401(k) rollover decision to be made

[ajs56]

Thanks for the replies, I will check on IRA law in Michigan!

 

[pb4uski]

Are 401ks treated differently than IRAs with regards to lawsuits?

Yes. IRAs vary by state. See IRA Asset Protection | Self Directed IRA | IRA Creditor Protection | IRA Bankruptcy Protection | www.irafinancialgroup.com or Protection From Creditors for Retirement Plan Assets

 

[SumDay]

While I understand your reasoning, don't be short sighted - there can be some situations where it is better to leave the 401k with the employer - for example, if the employer 401k happens to offer a good stable value fund or access to other good funds not available to retail investors.

Again, as mentioned, a 401(k) is safe from lawsuits. Speaking from experience, it's a small price to pay to have that money "protected". There are some crazy people out there.

 

[Walt34]

having had my 401k trapped in the maze of procedures and paper work when my company fell on hard times and closed the 401k i would say never leave money in a 401k with an ex employer if you do not have to.

I saw that happen to a bunch of guys that I worked with. The former company went BK and it took years and thousands in attorney fees to get access to their 401ks. That's why when I left my 401k was rolled to an IRA within a few days.

But it depends on the company. I'd feel comfortable leaving my money in a 401k at stable company, say Coca-Cola or General Electric.

 

[mathjak107]

or any of the other dow stocks that are no longer around.

 

[explanade]

I was thinking of keeping my 401k account rather than rolling over.

But they would charge $5 a quarter. And who knows if they would raise those fees later.

It's with Schwab.

Anyone else facing fees for maintaining 401k accounts?

 

[Rustward]

I was thinking of keeping my 401k account rather than rolling over.

But they would charge $5 a quarter. And who knows if they would raise those fees later.

It's with Schwab.

Anyone else facing fees for maintaining 401k accounts?

Just curious: Is that $5/quarter factoring into your decision?

 

[ziggy29]

Again, as mentioned, a 401(k) is safe from lawsuits. Speaking from experience, it's a small price to pay to have that money "protected". There are some crazy people out there.

Yes, a 401K is fully protected by federal law because (unlike an IRA) it is considered a pension plan, and federal pension laws protect 401K assets from lawsuits just as they protect defined benefit plans.

IRAs have various levels of protection from state to state. Texas, Florida and Oklahoma have the highest level of asset protection for IRAs, essentially unlimited just as a 401K plan is.

 

[pb4uski]

I wouldn't sweat the $5/quarter. More important things to consider:

Investment choices, performance and expense ratios
Does the 401k have a good stable value fund that is not available in an IRA?
Potential for penalty free withdrawals if you left in or after the year you turned 55 if the plan allows it
Simplification of having everything in one spot
Treatment of IRA in a lawsuit in your state

In my case the better investment choices and lower expense ratios and simplification won out and i rolled my 401k over into my IRA.

 

[Rustward]

I wouldn't sweat the $5/quarter. More important things to consider:

Investment choices, performance and expense ratios
Does the 401k have a good stable value fund that is not available in an IRA?
Potential for penalty free withdrawals if you left in or after the year you turned 55 if the plan allows it
Simplification of having everything in one spot
Treatment of IRA in a lawsuit in your state

In my case the better investment choices and lower expense ratios and simplification won out and i rolled my 401k over into my IRA.

Just to be clear this is where I was headed with the question.

 

[Cat-tirement]

My 401k will charge $4-5 per month (based on some complicated formula) beginning a year after separation. I plan on keeping my 401k for a good long time. It has a number of institutional Vanguard funds that I couldn't get otherwise, and their lower expense rates more than make up for the administration fee. Plus there's the extra legal protection mentioned by others.

 

[explanade]

Yeah for right now, it's in VBTIX.

$5 shouldn't be a factor but I wonder about fee-creep, Schwab increasing it over time.

I forgot about the liability protection but instead was wary about having it not fully in my control. Yet having it in Schwab, which is the custodian for my employer, should be no less under my control than my Vanguard Flagship account.