Retired in September and still unsure of Where to rollover my 401K

[Montecfo]

I agree, but sometimes it is easier to do in-kind. Either way in the end if simplifying you will be selling the various old funds.

I prefer in-kind to avoid time out of market and avoid fees on the round trip, if applicable.

 

[euro]

I don't get the fixation on in-kind rollovers for tax-deferred accounts.... what does it matter? I have always just converted to cash in the old account, transferred cash to the new tIRA and then bought what I wanted to in the new tIRA.

Well, for the most part, I agree with you but cashing out DOES mean that you may be out of the market for several weeks, or even months, so there is a risk that you may miss a run-up (I know you may also luck out and miss a decline, but on the whole, the risk of missing the upswing is higher).

 

[Katoslake]

I just did a 401k rollover last week and it took 4 full business days to go to cash, transfer and then redeploy cash to mutual funds. All within Fido. Did have a portion in a stable value fund in 401k that couldn’t be moved as mentioned by a previous poster.

 

[TravelinFamilyMan]

It sounds like you have a lot going on with the retirement, so just take some time and set up a mtg with your work 401k administrator to answer a few questions before you leave:
1. Can I take withdrawals, and how often? How is this done?
2. Am I limited to the current investment options as when I was working? (Probably yes)
3. For potential rollover, do they allow in-kind, or do you need to first convert to cash?
4. What are administrative fees if you leave the money in the 401k program? These are different than the individual investment fund fees.

I have all my savings with Fidelity, and been happy with their support and service. I did a few rollovers to self-directed IRA from various old work 401k/403b accounts. Nice thing about Fidelity is if you are near one of their offices, you can meet with an advisor who can help you with all of the rollover paperwork. Essentially you bring in your work 401k paperwork, and fill out some paperwork at Fidelity, and they do all the work to complete the rollover. At your level of funds you meet Fidelity Private Client status, Fidelity will offer investment advisor services free, to help you with any questions and some recommendations for your portfolio. They won't provide specific investment choices, but they will talk about asset allocation (AA), risk tolerance, monthly income needs, upcoming RMDs, estate planning (general, not formal lawyer), and more. The advisors are certified financial planners (CFP) who can help you out. BTW, Fidelity will likely also give you some incentive to move your 401k to a Fidelity IRA. That incentive could be around $2500 range I have heard. They will also push for their paid FA services, but you don't have to take that. You can get the advisor for free, and still get good customer service and advice.

I believe you can do just fine as self-directed and not have to pay any FA fees. Keep it simple as the three fund type examples. Go with low fee widely diversified funds that match your desired AA. You can do it, especially with some initial help fro a Fidelity advisor. Or whatever company Vanguard, Schwab are both good alternatives. I just like the Fidelity sticks and bricks offices where I can go to get things done in-person. You can probably get your in-laws to review your plan for free or maybe for a small fee if you want second opinion. Or discuss it here on E-R.org and you can get some great advice.

This is great advice. I've been with Fidelity for about 10 years with their Preferred Client group. Our advisor used to help us rebalance once a year and we paid no additional fees. She left last year and our new advisor is pushing their wealth management services at between .6 and .7 percent of assets. They claim their investments are invested based on cycles of the economy and put you into specific funds that have higher expenses! Decided to just use Bogleheads 3 fund portfolio and adjust yearly based on our desired AA. This has been easy so far and allows you to simplify and pay attention to your holdings among other benefits.

 

[FDC319]

Purely anecdotal example. I've been with Fidelity and Vanguard for years. I just retired and started the process to roll over my TSP(Fed/Mil 401K).

Due to the complexity of the TSP's withdrawal forms, I wanted to roll to Fidelity. I assumed I could simply go to their office after scheduling an appointment, complete the forms, and then fax to the TSP on the spot. Nope-the two offices within a two hour drive from my house are closed for all in person services. I could drop the forms off in their drop box and they would mail to me. Kind of defeats the purpose of them having an office.

I mailed the TSP rollover to Vanguard yesterday. I'm a fan of their active funds anyways.

 

[TravelinFamilyMan]

Oh forgot to mention that Fidelity offices have been closed here in Illinois since March too. We have met using Zoom though. Only thing you can do is drop off forms as the other poster mentioned.

 

[imnontrad]

Do you have company stock in that 401K?
If so, instead of rolling it over, you can remove it completely to your taxable portfolio as a NUA. You pay income tax on the cost basis only. You do not pay taxes on the appreciated value until you sell the stock - and at the lower capital gains rate (or keep it forever and let your heirs get the stepped up basis). In addition to saving on taxes, you will also reduce the amount in a pre-tax retirement account - meaning smaller RMDs.
Before you invest, research the "three bucket strategy" to retirement funds. That may change how you invest. (And look at low cost index funds).

 

[themillerman]

First, congratulations on your retirement. I retired at 58 in 2012 after 36 years with the same company so I can kinda relate to your perspective. I rolled over my 401k and the lump sum pension I opted for in lieu of lifetime pension payments from my employer to Vanguard. Just be sure wherever you move your funds that you definitely roll over the funds directly to a custodian and "do not" take possession of the funds or you will receive a very nasty tax surprise. You probably already knew that if you've spoken previously to a financial advisor.

When you roll over the 401k to a custodian such as Vanguard, you do not have to immediately invest the funds. The funds can and will initially be placed in a Money Market Settlement account and you can leave them in that account until you have spoken with an advisor and do your own research. You can then invest gradually into ETFs or Mutual Funds, etc. Also, there is no fee if you choose your own AAs but if you want their ongoing management, it is .3%, much less than the 1% you mentioned.

Best wishes on your retirement. Have some fun!

 

[dixter]

to the OP... after reading every ones advice if you weren't confused before then you should be with all of the answers given out here....

You mentioned Fidelity or Vanguard... you can use Fidelity to invest in Vanguard also... so no big deal there..

When you get ready to do the Roll over, if you choose fidelity, all that will happen is they will create an Roll over IRA account for you.. in the account there is going to be a FDRxx Fidelity Government Cash Account.. that is a money market account where the cash will reside... when you choose to purchase your investments, the funds will come from that money market account.. the money market account will pay a dividend but it is very small.. just look at it as a checking account that pays a little...

you should see if you can get them to create the roll over IRA account as soon as they can, then if you get the 401K check in the mail you will want to either send it in the mail or take the check by one of their offices...

once they cash your check you will see the funds in the Roll Over IRA and its all applied to the money market account in it...

if you plan on doing withdraws on that account you will also want to setup the transfer method... they can link your bank account or you can also setup a debt card... I think the bank account link is the fastest way to make a transfer...

If you go with Fidelity then I would suggest you log onto their website and go thru all of the options the best you can.. understand the tabs under News & Research ... there you will find " Fixed Income, Bonds and CD's " as a start...
Don't just hang out there... you should figure out how to look at the various investment options they have and there are so many..... but don't freak out and just take your time... if you are working with $1.4 mill then it could become a little over whelming at first... just take your time...

 

[ERhoosier]

I used to be a big Vanguard fan (40+ yr client), but I find their service has gone markedly downhill lately. And their expenses are no longer lowest in the industry. I still have some assets there only because my current employer's 401k program is there (yes I FAILED ER 7 yrs ago and went back to w$rk). Most of my $$ is at Schwab these days. Fees are low, excellent website support (inc individual bond services), and you have options from total self-management (basically free) to full advisor support (with fees, of course).

I agree 100% with moving your 401k away from your old employer. More choices and likely lower fees (since many employers subsidize employee 401k accts directly or indirectly).

With the pandemic expect most financial services to be 'virtual' these days, or at best by appointment only with masks/social distancing. Most seem to have temporarily closed most of their local offices. Around here, even local banks are drive-through or drop-box only these days (with only minor exceptions).

 

[dixter]

see if this will help you with your choices...

 

[Earlygirl]

My son told me about FZROX at Fidelity, which is a Total Stock Market Index Fund with a zero percent expense ratio. You may want to consider that for your stocks portion.

 

[dixter]

My son told me about FZROX at Fidelity, which is a Total Stock Market Index Fund with a zero percent expense ratio. You may want to consider that for your stocks portion.

Not bad... it did 20.5% last year...

 

[WhenIsItTime]

I like eTrade. Been with them for years. I don’t use their advisory services. The online, mobile platform and reporting are all good for DIY.

 

[Time2]

Well, for the most part, I agree with you but cashing out DOES mean that you may be out of the market for several weeks, or even months, so there is a risk that you may miss a run-up (I know you may also luck out and miss a decline, but on the whole, the risk of missing the upswing is higher).

To fund my sons Roth, I transferred money on 4/08/2019 from my Vanguard account to his Roth Brokerage account. On 3/18/2020 I again transferred money to his Roth. He noticed he never transferred the 2019 deposit into VTSAX. The error allowed him to buy in with a 22% discount from when I expected the money to move into VTSAX.
OK, good, but pay attention son!

 

[Dot57]

I am done with my investment management company. After a stellar year in the market I had a flat return on over $1M. The funds are all in Fidelity and mostly in rollover accounts. I don’t know how to go about breaking free and moving the $ into the ‘big 3’. I am concerned about any tax consequences.

 

[pb4uski]

Tax consequences are easy to assess. Obviously, none for tax-free Roth IRAs and HSAs or tax-deferred tIRAs as long as you do a trustee-to-trustee transfer or redeposit the money within 60 days and have no done a rollover in the last 12 months.

For taxable accounts, usually you can find your cost basis and unrealized gains online by logging into your account... but even if you have gains if you do an in-kind transfer from old brokerage to new brokerage then that would not be a taxable event.

Bottom line... in most cases tax consequences can easily be avoided.

 

[RetireBy90]

I have all my savings with Fidelity, and been happy with their support and service. I did a few rollovers to self-directed IRA from various old work 401k/403b accounts. Nice thing about Fidelity is if you are near one of their offices, you can meet with an advisor who can help you with all of the rollover paperwork. Essentially you bring in your work 401k paperwork, and fill out some paperwork at Fidelity, and they do all the work to complete the rollover. At your level of funds you meet Fidelity Private Client status, Fidelity will offer investment advisor services free, to help you with any questions and some recommendations for your portfolio. They won't provide specific investment choices, but they will talk about asset allocation (AA), risk tolerance, monthly income needs, upcoming RMDs, estate planning (general, not formal lawyer), and more. The advisors are certified financial planners (CFP) who can help you out. BTW, Fidelity will likely also give you some incentive to move your 401k to a Fidelity IRA. That incentive could be around $2500 range I have heard. They will also push for their paid FA services, but you don't have to take that. You can get the advisor for free, and still get good customer service and advice.

I moved my 401K and couple IRAs to Fidelity also. For IRAs since I was new with Fidelity I went into the local office and they helped with paperwork, and even called my old advisor to complete the transfer. My 401K was administered by Fido so that was easy. I think the 401K administrator did required paperwork and it was completed over the phone.
When doing a transfer normally existing assets are sold and the cash is transferred. With Fido it was deposited into a money market fund they call sweep account and then can be invested from there at your pace to get your allocation as you like. Took me several months to complete just cause I wanted to be slow and deliberate.
My DW is also not interested in managing our funds so I found a Fido advisor at no cost that she is comfortable with and will help with managing if I go first. I think finding an advisor for DW is important now.

 

[OldShooter]

I am done with my investment management company. After a stellar year in the market I had a flat return on over $1M. The funds are all in Fidelity and mostly in rollover accounts. I don’t know how to go about breaking free and moving the $ into the ‘big 3’. I am concerned about any tax consequences.

Easy peasy. Your new broker/custodian will have a form for you to fill out for each account you are moving. Very few decisions except whether you want the assets moved in kind or liquidated and the cash moved. Consult @pb4's post re tax consequences. If you opt for cash out make sure you will not be charged fees for selling, otherwise go for in-kind and do any selling after the transfer. Your new broker will contact the dear departed; you will have no direct dealings with them except possibly a phone call trying to talk you out of doing the deed. Decline politely, then hang up impolitely.

Sorry to hear about the bad year. On your equities, you should have been up at least 18% after fees.

 

[Dot57]

Since I’m no longer interested in an actively managed portfolio that charges a 1% fee, any advise on where to go for advisory help to make the change to the 3 index fund allocation? My current funds are at Fidelity. The ‘move’ seems so complicated. And of course I hate the thought of hurting my advisors feelings.

 

[OldShooter]

Since I’m no longer interested in an actively managed portfolio that charges a 1% fee, any advise on where to go for advisory help to make the change to the 3 index fund allocation? My current funds are at Fidelity. The ‘move’ seems so complicated. And of course I hate the thought of hurting my advisors feelings.

Your fears are totally unfounded. These books will give you all you need to know:

"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/

"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

The advisor? He is not your friend any more that a lawn maintainance guy is likely to be your friend. He is a hired hand. FA's work hard to be seen as friends because friends don't ask friends hard questions. Friends don't take their business away from friends, etc. There was a post here a couple of years ago, the poster told about an FA friend who frequently took him fishing on a nice boat. They drank together and enjoyed each others' company. The poster pulled his money from the FA and put it somewhere else. Never again was he invited to go fishing.

 

[RetireBy90]

Since I’m no longer interested in an actively managed portfolio that charges a 1% fee, any advise on where to go for advisory help to make the change to the 3 index fund allocation? My current funds are at Fidelity. The ‘move’ seems so complicated. And of course I hate the thought of hurting my advisors feelings.

I would have suggested that Fidelity was a good place. Is your advisor a Fidelity employee ? Are you unsure of what funds to use or how to sell and buy a different fund ? I did a transfer this morning with Fidelity on-line, just said to sell one fund and use proceeds to buy another, all one trade.
Sorry if I’m missing the complication, I don’t mean to gloss over what was to me a stressful move when I sold all the funds in my 401K and had to decide what funds to buy. It did get less stressful for me.

 

[OldShooter]

... Sorry if I’m missing the complication ...

My guess is that @Dot57 was using an advisor who in turn used Fido as a custodian. So the advisor would have had trading authority in the account(s) and @Dot57 wouln't have a direct Fido relationship. This is pretty common. It is big business for Fido, Schwab, and TDAmeritrade. Also a company most of us have never heard of: LPL Financial

 

[Dot57]

My funds are held at Fidelity but are managed by a 3rd party advisor who charges 1%. Is like to move all the funds into 3 index funds (still researching which ones). While I’ve ordered the recommended reads suggested by OldShooter (thank you), I’m wondering who can help me with the administrative aspects of setting up the index funds? Is it as simple as putting a call into Fidelity (assuming I choose their funds)?

 

[RetireBy90]

My funds are held at Fidelity but are managed by a 3rd party advisor who charges 1%. Is like to move all the funds into 3 index funds (still researching which ones). While I’ve ordered the recommended reads suggested by OldShooter (thank you), I’m wondering who can help me with the administrative aspects of setting up the index funds? Is it as simple as putting a call into Fidelity (assuming I choose their funds)?

I would suggest you open another Fido account and transfer from the current to the new one. Personally I would visit my local office to do this. As I mentioned, I did a similar move several years ago. The staff at the front desk took me to a computer in the lobby and walked me through the moves. My accounts were with another company, managed by a third party advisor. They helped open a new account for me then called the advisor to get the transfer started from his side. Being Fido to Fido it may be easier for you. I did have a 2 minute uncomfortable discussion with the advisor but that was it.

Just want to advise or encourage you that it seems daunting but it really isn’t. You can do this. You could wait for 3 months if you feel uncomfortable with the virus ?