Hi all!
Long time reader, first time poster, love all the advice given on here (especially the book recommendations).
My current company 401k is with John Hancock, new company 401k is with Schwab.
I want to do a direct rollover, however I cannot seem to figure out what my investment options will be with Schwab (even the rep on the phone stated he couldn't give me a list).
Anyone have their 401k with Schwab?
I mostly just want to know if the expense ratios for investments within the Schwab 401k are so high that I should just go with a Vanguard rollover IRA instead.
Any info would be much appreciated,
Thanks!
Schwab 401k vs Vanguard IRA
- in_reality
- Posts: 4529
- Joined: Fri Jul 12, 2013 6:13 am
Re: Schwab 401k vs Vanguard IRA
I don't have a 401k, but I do hold many of Schwab's ETFs (great expense ratios) and know Schwab offered one of the first super low cost 401k ETF plans. They also have low cost index mutual funds plan.
So it is highly likely there are some really good low cost options available to you. If you are in the Index Advantage ETF 401k, then you probably will be in the .15% ER range and there may be some fee for advisory services (1). For the ETF plan, I believe that (advisory services) was optional but you are automatically enrolled and have to opt out.(2) The Index Advantage mutual funds program was a few basis points higher but still quite reasonable.
http://pressroom.aboutschwab.com/press- ... comes-firs
(1) there are 80 low-cost index exchange-traded funds that Schwab Retirement Plans Services, Inc., makes available under the platform. The funds represent more than 25 asset categories from major providers including Charles Schwab Investment Management, ETF Securities, First Trust, Guggenheim Investments, Invesco PowerShares, iShares ETFs, PIMCO, State Street Global Advisors, Van Eck Global, Vanguard and United States Commodity Funds
(2) The index mutual fund version of Schwab Index Advantage was launched in 2012 and includes an automatic enrollment feature for the managed account advisory service ... 85% stay enrolled. I assume the ETF plan works similarly
So it is highly likely there are some really good low cost options available to you. If you are in the Index Advantage ETF 401k, then you probably will be in the .15% ER range and there may be some fee for advisory services (1). For the ETF plan, I believe that (advisory services) was optional but you are automatically enrolled and have to opt out.(2) The Index Advantage mutual funds program was a few basis points higher but still quite reasonable.
http://pressroom.aboutschwab.com/press- ... comes-firs
(1) there are 80 low-cost index exchange-traded funds that Schwab Retirement Plans Services, Inc., makes available under the platform. The funds represent more than 25 asset categories from major providers including Charles Schwab Investment Management, ETF Securities, First Trust, Guggenheim Investments, Invesco PowerShares, iShares ETFs, PIMCO, State Street Global Advisors, Van Eck Global, Vanguard and United States Commodity Funds
(2) The index mutual fund version of Schwab Index Advantage was launched in 2012 and includes an automatic enrollment feature for the managed account advisory service ... 85% stay enrolled. I assume the ETF plan works similarly
Re: Schwab 401k vs Vanguard IRA
Your company is required to supply you with information about what is available and what the costs are. Talk to them.
Link to Asking Portfolio Questions
Re: Schwab 401k vs Vanguard IRA
Hello tnvmv2 and welcome,
A few questions that come to mind are: Do you have to do this direct rollover now?
Do you have some time to do it?
How much time from now do you have to wait to be able to participate in the new 401K?
Reasons: You may be able to leave the old 401k with old employer for a bit while all is figured out with the new plan
A few questions that come to mind are: Do you have to do this direct rollover now?
Do you have some time to do it?
How much time from now do you have to wait to be able to participate in the new 401K?
Reasons: You may be able to leave the old 401k with old employer for a bit while all is figured out with the new plan
Re: Schwab 401k vs Vanguard IRA
Thanks for the help so far everyone, to answer your questions:jmndu99 wrote:Hello tnvmv2 and welcome,
A few questions that come to mind are: Do you have to do this direct rollover now?
Do you have some time to do it?
How much time from now do you have to wait to be able to participate in the new 401K?
Reasons: You may be able to leave the old 401k with old employer for a bit while all is figured out with the new plan
Do you have to do this direct rollover now? Within the next 30 days
Do you have some time to do it? 30 days
How much time from now do you have to wait to be able to participate in the new 401K? I can start contributing on day one on employment (July 1st)
Holding my 401k at my current custodian was my first choice, however this is not an option, the company I currently work for (until June 30th) is dissolving completely.
I called Schwab and they cannot give me any information regarding the new company's 401k investment options until I am "in their system," so I will wait until that process completes to find what options I have and then decide. Most signs are pointing to Vanguard IRA.
Thanks!
Re: Schwab 401k vs Vanguard IRA
Well, you will have a little bit of time after you are "in the system" of the new job. But be sure to jump right on that - if you don't make a choice about your money, John Handcock may just roll it into their own IRA and you might have to pay a closing fee to get out.
My guess is that Schwab will have some decent choices, but you already know what you'll get at VG.
My guess is that Schwab will have some decent choices, but you already know what you'll get at VG.
Link to Asking Portfolio Questions
Re: Schwab 401k vs Vanguard IRA
What does your income look like with respect to IRA contribution limits? If you ever plan on doing a backdoor into a Roth IRA it would be much easier if you were able to roll the 401k to your new 401k.
Re: Schwab 401k vs Vanguard IRA
Our income (wife and I) prevent us from directly contributing to a Roth IRA, so we have been utilizing the backdoor Roth for years now, and plan on continuing.noktem wrote:What does your income look like with respect to IRA contribution limits? If you ever plan on doing a backdoor into a Roth IRA it would be much easier if you were able to roll the 401k to your new 401k.
Would a one-time 401k -> IRA rollover prevent us from doing it this year? Or make it much more complicated?
If that's the case, then I need to figure out which is better for us in the long run, Schwab's higher ER's for the 401k, or the lost ability to do a backdoor Roth.
Any thoughts?
Re: Schwab 401k vs Vanguard IRA
You are allowed to rollover all you want, but anything in tIRA on 12/31 will be included in the calculations for any Roth Conversion or back door contribution to Roth IRA that you did in that year. This would apply only to you. If your spouse doesn't have other IRAs, the back door could go on as in the past.tnvmv2 wrote:Our income (wife and I) prevent us from directly contributing to a Roth IRA, so we have been utilizing the backdoor Roth for years now, and plan on continuing.
Would a one-time 401k -> IRA rollover prevent us from doing it this year? Or make it much more complicated?
I don't know. I don't recall anyone running numbers on this, but someone could have. But at this point, you don't know if the schwabs ERs are higher or not, do you? And even if they are higher, if they still fall into the low cost range, I'd probably want to do the back door. But opinions might vary on this.If that's the case, then I need to figure out which is better for us in the long run, Schwab's higher ER's for the 401k, or the lost ability to do a backdoor Roth.
Any thoughts?
Link to Asking Portfolio Questions