are maxing out your 401K and your income is too high to put money directly into your Roth, you may be interested in doing backdoor Roth conversions. You will not want to rollover the previous employers 401K money in that case. Otherwise, I would vote for a rollover to an IRA.

 

[teetee]

I agree with the first part on rolling over your 401k money to a tIRA but totally disagree with the advice to convert it to Roth while you are still working.

That is foolish because you will pay much more in tax on the conversion because the Roth conversion is added to your employment earnings. The wiser play is to do Roth conversions after you retire when you don't have earnings anymore and are in a lower tax bracket... ideally before other retirement income streams like pensions, SS or RMDs start.

I've done a lot of Roth conversions since I retired and paid on average less than 9% of the amounts converted in tax... if I had taken teetee's advice and converted in the 5 years before I retired I would have paid 28% or more!

That was my fault. I meant to say finish the IRA to Roth conversion before RMD kicks in(72). Somehow in my mind that is everyone's retirement age.

Yes if course the cheapest conversion should be donein the years when the earned income is the lowest (during unemployment or retirement).

 

[pb4uski]

We all have the occasional brain-fart.

 

[CardsFan]

Glad to know I am not the only person to use that expression. And I have them every day.

We all have the occasional brain-fart.