Another 401K rollover question

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Topic Author
SVUS
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Another 401K rollover question

Post by SVUS »

I changed my employer on September 1 and have about $180K in 401K with them. The 401K plan is administered by Voya financial and I have following investments as of now in that 401K:
1. Fidelity 500 Index Fund - 40%
2. Fidelity Small Cap Index Fund - 10%
3. Fidelity U.S. Bond Index Fund - 20%
4. Fidelity Mid Cap Index Fund - 20%
5. Fidelity International Index Fund - 10%

My new employer's 401K is with TRowePrice. I have access to VGELX,VIMAX,VSMAX,FBKWX,FXAIX,FSGGX, TRowEprice target funds and couple of other funds.

I file MFJ and our income would be under $200K.
I also have traditional IRA and ROTH IRA with Fidelity. Me and my wife both contribute max to 401K every year. I am 45 years.

I have read through the posts here and the consensus appears to be to keep the money in 401K due to better creditor protection and backdoor Roth conversion abilities. However, I have been reading about a bill which may stop the backdoor conversion, so not sure if keeping money in 401K is still a better choice. Following are my questions:
1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
2. Should I move 401K from Voya to TRowePrice?
3. Or is it better to keep 401K at Voya and do nothing?

Thanks
MrJedi
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Re: Another 401K rollover question

Post by MrJedi »

Almost certainly not 1 unless your plans are atrocious which it doesn't sound like. Roth conversion is a separate question.

If the new plan options are similar or better in terms of options and fees, I would rollover to the new one.
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retiredjg
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Re: Another 401K rollover question

Post by retiredjg »

SVUS wrote: Sat Oct 16, 2021 1:36 pm1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
This one is easy....NO!

What is the point in deferring taxes just to turn around and pay what may be a higher rate of taxes on this money?

If you want to roll it into IRA, that's fine. Converting to Roth would be a poor choice in almost all circumstances.

2. Should I move 401K from Voya to TRowePrice?
This depends on the costs of the two plans. If the new plan has good choices with low costs, there is no reason to leave it where it is.

3. Or is it better to keep 401K at Voya and do nothing?
Again, depends on the costs of the two plans.
niagara_guy
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Re: Another 401K rollover question

Post by niagara_guy »

Would you please post the funds you are invested in at voya and the fees, including the aum fee (use the pencil icon to edit your post)? Here is a link to how to post, you don't need to post everything, just the funds. For your new 401k, please post the funds available using the same format.
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ruralavalon
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Re: Another 401K rollover question

Post by ruralavalon »

SVUS wrote: Sat Oct 16, 2021 1:36 pm I changed my employer on September 1 and have about $180K in 401K with them. The 401K plan is administered by Voya financial and I have following investments as of now in that 401K:
1. Fidelity 500 Index Fund - 40%
2. Fidelity Small Cap Index Fund - 10%
3. Fidelity U.S. Bond Index Fund - 20%
4. Fidelity Mid Cap Index Fund - 20%
5. Fidelity International Index Fund - 10%

My new employer's 401K is with TRowePrice. I have access to VGELX,VIMAX,VSMAX,FBKWX,FXAIX,FSGGX, TRowEprice target funds and couple of other funds.

I file MFJ and our income would be under $200K.
I also have traditional IRA and ROTH IRA with Fidelity. Me and my wife both contribute max to 401K every year. I am 45 years.

I have read through the posts here and the consensus appears to be to keep the money in 401K due to better creditor protection and backdoor Roth conversion abilities. However, I have been reading about a bill which may stop the backdoor conversion, so not sure if keeping money in 401K is still a better choice. Following are my questions:
1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
2. Should I move 401K from Voya to TRowePrice?
3. Or is it better to keep 401K at Voya and do nothing?

Thanks
There are many proposals in every session of Congress that do not become law. Most proposals don't become law. Don't decide anything based on a proposal to change the law.

If either the old or the new 401k plan offers good funds with low expense ratios then keep it in a 401k plan, either where it is or a rollover to the new 401k.

You have not stated the expense ratios for the funds you listed, but it looks like both the old and the new 401ks offer good funds with low expense ratios.

What funds in each plan would you use? Please give fund names, tickers, and expense ratios. Are any other fees charged the participants each plan?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Re: Another 401K rollover question

Post by LadyGeek »

SVUS wrote: Sat Oct 16, 2021 1:36 pm ...However, I have been reading about a bill which may stop the backdoor conversion, so not sure if keeping money in 401K is still a better choice.
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Topic Author
SVUS
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Re: Another 401K rollover question

Post by SVUS »

Thanks everyone for your response. I have been navigating through Voya website to find what other fee, they charge if I continue with my 401K plan, but couldn't find the details, so I would be calling the customer service on Monday to figure this out and provide the details here (with other expenses and fees).
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ruralavalon
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Location: Illinois

Re: Another 401K rollover question

Post by ruralavalon »

SVUS wrote: Sat Oct 16, 2021 1:36 pm I changed my employer on September 1 and have about $180K in 401K with them. The 401K plan is administered by Voya financial and I have following investments as of now in that 401K:
1. Fidelity 500 Index Fund - 40%
2. Fidelity Small Cap Index Fund - 10%
3. Fidelity U.S. Bond Index Fund - 20%
4. Fidelity Mid Cap Index Fund - 20%
5. Fidelity International Index Fund - 10%

My new employer's 401K is with TRowePrice. I have access to Vanguard Energy Fund Admiral Shares VGELX, Vanguard Mid-Cap Index Fund Admiral Shares VIMAX, Vanguard Small-Cap Index Fund Admiral Shares VSMAX, Fidelity Advisor Total Bond Fund - Class Z FBKWX, Fidelity® 500 Index FXAIX, Fidelity® Global ex U.S. Index Fund FSGGX, TRowEprice target funds and couple of other funds.

I file MFJ and our income would be under $200K.
I also have traditional IRA and ROTH IRA with Fidelity. Me and my wife both contribute max to 401K every year. I am 45 years.

I have read through the posts here and the consensus appears to be to keep the money in 401K due to better creditor protection and backdoor Roth conversion abilities. However, I have been reading about a bill which may stop the backdoor conversion, so not sure if keeping money in 401K is still a better choice. Following are my questions:
1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
2. Should I move 401K from Voya to TRowePrice?
3. Or is it better to keep 401K at Voya and do nothing?

Thanks
Please use both fund names and ticker symbols, not just ticker symbols alone. Don't make members who want to help you have to look up what you are talking about.

It depends almost entirely on expenses and funds offered; expense information is not provided in your post. Often an employer plan charges a different expense ratio than is charged the general public for the identical fund.

There are three basic choices.

1) If the funds offered in the old 401k are good with low expense ratios, and there is no account maintenance fee charged for keeping the account there or only a small fee, then it may be best to leave the old 401k where it is.

2) If the new 401k offers similar or better funds with similar or lower expense ratios, and will accept a rollover from the old 401k, then it may be best to roll the old 401k over into the new 401k.

3) If neither 401k offers good funds with low expense ratios then it may be best to roll the old 401k over to an IRA at a low cost fund provider like Vanguard, Fidelity or Schwab.

Wiki article, 401k, ”Rollover to IRA".

Additional considerations include:

1) the convenience of having one fewer account to keep track and manage, if you move the old 401k into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA, which may be an important consideration for higher income individuals, and

3) a 401k allows earlier distributions penalty free starting at age 55 (versus age 59.5 for an IRA) if no longer employed by the employer offering the plan.
Wiki article, 401k, "Move to new 401k".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
an_asker
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Re: Another 401K rollover question

Post by an_asker »

SVUS wrote: Sat Oct 16, 2021 1:36 pm [...]
1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
2. Should I move 401K from Voya to TRowePrice?
3. Or is it better to keep 401K at Voya and do nothing?

Thanks
Insufficient information. That one 401(k) cannot be your only 401(k)/IRA currently out there. Am I right?

In other words, if all you have is the $200k 401k, the suggestions would be different from what they would be if you had an additional $1 million in oher 401ks...
Topic Author
SVUS
Posts: 11
Joined: Sat Apr 07, 2018 6:03 pm

Re: Another 401K rollover question

Post by SVUS »

an_asker wrote: Mon Oct 18, 2021 10:32 am
SVUS wrote: Sat Oct 16, 2021 1:36 pm [...]
1. Should I move 401K from Voya to an IRA and then convert to Roth immediately after the transfer?
2. Should I move 401K from Voya to TRowePrice?
3. Or is it better to keep 401K at Voya and do nothing?

Thanks
Insufficient information. That one 401(k) cannot be your only 401(k)/IRA currently out there. Am I right?

In other words, if all you have is the $200k 401k, the suggestions would be different from what they would be if you had an additional $1 million in oher 401ks...
This is my only 401K, I don't have any other 401K. I have $70,000 in traditional IRA at Fidelity and $12,000 in a Roth IRA at fidelity.
Topic Author
SVUS
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Re: Another 401K rollover question

Post by SVUS »

Thanks for all the replies.
The expense ratio of Fidelity funds at Voya and most Fidelity and Vanguard funds at TRowePrice is under .10%. However Voya has annual operating expenses as a % of funds. For me this amounts to about $350 per year. TRowePrice does not have operating expenses but charges $20.5 per quarter for plan administration. So I think its better to rollover my 401K to TRowePrice.

Following are the expense ratios at Voya and TRowePrice:

Voya
Fund Name Ticker Expense Ratio(%)
Fidelity US Bond Index Fund FXNAX 0.03
Fidelity 500 Index Fund FXAIX 0.02
Fidelity Small Cap Index Fund FSSNX 0.03
Fidelity Mid Cap Index Fund FMCSX 0.03
Fidelity International Index Fund FSPSX 0.04

TRowePrice
Fund Name Ticker Expense Ratio(%)
Fidelity 500 Index Fund FXAIX 0.02
Fidelity Global Ex US Index Fund FSGGX 0.07
Vanguard Mid-Cap Index Adm VIMAX 0.05
Vanguard Small Cap Index Adm VSMAX 0.05
Fidelity Adv Total Bond Z FBKWX 0.40
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ruralavalon
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Re: Another 401K rollover question

Post by ruralavalon »

SVUS wrote: Wed Oct 20, 2021 8:16 pm Thanks for all the replies.
The expense ratio of Fidelity funds at Voya and most Fidelity and Vanguard funds at TRowePrice is under .10%. However Voya has annual operating expenses as a % of funds. For me this amounts to about $350 per year. TRowePrice does not have operating expenses but charges $20.5 per quarter for plan administration. So I think its better to rollover my 401K to TRowePrice.

Following are the expense ratios at Voya and TRowePrice:

Voya
Fund Name Ticker Expense Ratio(%)
Fidelity US Bond Index Fund FXNAX 0.03
Fidelity 500 Index Fund FXAIX 0.02
Fidelity Small Cap Index Fund FSSNX 0.03
Fidelity Mid Cap Index Fund FMCSX 0.03
Fidelity International Index Fund FSPSX 0.04

TRowePrice
Fund Name Ticker Expense Ratio(%)
Fidelity 500 Index Fund FXAIX 0.02
Fidelity Global Ex US Index Fund FSGGX 0.07
Vanguard Mid-Cap Index Adm VIMAX 0.05
Vanguard Small Cap Index Adm VSMAX 0.05
Fidelity Adv Total Bond Z FBKWX 0.40
I think rollover into the new employer's 401k plan using T. Rowe Price is the right choice. In addition to the lower fees for operating expenses/administration, T. Rowe Price offers a more diversified international stock fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
an_asker
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Re: Another 401K rollover question

Post by an_asker »

ruralavalon wrote: Thu Oct 21, 2021 5:48 am
SVUS wrote: Wed Oct 20, 2021 8:16 pm Thanks for all the replies.
The expense ratio of Fidelity funds at Voya and most Fidelity and Vanguard funds at TRowePrice is under .10%. However Voya has annual operating expenses as a % of funds. For me this amounts to about $350 per year. TRowePrice does not have operating expenses but charges $20.5 per quarter for plan administration. So I think its better to rollover my 401K to TRowePrice.
[...]
I think rollover into the new employer's 401k plan using T. Rowe Price is the right choice. In addition to the lower fees for operating expenses/administration, T. Rowe Price offers a more diversified international stock fund.
+1! I would do this on fees alone, regardless of the international stock fund option.
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