Changed jobs - 401k rollover to IRA or to 401k?
Changed jobs - 401k rollover to IRA or to 401k?
Hey all,
Curious if it's generally better to convert the 401k from my last company to an IRA or if it's better to roll it to the new company's 401k? I have a good amount in the 401k now and have been rolling it over ever since 2 companies prior. I have some portion allocated as Roth 401k funds as well.
Any suggestions on the best way to move forward?
Curious if it's generally better to convert the 401k from my last company to an IRA or if it's better to roll it to the new company's 401k? I have a good amount in the 401k now and have been rolling it over ever since 2 companies prior. I have some portion allocated as Roth 401k funds as well.
Any suggestions on the best way to move forward?
Re: Changed jobs - 401k rollover to IRA or to 401k?
I would investigate the funds and expenses of the new 401K plan. If it is a good plan, I would roll over the pre-tax portion to the new 401K
I would roll over the Roth funds to a personal Roth.
I would roll over the Roth funds to a personal Roth.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Re: Changed jobs - 401k rollover to IRA or to 401k?
Thanks!
The plan I'd be rolling to is with Fidelity. Interestingly, the index fund choice they offer is Vanguard VIIIX Exp Ratio (Net) 0.02%
I have FSKAX and FSAIX in my Roth, Traditional and Taxable and the exp ratio for those is .015
The old plan I had State St S&P 500 Indx NL Cl K which has an exp ratio of .01 so it seems like that was more favorable actually.
In this case, would it be best just to roll my old/existing 401k to Traditional and Roth IRAs and start fresh with the new company's 401k?
I think I also have after-tax contributions in the old/existing 401k - do those just get converted to Roth?
Re: Changed jobs - 401k rollover to IRA or to 401k?
Vanguard Institutional Index (SP500) is a great fund. A half a basis point is just noise (Vanguard returns more than Fidelity from loaning out shares, so performance of the Vanguard fund may actually be better).
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Re: Changed jobs - 401k rollover to IRA or to 401k?
You could consider keeping everything in the old 401k if the funds and costs are beneficial. I believe that plans are required to let you stay if you have at least $5k in it, and many plans don’t charge any type of a surcharge for ex-employees.
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Re: Changed jobs - 401k rollover to IRA or to 401k?
The last time I changed jobs, I rolled my 401k over to an IRA after seeing the high fees and limited international fund options in my new job's 403b plan.
I wanted to go ex-China with my emerging markets allocation, so a self-directed rollover IRA allowed me to use EMXC (iShares Emerging Markets ex-China ETF) on the international side of my portfolio. At my new job I've put new contributions into VTSAX (had the lowest fees for any fund by a lot) and sold down US in the rollover IRA to maintain overall AA (now the rollover IRA is 66% international/emerging).
I'd do the rollover IRA if you need/want the flexibility.
I wanted to go ex-China with my emerging markets allocation, so a self-directed rollover IRA allowed me to use EMXC (iShares Emerging Markets ex-China ETF) on the international side of my portfolio. At my new job I've put new contributions into VTSAX (had the lowest fees for any fund by a lot) and sold down US in the rollover IRA to maintain overall AA (now the rollover IRA is 66% international/emerging).
I'd do the rollover IRA if you need/want the flexibility.
Age minus 10 in bonds/cash | 5% commodities | 50/50 US/Int Equity
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Re: Changed jobs - 401k rollover to IRA or to 401k?
jplee3 wrote: ↑Fri Oct 22, 2021 5:59 pm Hey all,
Curious if it's generally better to convert the 401k from my last company to an IRA or if it's better to roll it to the new company's 401k? I have a good amount in the 401k now and have been rolling it over ever since 2 companies prior. I have some portion allocated as Roth 401k funds as well.
Any suggestions on the best way to move forward?
Rollover of some kind should be the default preference, otherwise you may wind up with many small old 401k accounts. The average worker tenure at an employer is just 4-5 years, and employees on average have 12 employers during their working life. Employee Benefit Research Institute (EBRI), "The Good Old Days", link; and Bureau of Labor Statistics, FAQ.jplee3 wrote: ↑Fri Oct 22, 2021 6:25 pmThanks!
The plan I'd be rolling to is with Fidelity. Interestingly, the index fund choice they offer is Vanguard VIIIX Exp Ratio (Net) 0.02%
I have FSKAX and FSAIX in my Roth, Traditional and Taxable and the exp ratio for those is .015
The old plan I had State St S&P 500 Indx NL Cl K which has an exp ratio of .01 so it seems like that was more favorable actually.
In this case, would it be best just to roll my old/existing 401k to Traditional and Roth IRAs and start fresh with the new company's 401k?
I think I also have after-tax contributions in the old/existing 401k - do those just get converted to Roth?
A tiny difference in expense ratios is meaningless in this decision. Portfolio Visualizer, 2012-2021.
White Coat Investor, "Don’t Obsess About Expense Ratios".
What other funds are offered in each plan?
It depends almost entirely on expenses and funds offered. 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) (I think this is probably the best choice in your situation.) 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) (This apparently does not apply to your situation.) 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".
Last edited by ruralavalon on Sat Oct 23, 2021 10:42 am, edited 5 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: Changed jobs - 401k rollover to IRA or to 401k?
My default choice would be to roll into the new employer's 401K, provided they accept roll-ins from other plans and have good, low-expense funds available. Keeping the funds in the 401K allows you to make Roth conversions of any non-deductible IRA contributions you may have made to a Traditional IRA, and assets in employer plans generally enjoy superior asset protection properties than do assets in IRA's.
For more details about asset protection, you can read the Boglehead wiki at
https://www.bogleheads.org/wiki/Asset_protection
For more details about asset protection, you can read the Boglehead wiki at
https://www.bogleheads.org/wiki/Asset_protection
“Now shall I walk or shall I ride? |
'Ride,' Pleasure said; |
'Walk,' Joy replied.” |
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― W.H. Davies
Re: Changed jobs - 401k rollover to IRA or to 401k?
At this point I'm not planning on investing in much else outside a handful of funds at most (FSKAX, FSNAX, FSRNX between my tax-deferred and tax-exempt accounts) - so I'll probably keep most everything in those funds or equivalent funds at the moment. I guess it's a matter of if I'm good with going 'heavy' on VIIIX or if I should move stuff over to Fidelity and FSKAX (or FSAIX). The trade-off appears to be slightly better potential performance at a nominal cost opting for the former.Karlsefni wrote: ↑Fri Oct 22, 2021 9:05 pm The last time I changed jobs, I rolled my 401k over to an IRA after seeing the high fees and limited international fund options in my new job's 403b plan.
I wanted to go ex-China with my emerging markets allocation, so a self-directed rollover IRA allowed me to use EMXC (iShares Emerging Markets ex-China ETF) on the international side of my portfolio. At my new job I've put new contributions into VTSAX (had the lowest fees for any fund by a lot) and sold down US in the rollover IRA to maintain overall AA (now the rollover IRA is 66% international/emerging).
I'd do the rollover IRA if you need/want the flexibility.
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Re: Changed jobs - 401k rollover to IRA or to 401k?
The two S&P 500 index funds (VIIIX and FXAIX) have had an identical Compound Annual Growth Rate (CAGR), and the total stock market index fund (FSKAX) has had a lower (CAGR), the difference is immaterial. Portfolio Visualizer, 2012-2021.jplee3 wrote: ↑Sat Oct 23, 2021 10:52 amAt this point I'm not planning on investing in much else outside a handful of funds at most (FSKAX, FSNAX, FSRNX between my tax-deferred and tax-exempt accounts) - so I'll probably keep most everything in those funds or equivalent funds at the moment. I guess it's a matter of if I'm good with going 'heavy' on VIIIX or if I should move stuff over to Fidelity and FSKAX (or FSAIX). The trade-off appears to be slightly better potential performance at a nominal cost opting for the former.Karlsefni wrote: ↑Fri Oct 22, 2021 9:05 pm The last time I changed jobs, I rolled my 401k over to an IRA after seeing the high fees and limited international fund options in my new job's 403b plan.
I wanted to go ex-China with my emerging markets allocation, so a self-directed rollover IRA allowed me to use EMXC (iShares Emerging Markets ex-China ETF) on the international side of my portfolio. At my new job I've put new contributions into VTSAX (had the lowest fees for any fund by a lot) and sold down US in the rollover IRA to maintain overall AA (now the rollover IRA is 66% international/emerging).
I'd do the rollover IRA if you need/want the flexibility.
Last edited by ruralavalon on Sat Oct 23, 2021 11:07 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: Changed jobs - 401k rollover to IRA or to 401k?
Depending on the balance, it may be worthwhile to roll it over to an IRA and convert to low-cost ETFs. That makes it portable and you can move it around to get new account bonuses at multiple brokers.
Check out the offers listed at Doctor Of Credit (and in a related thread in Bogleheads' personal finance forum) to see if the requirements and benefits (minimum balances, hold times and bonuses) make it worthwhile for you. It has been for us. DW and I have gotten $1,000s in the past couple of years moving money to Chase, Citi, Merrill Edge and E-Trade. Our next potential bonus is Ally or Schwab but I don't want to lock up our funds for the year hold they both require.
Edit to add: be sure it's characterized as a rollover IRA and keep all rolled-over funds in accounts separate from contributed funds. You can't roll traditional contributed (not rolled-over) IRA funds into an employer plan.
Check out the offers listed at Doctor Of Credit (and in a related thread in Bogleheads' personal finance forum) to see if the requirements and benefits (minimum balances, hold times and bonuses) make it worthwhile for you. It has been for us. DW and I have gotten $1,000s in the past couple of years moving money to Chase, Citi, Merrill Edge and E-Trade. Our next potential bonus is Ally or Schwab but I don't want to lock up our funds for the year hold they both require.
Edit to add: be sure it's characterized as a rollover IRA and keep all rolled-over funds in accounts separate from contributed funds. You can't roll traditional contributed (not rolled-over) IRA funds into an employer plan.
Last edited by spammagnet on Sat Oct 23, 2021 11:44 am, edited 2 times in total.
Re: Changed jobs - 401k rollover to IRA or to 401k?
ruralavalon wrote: ↑Sat Oct 23, 2021 10:26 amjplee3 wrote: ↑Fri Oct 22, 2021 5:59 pm Hey all,
Curious if it's generally better to convert the 401k from my last company to an IRA or if it's better to roll it to the new company's 401k? I have a good amount in the 401k now and have been rolling it over ever since 2 companies prior. I have some portion allocated as Roth 401k funds as well.
Any suggestions on the best way to move forward?Rollover of some kind should be the default preference, otherwise you may wind up with many small old 401k accounts. The average worker tenure at an employer is just 4-5 years, and employees on average have 12 employers during their working life. Employee Benefit Research Institute (EBRI), "The Good Old Days", link; and Bureau of Labor Statistics, FAQ.jplee3 wrote: ↑Fri Oct 22, 2021 6:25 pmThanks!
The plan I'd be rolling to is with Fidelity. Interestingly, the index fund choice they offer is Vanguard VIIIX Exp Ratio (Net) 0.02%
I have FSKAX and FSAIX in my Roth, Traditional and Taxable and the exp ratio for those is .015
The old plan I had State St S&P 500 Indx NL Cl K which has an exp ratio of .01 so it seems like that was more favorable actually.
In this case, would it be best just to roll my old/existing 401k to Traditional and Roth IRAs and start fresh with the new company's 401k?
I think I also have after-tax contributions in the old/existing 401k - do those just get converted to Roth?
A tiny difference in expense ratios is meaningless in this decision. Portfolio Visualizer, 2012-2021.
White Coat Investor, "Don’t Obsess About Expense Ratios".
What other funds are offered in each plan?
It depends almost entirely on expenses and funds offered. 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) (I think this is probably the best choice in your situation.) 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) (This apparently does not apply to your situation.) 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".
Thanks!!
So in terms of other funds, besides a bunch of target date funds, there are these:
Name/Inception Date Asset Class Category Gross Expense Ratio** Shareholder Fees
FID GROWTH CO POOL
12/13/2013
Stock Investments Large Cap 0.43% No additional fees apply.
VANG INST INDEX PLUS (VIIIX)
07/31/1990
Stock Investments Large Cap 0.02% No additional fees apply.
VANG MIDCAP IDX INST (VMCIX)
05/21/1998
Stock Investments Mid-Cap 0.04% No additional fees apply.
NB GENESIS R6 (NRGSX)
09/27/1988
Stock Investments Small Cap 0.75% No additional fees apply.
VANG SM CAP IDX INST (VSCIX)
10/03/1960
Stock Investments Small Cap 0.04% No additional fees apply.
DODGE & COX INTL STK (DODFX)
05/01/2001
Stock Investments International 0.63% No additional fees apply.
MFS INTL GROWTH R6 (MGRDX)
10/24/1995
Stock Investments International 0.72% No additional fees apply.
FID BALANCED K (FBAKX)
11/06/1986
Blended Fund Investments* N/A 0.44% No additional fees apply.
VANG RET SAV TR IV
01/03/1989
Bond/Managed Income Stable Value 0.35% No additional fees apply.
PIM TOTAL RT INST (PTTRX)
05/11/1987
Bond/Managed Income Income 0.47% No additional fees apply.
VANG TOT BD MKT INST (VBTIX)
12/11/1986
Bond/Managed Income Income 0.035% No additional fees apply.
VIIIX would, I think, be the most 'equivalent' fund to what I have now. Old 401k plan uses State Street's Index K S&P 500 fund and I have everything invested in that at the moment.
Re: Changed jobs - 401k rollover to IRA or to 401k?
Would really depend on the funds available and fees to me. I already know my IRA has lower fees than my work retirement account.
Re: Changed jobs - 401k rollover to IRA or to 401k?
backpacker61 wrote: ↑Sat Oct 23, 2021 10:38 amKeeping the funds in the 401K allows you to make Roth conversions of any non-deductible IRA contributions you may have made to a Traditional IRA[/url]
In my case, I've been maxing out our Roth IRAs YOY while having the 401k. We're not below the maximum salary level for making deductible IRA contributions to a tIRA, otherwise I would consider doing that.
Can you clarify more on this? Is there a $$$ limit or limit to number of times you can rollover where a backdoor Roth IRA would be impacted? I don't know if I'm quite to the income level that I could really/easily leverage a backdoor Roth but good to keep in mind.ruralavalon wrote: ↑Sat Oct 23, 2021 10:26 am 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
Re: Changed jobs - 401k rollover to IRA or to 401k?
VIIIX has slightly more expensive fees than what I currently have (.02). Old plan with State Street S&P 500 has lower fees than both at .01
My existing IRAs with FSKAX and FSAIX the fees are .015 so literally in the middle. In terms of fees alone, compared to the new 401k, my existing Fidelity IRAs win. But even in terms of available funds, as you can see from the selection I posted, it's fairly limited as well. So if I ever did want to change investments to something else (which I likely wouldn't do as I'd just go straight S&P500 in my 401k regardless), I'd be a bit constrained compared to what I can do in the IRAs.
Side questions: I'm assuming any after-tax funds just get converted into a Roth IRA if I were to roll everything over to IRAs? Besides the traditional 401k, if I have Roth AND after Tax 401ks, and I rollover to IRAs, would I have end up with 3 different rollover accounts or just 2 (where the Roth and After-tax were combined)? Is it possible to roll this into my existing Roth IRAs? Or if not and separate accounts have to be opened, can those Roth IRAs be combined after the fact?
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Re: Changed jobs - 401k rollover to IRA or to 401k?
The new 401k offers excellent very diversified funds with very low to lower than average expense ratios, like these:
1) VANG INST INDEX PLUS (VIIIX) ER 0.02%;
2) DODGE & COX INTL STK (DODFX) ER 0.63%; and
3) VANG TOT BD MKT INST (VBTIX) ER 0.035%.
I suggest a rollover of the old 401k into the new 401k.
White Coat Investor, "Don’t Obsess About Expense Ratios".
The two S&P 500 index funds (VIIIX and FXAIX) have had an identical Compound Annual Growth Rate (CAGR), and the total stock market index fund (FSKAX) has had a lower CAGR, the difference is immaterial. Portfolio Visualizer, 2012-2021.
1) VANG INST INDEX PLUS (VIIIX) ER 0.02%;
2) DODGE & COX INTL STK (DODFX) ER 0.63%; and
3) VANG TOT BD MKT INST (VBTIX) ER 0.035%.
I suggest a rollover of the old 401k into the new 401k.
A tiny difference in expense ratios is meaningless in this decision. Portfolio Visualizer, 2012-2021.jplee3 wrote: ↑Sat Oct 23, 2021 11:26 amMy existing IRAs with FSKAX and FSAIX the fees are .015 so literally in the middle. In terms of fees alone, compared to the new 401k, my existing Fidelity IRAs win. But even in terms of available funds, as you can see from the selection I posted, it's fairly limited as well. So if I ever did want to change investments to something else (which I likely wouldn't do as I'd just go straight S&P500 in my 401k regardless), I'd be a bit constrained compared to what I can do in the IRAs.
White Coat Investor, "Don’t Obsess About Expense Ratios".
The two S&P 500 index funds (VIIIX and FXAIX) have had an identical Compound Annual Growth Rate (CAGR), and the total stock market index fund (FSKAX) has had a lower CAGR, the difference is immaterial. Portfolio Visualizer, 2012-2021.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Changed jobs - 401k rollover to IRA or to 401k?
Are there any rules around *when* a rollover has to occur? Do I need to do it ASAP? Or could I wait a while, even after contributions have been made into the new 401k, and then decide to roll everything over from the old 401k into the new one?ruralavalon wrote: ↑Sat Oct 23, 2021 11:32 am The new 401k offers excellent very diversified funds with very low to lower than average expense ratios, like these:
1) VANG INST INDEX PLUS (VIIIX) ER 0.02%;
2) DODGE & COX INTL STK (DODFX) ER 0.63%; and
3) VANG TOT BD MKT INST (VBTIX) ER 0.035%.
I suggest a rollover of the old 401k into the new 401k.
A tiny difference in expense ratios is meaningless in this decision. Portfolio Visualizer, 2012-2021.jplee3 wrote: ↑Sat Oct 23, 2021 11:26 amMy existing IRAs with FSKAX and FSAIX the fees are .015 so literally in the middle. In terms of fees alone, compared to the new 401k, my existing Fidelity IRAs win. But even in terms of available funds, as you can see from the selection I posted, it's fairly limited as well. So if I ever did want to change investments to something else (which I likely wouldn't do as I'd just go straight S&P500 in my 401k regardless), I'd be a bit constrained compared to what I can do in the IRAs.
White Coat Investor, "Don’t Obsess About Expense Ratios".
The two S&P 500 index funds (VIIIX and FXAIX) have had an identical Compound Annual Growth Rate (CAGR), and the total stock market index fund (FSKAX) has had a lower CAGR, the difference is immaterial. Portfolio Visualizer, 2012-2021.
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Re: Changed jobs - 401k rollover to IRA or to 401k?
There may be a time limit stated in one of the 401k plans. Otherwise no time limit.jplee3 wrote: ↑Sat Oct 23, 2021 12:01 pmAre there any rules around *when* a rollover has to occur? Do I need to do it ASAP? Or could I wait a while, even after contributions have been made into the new 401k, and then decide to roll everything over from the old 401k into the new one?ruralavalon wrote: ↑Sat Oct 23, 2021 11:32 am The new 401k offers excellent very diversified funds with very low to lower than average expense ratios, like these:
1) VANG INST INDEX PLUS (VIIIX) ER 0.02%;
2) DODGE & COX INTL STK (DODFX) ER 0.63%; and
3) VANG TOT BD MKT INST (VBTIX) ER 0.035%.
I suggest a rollover of the old 401k into the new 401k.
A tiny difference in expense ratios is meaningless in this decision. Portfolio Visualizer, 2012-2021.jplee3 wrote: ↑Sat Oct 23, 2021 11:26 amMy existing IRAs with FSKAX and FSAIX the fees are .015 so literally in the middle. In terms of fees alone, compared to the new 401k, my existing Fidelity IRAs win. But even in terms of available funds, as you can see from the selection I posted, it's fairly limited as well. So if I ever did want to change investments to something else (which I likely wouldn't do as I'd just go straight S&P500 in my 401k regardless), I'd be a bit constrained compared to what I can do in the IRAs.
White Coat Investor, "Don’t Obsess About Expense Ratios".
The two S&P 500 index funds (VIIIX and FXAIX) have had an identical Compound Annual Growth Rate (CAGR), and the total stock market index fund (FSKAX) has had a lower CAGR, the difference is immaterial. Portfolio Visualizer, 2012-2021.
Often the old 401k plan requires that a small account be moved immediately.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: Changed jobs - 401k rollover to IRA or to 401k?
Not *when, but the balance in your old plan could play a factor.Are there any rules around *when* a rollover has to occur? Do I need to do it ASAP? Or could I wait a while, even after contributions have been made into the new 401k, and then decide to roll everything over from the old 401k into the new one?
If under $5000 you’ll want to take action quicker. Your plan is allowed to automatically roll you to an IRA. You’d be free to then transfer it to your IRA, or to your 401k if that plan accepts rollover from IRAs, which not all do. If under $1000 they can cash you out which you don’t want, so do a rollover ASAP.
If over $5000 there’s less of a rush, though generally speaking your old plan may charge extra fees for being a terminated participant. Also if you die there’s one more account for your family to deal with, or you could just forget about the old 401k (trust me). So in my opinion consolidating accounts is the move more often than not, and there no time like the present.
As to the decision: new 401k or IRA, clearly fund choice and cost are so similar that it’s moot. So you’re left with creditor protection (401k is the legal gold standard, IRAs not automatically though many states have comparable protection to 401ks).
There’s also access to the money: you can take an IDA distribution any time no questions asked. Your 401k *may have a withdrawal option for your rollover portion, but it’s no guarantee, and even if so there could be limits to the amount or frequency.
In my opinion, if creditor protection is no problem (your state’s rules on IRAs) I’d go with the IRA.
Re: Changed jobs - 401k rollover to IRA or to 401k?
Interesting, I didn't know about the creditor protection. It sounds like this is for protection against things like judgements and liens?Lionel Hutz wrote: ↑Sat Oct 23, 2021 6:53 pmNot *when, but the balance in your old plan could play a factor.Are there any rules around *when* a rollover has to occur? Do I need to do it ASAP? Or could I wait a while, even after contributions have been made into the new 401k, and then decide to roll everything over from the old 401k into the new one?
If under $5000 you’ll want to take action quicker. Your plan is allowed to automatically roll you to an IRA. You’d be free to then transfer it to your IRA, or to your 401k if that plan accepts rollover from IRAs, which not all do. If under $1000 they can cash you out which you don’t want, so do a rollover ASAP.
If over $5000 there’s less of a rush, though generally speaking your old plan may charge extra fees for being a terminated participant. Also if you die there’s one more account for your family to deal with, or you could just forget about the old 401k (trust me). So in my opinion consolidating accounts is the move more often than not, and there no time like the present.
As to the decision: new 401k or IRA, clearly fund choice and cost are so similar that it’s moot. So you’re left with creditor protection (401k is the legal gold standard, IRAs not automatically though many states have comparable protection to 401ks).
There’s also access to the money: you can take an IDA distribution any time no questions asked. Your 401k *may have a withdrawal option for your rollover portion, but it’s no guarantee, and even if so there could be limits to the amount or frequency.
In my opinion, if creditor protection is no problem (your state’s rules on IRAs) I’d go with the IRA.
I'm in California, and it seems like there are no such protections for IRAs here at least compared to 401ks:
https://www.nolo.com/legal-encyclopedia ... ornia.html
So based on that alone, considering the 401k rollover might be the best thing to do.
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Re: Changed jobs - 401k rollover to IRA or to 401k?
I agree with having the distribution characterized as a Rollover IRA for asset protection purposes, but I'm pretty sure it's not generally correct that you cannot roll over a contributory IRA into an employer plan (perhaps it can't be done with some custodians). Some won't accept any after tax or Roth assets, so will accept pre-tax only.spammagnet wrote: ↑Sat Oct 23, 2021 11:07 am Edit to add: be sure it's characterized as a rollover IRA and keep all rolled-over funds in accounts separate from contributed funds. You can't roll traditional contributed (not rolled-over) IRA funds into an employer plan.
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Re: Changed jobs - 401k rollover to IRA or to 401k?
You can rollover contributory tIRAs into 401k plans provided the plan allows it. I did it for mine. A few years ago to facilitate a pro rata tax free backdoor Roth IRA.backpacker61 wrote: ↑Sun Oct 24, 2021 6:41 amI agree with having the distribution characterized as a Rollover IRA for asset protection purposes, but I'm pretty sure it's not generally correct that you cannot roll over a contributory IRA into an employer plan (perhaps it can't be done with some custodians). Some won't accept any after tax or Roth assets, so will accept pre-tax only.spammagnet wrote: ↑Sat Oct 23, 2021 11:07 am Edit to add: be sure it's characterized as a rollover IRA and keep all rolled-over funds in accounts separate from contributed funds. You can't roll traditional contributed (not rolled-over) IRA funds into an employer plan.