Old 401k transfer to new 401k or rollover to IRA, and funds selection

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Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Hello All:

I have left my old 401k in my previous employer’s 401k plan for several years (allowed by the plan).

They are managed by ADP, and invested in:

- 30%, Vanguard Target Retirement 2030 Trust II (changed from Vanguard Institutional Target Retirement 2030 Fund - Institutional Class on 1/1/2022), expense ratio 0.08
- 70%, Vanguard Target Retirement 2040 Trust II (changed from Vanguard Institutional Target Retirement 2040 Fund - Institutional Class on 1/1/2022), expense ratio 0.08

Below are available funds to select:

Investment Fund Expense Ratio
Invesco Stable Value Fund - Class A1 0.29
Vanguard Total Bond Market Index Fund - Institutional Class 0.04
Dodge & Cox Income Fund 0.42
Vanguard Target Retirement 2015 Trust II 0.08
Vanguard Target Retirement 2020 Trust II 0.08
Vanguard Target Retirement 2025 Trust II 0.08
Vanguard Target Retirement 2030 Trust II 0.08
Vanguard Target Retirement 2035 Trust II 0.08
Vanguard Target Retirement 2040 Trust II 0.08
Vanguard Target Retirement 2045 Trust II 0.08
Vanguard Target Retirement 2050 Trust II 0.08
Vanguard Target Retirement 2055 Trust II 0.08
Vanguard Target Retirement 2060 Trust II 0.08
Vanguard Target Retirement 2065 Trust II 0.08
Dodge & Cox Stock Fund 0.52
Vanguard Institutional Index Fund - Institutional Plus Class 0.02
Fidelity Contrafund - Class K6 0.45
T Rowe Price Mid Cap Value Fund - Class I 0.65
Vanguard Mid-Cap Index Fund - Institutional Class 0.04
Janus Henderson Enterprise Fund - Class N 0.66
Loomis Sayles Small Cap Value Fund - Class N 0.85
Vanguard Small Cap Index Fund - Institutional Class 0.04
Vanguard Total International Stock Index Fund - Institutional Class 0.08
American Funds EuroPacific Growth Fund - Class R6 0.46
Vanguard Target Retirement Income Trust II 0.08

I am thinking to either rollover to my Rollover IRA @ Vanguard, or transfer to my current 401k @ Fidelity.
My Rollover IRA @ Vanguard investment:

Invested Fund Expense ratio
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
25% VBIAX Vanguard Balanced Index Fund Admiral Shares 0.07
25% VFIAX Vanguard 500 Index Fund Admiral Shares 0.04

I also have some VFORX Vanguard Target Retirement 2040 Investor CL and VTI at Vanguard Roth IRA. By considering the tax rate, rollover to Roth IRA is not considered.

My current 401k @ Fidelity:
100%, flexPATH Index+ Moderate 2035 Fund I2, expense ratio 0.31%.

Below are the available funds to select:

Name/Inception Date Asset Class Plan-specific option Gross Expense Ratio
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
LARGE CAP GRTH I105/30/2018 Stock Investments Yes 0.29%
LARGE CP VALUE I112/03/2018 Stock Investments Yes 0.29%
FID SMALL CAP VALUE (FCPVX)11/03/2004 Stock Investments No 0.98%
VICT SM CAP GR I107/22/2019 Stock Investments Yes 0.59%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04%
FID OVERSEAS (FOSFX)12/04/1984 Stock Investments No 0.99%
FID REAL ESTATE INVS (FRESX)11/17/1986 Stock Investments No 0.73%
FLEXPATH+AGR 2025 I106/01/2015 Blended Investment* Yes 0.30%
FLEXPATH+AGR 2035 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR 2045 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR RET I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+CON 2025 I106/01/2015 Blended Investment* Yes 0.28%
FLEXPATH+CON 2035 I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+CON 2045 I106/01/2015 Blended Investment* Yes 0.31%
FLEXPATH+CON 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+CON RET I106/01/2015 Blended Investment* Yes 0.28%
FLEXPATH+MOD 2025 I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+MOD 2035 I106/01/2015 Blended Investment* Yes 0.31%
FLEXPATH+MOD 2045 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+MOD 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+MOD RET I106/01/2015 Blended Investment* Yes 0.28%
MORLEY STABLE VALUE12/03/1993 Bond Investments Yes 0.44%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
LA CORE BOND CIT01/02/2018 Bond Investments Yes 0.21%

If I rollover to Vanguard Rollover IRA, there should have many other funds to select.

Based on above situation, I have below 3 choices:

1. Continue to keep my old 401k at ADP. With retirement at ~2038 and I am ok with risk, should I keep current target retirement funds or switch to other better funds?
2. Rollover to my Vanguard Rollover IRA. What funds are good to invest into? And any suggestion for my current funds selection at my Rollover IRA?
3. Transfer to my Fidelity 401k. What funds are good to invest into? And any suggestion for my current fund selection (one target retirement fund @ 100%)?

Any advice is welcome.

Thanks !
User avatar
FiveK
Posts: 15742
Joined: Sun Mar 16, 2014 2:43 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by FiveK »

Three-fund portfolio - Bogleheads has suggestions that include your options.

If your income is (or expected to be) such that the backdoor Roth process would be of interest, then keeping the money in a 401k would be preferable. Otherwise it doesn't matter much.
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by Duckie »

fred2017 wrote: Sun May 01, 2022 12:31 am I have left my old 401k in my previous employer’s 401k plan for several years (allowed by the plan).
The best options in the old 401k plan are:
  • Vanguard Institutional Index 0.02 -- Large caps, 80% of US stocks
  • Vanguard Total International Stock Index 0.08 -- Complete international stocks
  • Vanguard Total Bond Market Index 0.04 -- US bonds
My Rollover IRA @ Vanguard investment:

Invested Fund Expense ratio
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
25% VBIAX Vanguard Balanced Index Fund Admiral Shares 0.07
25% VFIAX Vanguard 500 Index Fund Admiral Shares 0.04
You are duplicating things. The bonds in Balanced Index are already contained in Total Bond. 500 Index and the stocks in Balanced Index are already contained in Total Stock.
I also have some VFORX Vanguard Target Retirement 2040 Investor CL and VTI at Vanguard Roth IRA.
In general it's better to put assets with higher expected growth (stocks) in Roth accounts and assets with lower expected growth (bonds) in pre-tax accounts. That's because you've already paid the taxes in the Roth accounts so future growth is tax-free. So I recommend you drop VFORX in the Roth IRA.
My current 401k @ Fidelity:
The best options in the plan are:
  • FID TOTAL MKT IDX (FSKAX) 0.02% -- Complete US stocks
  • FID INTL INDEX (FSPSX) 0.04% -- Developed markets, 75% of international stocks
  • FID US BOND IDX (FXNAX) 0.03% -- US bonds
The international fund is better in the old 401k, but not enough to make a difference.

If your future income will be anywhere near the income limits for direct Roth IRA contributions, having a rollover IRA will cause a problem. Will your current 401k take incoming rollovers from IRAs?

For simplicity I would roll the old 401k into the new 401k. That makes one fewer account to track. If your income is near the limit (and maybe even if it's not) I would also roll the Rollover IRA into the new 401k.

What are your account percentages?
  • Old 401k at ADP -- ??%
    Current 401k at Fidelity -- ??%
    Rollover IRA at Vanguard -- ??%
    Roth IRA at Vanguard -- ??%
    Totaling______________100%
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Duckie wrote: Sun May 01, 2022 5:26 pm
fred2017 wrote: Sun May 01, 2022 12:31 am I have left my old 401k in my previous employer’s 401k plan for several years (allowed by the plan).

The best options in the old 401k plan are:
  • Vanguard Institutional Index 0.02 -- Large caps, 80% of US stocks
  • Vanguard Total International Stock Index 0.08 -- Complete international stocks
  • Vanguard Total Bond Market Index 0.04 -- US bonds


Thanks, do these 3 funds mimic the 3-fund portfolio theory? What is the recommended ratio for each fund, if I stay with ADP? (One reason I did not move for several years was simply that even with my current target retirement funds selection, the performance was not bad comparing to my Roth/Rollover IRAs and current 401k plan.


My Rollover IRA @ Vanguard investment:

Invested Fund Expense ratio
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
25% VBIAX Vanguard Balanced Index Fund Admiral Shares 0.07
25% VFIAX Vanguard 500 Index Fund Admiral Shares 0.04
You are duplicating things. The bonds in Balanced Index are already contained in Total Bond. 500 Index and the stocks in Balanced Index are already contained in Total Stock.

Thanks for the education! I later added VBIAX and VFIAX because I saw people were selecting these two funds.



I also have some VFORX Vanguard Target Retirement 2040 Investor CL and VTI at Vanguard Roth IRA.
In general it's better to put assets with higher expected growth (stocks) in Roth accounts and assets with lower expected growth (bonds) in pre-tax accounts. That's because you've already paid the taxes in the Roth accounts so future growth is tax-free. So I recommend you drop VFORX in the Roth IRA.

Thanks for this suggestion, this is really useful suggestion (and education), I will make adjustment as it does make sense !



My current 401k @ Fidelity:
The best options in the plan are:
  • FID TOTAL MKT IDX (FSKAX) 0.02% -- Complete US stocks
  • FID INTL INDEX (FSPSX) 0.04% -- Developed markets, 75% of international stocks
  • FID US BOND IDX (FXNAX) 0.03% -- US bonds
The international fund is better in the old 401k, but not enough to make a difference.

Seems these 3 funds mimic the 3-fund portfolio theory, again, any ratio suggestion?


If your future income will be anywhere near the income limits for direct Roth IRA contributions, having a rollover IRA will cause a problem. Will your current 401k take incoming rollovers from IRAs?

I am currently at the edge of income limits, but most likely will be over the limit from now on.
Why having a rollover IRA will cause a problem, as rollover IRA is same type - also pre-tax? Can you help to explain a little more. My current exist rollover IRA at Vanguard was transferred from an earlier 401k.
I am unsure if my current 401k will take incoming rollovers from IRAs, will check on this.




[/quote]For simplicity I would roll the old 401k into the new 401k. That makes one fewer account to track. If your income is near the limit (and maybe even if it's not) I would also roll the Rollover IRA into the new 401k.

Thanks again, please help to understand the reason to roll the rollover IRA into the new 401k.


What are your account percentages?
  • Old 401k at ADP -- ??% 48%
    Current 401k at Fidelity -- ??% 28%
    Rollover IRA at Vanguard -- ??% 11%
    Roth IRA at Vanguard -- ??% 14%
    Totaling______________100%
    [/quote]
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Hi Duckie, wanted to let you know that some were responded in the yellow-background quotes. Still learning how to edit/respond.
Thank you so much !
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Thank you FiveK!
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by Duckie »

fred2017 wrote: Mon May 02, 2022 12:37 am
Duckie wrote: Sun May 01, 2022 5:26 pm The best options in the old 401k plan are:
  • Vanguard Institutional Index 0.02 -- Large caps, 80% of US stocks
  • Vanguard Total International Stock Index 0.08 -- Complete international stocks
  • Vanguard Total Bond Market Index 0.04 -- US bonds
Thanks, do these 3 funds mimic the 3-fund portfolio theory?
Yes.
What is the recommended ratio for each fund, if I stay with ADP?
I recommend you don't stay with ADP, but if you do choose to then since this is your largest account I would put your entire desired international allocation here filling the rest with bonds. If there's still room put the remainder in Institutional Index.
The best options in the current 401k plan are:
  • FID TOTAL MKT IDX (FSKAX) 0.02% -- Complete US stocks
  • FID INTL INDEX (FSPSX) 0.04% -- Developed markets, 75% of international stocks
  • FID US BOND IDX (FXNAX) 0.03% -- US bonds
Seems these 3 funds mimic the 3-fund portfolio theory, again, any ratio suggestion?
I would use this for the remainder of your bonds (if you haven't used them all in the old ADP 401k) and then fill with FSKAX.
If your future income will be anywhere near the income limits for direct Roth IRA contributions, having a rollover IRA will cause a problem. Will your current 401k take incoming rollovers from IRAs?
I am currently at the edge of income limits, but most likely will be over the limit from now on.
Why having a rollover IRA will cause a problem, as rollover IRA is same type - also pre-tax? Can you help to explain a little more. My current exist rollover IRA at Vanguard was transferred from an earlier 401k.
If you cannot contribute to a Roth IRA directly you can get money in through the backdoor. But that process means you can't have assets in pre-tax IRAs because of the pro-rata rule. Your rollover IRA probably makes the backdoor Roth process too expensive for you.
I am unsure if my current 401k will take incoming rollovers from IRAs, will check on this.
Please check.

_______________________________

The following three examples all have an AA of 50% US stocks, 30% international stocks, and 20% bonds (similar to TD2040). Depending on whether or not you roll over you could have something like this:

Portfolio #1

Old 401k at ADP -- 48%
30% (VTSNX) Vanguard Total International Stock Index Fund Institutional Shares (0.08%)
18% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

Current 401k at Fidelity -- 28%
26% (FSKAX) Fidelity Total Market Index Fund (0.02%)
2% (FXNAX) Fidelity U.S. Bond Index Fund (0.03%)

Rollover IRA at Vanguard -- 10%
10% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Roth IRA at Vanguard -- 14%
14% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

or

Portfolio #2

Old 401k at ADP -- 48%
30% (VTSNX) Vanguard Total International Stock Index Fund Institutional Shares (0.08%)
18% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

Current 401k at Fidelity -- 38% <-- Includes Rollover IRA.
36% (FSKAX) Fidelity Total Market Index Fund (0.02%)
2% (FXNAX) Fidelity U.S. Bond Index Fund (0.03%)

Roth IRA at Vanguard -- 14%
14% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

or

Portfolio #3

Current 401k at Fidelity -- 86% <-- Includes old 401k and Rollover IRA.
50% (FSKAX) Fidelity Total Market Index Fund (0.02%)
16% (FSPSX) Fidelity International Index Fund (0.04%)
20% (FXNAX) Fidelity U.S. Bond Index Fund (0.03%)

Roth IRA at Vanguard -- 14%
14% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

Just some possibilities.
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Hi Duckie:

Thank you so much for the detailed portfolio suggestion in different situations.

I still have below questions:

1. So you are suggesting 50% Total US Stock, 30% Total International Stock and 20% Total Bond. Should the percentage of bond equal to your age (saw somewhere of this theory), which would be between 40-50% for me?

2. Transfer the rollover IRA to current 401k is to reduce IRA account amount so there is chance to do the backdoor Roth? (because all IRA amount needs to be converted to Roth if to do backdoor Roth and can't just do partial?)

3. I haven't got an answer from my employer that if I can transfer my rollover IRA to current 401k plan, if end up with no, then do you think it is better to transfer ADP 401k to current Fidelity 401k, or it is also no obvious disadvantage to transfer to Vanguard rollover IRA (then no plan for backdoor Roth in the future). (Or I can check if I can transfer rollover IRA to ADP first, and later transfer the whole to current 401k at Fidelity).

Thanks again, really appreciate it!
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FiveK
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by FiveK »

fred2017 wrote: Mon May 02, 2022 9:48 pm Should the percentage of bond equal to your age (saw somewhere of this theory), which would be between 40-50% for me?
There are many different theories about this, all of which have some rationale but none of which are definitively "correct". E.g., see Equity Glide Paths — Bogleheads versus Target Funds - Bogleheads.org for some spreads among people and target date funds for your age.
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

fred2017 wrote: Mon May 02, 2022 9:48 pm Hi Duckie:

Thank you so much for the detailed portfolio suggestion in different situations.

I still have below questions:

1. So you are suggesting 50% Total US Stock, 30% Total International Stock and 20% Total Bond. Should the percentage of bond equal to your age (saw somewhere of this theory), which would be between 40-50% for me?

2. Transfer the rollover IRA to current 401k is to reduce IRA account amount so there is chance to do the backdoor Roth? (because all IRA amount needs to be converted to Roth if to do backdoor Roth and can't just do partial?)

3. I haven't got an answer from my employer that if I can transfer my rollover IRA to current 401k plan, if end up with no, then do you think it is better to transfer ADP 401k to current Fidelity 401k, or it is also no obvious disadvantage to transfer to Vanguard rollover IRA (then no plan for backdoor Roth in the future). (Or I can check if I can transfer rollover IRA to ADP first, and later transfer the whole to current 401k at Fidelity).

Thanks again, really appreciate it!
One more additional question :) - I noticed that for Portfolio #3, the fund in Roth IRA is internal stock fund, while the other two Portfolios have US stock fund for Roth IRA, are US stock fund and international stock fund are similar in regards to tax efficiency?
Thanks !
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Duckie
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by Duckie »

fred2017 wrote: Mon May 02, 2022 9:48 pm So you are suggesting 50% Total US Stock, 30% Total International Stock and 20% Total Bond.
Your post never listed your age or desired assets allocation (AA). In my examples I was going by the allocation you had in the target-date funds.
Should the percentage of bond equal to your age (saw somewhere of this theory), which would be between 40-50% for me?
That's one way of doing it. Your desired AA is very personal. Only you can decide what is suitable for you.
Transfer the rollover IRA to current 401k is to reduce IRA account amount so there is chance to do the backdoor Roth? (because all IRA amount needs to be converted to Roth if to do backdoor Roth and can't just do partial?)
The pro-rata rule means if you leave anything in the Rollover IRA part of your conversion will be taxable. If you're going to use the backdoor method, shift ALL of your Rollover IRA whether by rolling into an employer plan or converting and paying the taxes.
I haven't got an answer from my employer that if I can transfer my rollover IRA to current 401k plan, if end up with no, then do you think it is better to transfer ADP 401k to current Fidelity 401k, or it is also no obvious disadvantage to transfer to Vanguard rollover IRA (then no plan for backdoor Roth in the future).
I'm on the fence here. I'm a fan of consolidating accounts. However, the old ADP 401k plan has slightly lower expense ratios than your Rollover IRA (unless you buy ETFs in the IRA). Do you pay any management fees to that plan other than the expense ratios? It wouldn't hurt to keep the ADP plan. It wouldn't hurt to roll to your Rollover IRA.
(Or I can check if I can transfer rollover IRA to ADP first, and later transfer the whole to current 401k at Fidelity).
You could check, but I think it is highly unlikely that your old 401k will allow incoming rollovers. It's possible, but not probable.
I noticed that for Portfolio #3, the fund in Roth IRA is internal stock fund, while the other two Portfolios have US stock fund for Roth IRA,
My reason for putting international in the Roth IRA in #3 is because VTIAX is a more-complete international fund than FSPSX which is missing emerging markets, small caps, and Canada.
are US stock fund and international stock fund are similar in regards to tax efficiency?
It depends on the specific funds but in your case since all your accounts are tax-sheltered you don't need to worry about tax-efficiency at this time.
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ruralavalon
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Location: Illinois

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by ruralavalon »

fred2017 wrote: Sun May 01, 2022 12:31 am Hello All:

I have left my old 401k in my previous employer’s 401k plan for several years (allowed by the plan).

They are managed by ADP, and invested in:

- 30%, Vanguard Target Retirement 2030 Trust II (changed from Vanguard Institutional Target Retirement 2030 Fund - Institutional Class on 1/1/2022), expense ratio 0.08
- 70%, Vanguard Target Retirement 2040 Trust II (changed from Vanguard Institutional Target Retirement 2040 Fund - Institutional Class on 1/1/2022), expense ratio 0.08

Below are available funds to select:

Investment Fund Expense Ratio
Invesco Stable Value Fund - Class A1 0.29
Vanguard Total Bond Market Index Fund - Institutional Class 0.04
Dodge & Cox Income Fund 0.42
Vanguard Target Retirement 2015 Trust II 0.08
Vanguard Target Retirement 2020 Trust II 0.08
Vanguard Target Retirement 2025 Trust II 0.08
Vanguard Target Retirement 2030 Trust II 0.08
Vanguard Target Retirement 2035 Trust II 0.08
Vanguard Target Retirement 2040 Trust II 0.08
Vanguard Target Retirement 2045 Trust II 0.08
Vanguard Target Retirement 2050 Trust II 0.08
Vanguard Target Retirement 2055 Trust II 0.08
Vanguard Target Retirement 2060 Trust II 0.08
Vanguard Target Retirement 2065 Trust II 0.08
Dodge & Cox Stock Fund 0.52
Vanguard Institutional Index Fund - Institutional Plus Class 0.02
Fidelity Contrafund - Class K6 0.45
T Rowe Price Mid Cap Value Fund - Class I 0.65
Vanguard Mid-Cap Index Fund - Institutional Class 0.04
Janus Henderson Enterprise Fund - Class N 0.66
Loomis Sayles Small Cap Value Fund - Class N 0.85
Vanguard Small Cap Index Fund - Institutional Class 0.04
Vanguard Total International Stock Index Fund - Institutional Class 0.08
American Funds EuroPacific Growth Fund - Class R6 0.46
Vanguard Target Retirement Income Trust II 0.08

I am thinking to either rollover to my Rollover IRA @ Vanguard, or transfer to my current 401k @ Fidelity.
My Rollover IRA @ Vanguard investment:

Invested Fund Expense ratio
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
25% VBIAX Vanguard Balanced Index Fund Admiral Shares 0.07
25% VFIAX Vanguard 500 Index Fund Admiral Shares 0.04

I also have some VFORX Vanguard Target Retirement 2040 Investor CL and VTI at Vanguard Roth IRA. By considering the tax rate, rollover to Roth IRA is not considered.

My current 401k @ Fidelity:
100%, flexPATH Index+ Moderate 2035 Fund I2, expense ratio 0.31%.

Below are the available funds to select:

Name/Inception Date Asset Class Plan-specific option Gross Expense Ratio
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
LARGE CAP GRTH I105/30/2018 Stock Investments Yes 0.29%
LARGE CP VALUE I112/03/2018 Stock Investments Yes 0.29%
FID SMALL CAP VALUE (FCPVX)11/03/2004 Stock Investments No 0.98%
VICT SM CAP GR I107/22/2019 Stock Investments Yes 0.59%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04%
FID OVERSEAS (FOSFX)12/04/1984 Stock Investments No 0.99%
FID REAL ESTATE INVS (FRESX)11/17/1986 Stock Investments No 0.73%
FLEXPATH+AGR 2025 I106/01/2015 Blended Investment* Yes 0.30%
FLEXPATH+AGR 2035 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR 2045 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+AGR RET I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+CON 2025 I106/01/2015 Blended Investment* Yes 0.28%
FLEXPATH+CON 2035 I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+CON 2045 I106/01/2015 Blended Investment* Yes 0.31%
FLEXPATH+CON 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+CON RET I106/01/2015 Blended Investment* Yes 0.28%
FLEXPATH+MOD 2025 I106/01/2015 Blended Investment* Yes 0.29%
FLEXPATH+MOD 2035 I106/01/2015 Blended Investment* Yes 0.31%
FLEXPATH+MOD 2045 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+MOD 2055 I106/01/2015 Blended Investment* Yes 0.32%
FLEXPATH+MOD RET I106/01/2015 Blended Investment* Yes 0.28%
MORLEY STABLE VALUE12/03/1993 Bond Investments Yes 0.44%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
LA CORE BOND CIT01/02/2018 Bond Investments Yes 0.21%

If I rollover to Vanguard Rollover IRA, there should have many other funds to select.

Based on above situation, I have below 3 choices:

1. Continue to keep my old 401k at ADP. With retirement at ~2038 and I am ok with risk, should I keep current target retirement funds or switch to other better funds?
2. Rollover to my Vanguard Rollover IRA. What funds are good to invest into? And any suggestion for my current funds selection at my Rollover IRA?
3. Transfer to my Fidelity 401k. What funds are good to invest into? And any suggestion for my current fund selection (one target retirement fund @ 100%)?

Any advice is welcome.

Thanks !
If you want to continue using target date fund funds, then leave the the old 401k account alone because it offers lower expense ratios for that.

If you want to switch to using a combination of index funds, like a three -fund portfolio, then I suggest rolling over the old 401k account into the new employer's 401k plan which has nearly identical funds and very low expense ratios like:
1) FID TOTAL MKT IDX (FSKAX) 0.02%
2) FID INTL INDEX (FSPSX) 0.04% -- Developed markets only
3) FID US BOND IDX (FXNAX) 0.03%.

Will your current employer's plan accept a rollover from your Vanguard rollover IRA?

If so then you could rollover the Vanguard IRA into your new employer's plan for the simplicity and have just one account to keep track of and manage.

That also opens the path for a backdoor Roth IRA in the future if that is what you desire.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
fred2017
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Thank you all - Duckie, ruralavalon and FiveK.

I called Fidelity directly today that I can transfer my rollover IRA (I don't know if there is additional management fee etc.) to my current 401k plan, I do not want to transfer for simplicity.
Topic Author
fred2017
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

Thanks for all the advices and education !

Started to work on the transfer.

Found an error in my last post - I do want to transfer for simplicity :happy .
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fred2017
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

I have another question after reading asset location:

"In general, the international fund should go into a taxable account, the bond fund should go into a tax-advantaged account, and the domestic equity fund should fill in the remaining space."

Which accounts are consider taxable account in the quote? - Are those individual brokerage accounts, not tax-deferred accounts?

I have one individual account at Vanguard, but basically they are invested in individual stocks. Should this individual brokerage account also be considered and counted into asset allocation?

Thanks again !
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ruralavalon
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by ruralavalon »

fred2017 wrote: Mon May 16, 2022 12:46 am I have another question after reading asset location:

"In general, the international fund should go into a taxable account, the bond fund should go into a tax-advantaged account, and the domestic equity fund should fill in the remaining space."

Which accounts are consider taxable account in the quote? - Are those individual brokerage accounts, not tax-deferred accounts?
Yes.

fred2017 wrote: Mon May 16, 2022 12:46 amI have one individual account at Vanguard, but basically they are invested in individual stocks. Should this individual brokerage account also be considered and counted into asset allocation?
Yes.

Do you also have any IRAs?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
pasadena
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by pasadena »

I would roll over to your current 401(k). It has everything you need and I'm all for simplification. I'm not a fan of the available funds for International Stocks, though. Do you have a taxable account?

If you're above the threshold for direct Roth IRA contributions, then I would also rollover the tIRA to the 401(k), openeing the door to backdoor Roth (pun not intended but I like it). If you don't have one, open one today, either way.

In the current 401(k) I would choose:
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04% - meh as it's missing emerging markets.

If you decide to keep the old one:
Vanguard Total Bond Market Index Fund - Institutional Class 0.04
Vanguard Institutional Index Fund - Institutional Plus Class 0.02
Vanguard Small Cap Index Fund - Institutional Class 0.04
Vanguard Total International Stock Index Fund - Institutional Class 0.08

If you decide to keep the tIRA:
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04

If you go with total market funds (VTSAX at Vanguard, FSKAX at Fidelity), you don't need other US Stock funds as they will just duplicate stocks.

So the options as I see them:

(1) My personal choice - everything in the new 401(k).
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04%

^ If you have a taxable account and or a Roth IRA, remove FSPSX and buy either VTIAX or FTIHX there instead.

(2) Consolidate the 401(k) but keep the tIRA:

401(k):
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%

tIRA:
VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
Topic Author
fred2017
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Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

ruralavalon wrote: Mon May 16, 2022 8:53 am
fred2017 wrote: Mon May 16, 2022 12:46 am I have another question after reading asset location:

"In general, the international fund should go into a taxable account, the bond fund should go into a tax-advantaged account, and the domestic equity fund should fill in the remaining space."

Which accounts are consider taxable account in the quote? - Are those individual brokerage accounts, not tax-deferred accounts?
Yes.

fred2017 wrote: Mon May 16, 2022 12:46 amI have one individual account at Vanguard, but basically they are invested in individual stocks. Should this individual brokerage account also be considered and counted into asset allocation?
Yes.

Do you also have any IRAs?
Thanks ruralavalon.
Yes, I have Traditional IRA and Roth IRA. I am working on to transfer my Traditional IRA and old 401k to my current 401k plan, for simplicity.
I have an individual brokerage account at Vanguard (which is the free money I have, besides emergency fund in an on-line saving account), assume this is the taxable account, but all of them have been invested in individual stocks. But once my lose of stocks getting better, I plan to sell them and buy index fund or ETF, as long-term investment goal. Maybe at that time, I can consolidate this account into asset allocation and put tax-efficient funds into this account - the taxable account?

Thanks so much !
Topic Author
fred2017
Posts: 64
Joined: Sun May 14, 2017 9:28 pm

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by fred2017 »

pasadena wrote: Mon May 16, 2022 9:16 am I would roll over to your current 401(k). It has everything you need and I'm all for simplification. I'm not a fan of the available funds for International Stocks, though. Do you have a taxable account?

If you're above the threshold for direct Roth IRA contributions, then I would also rollover the tIRA to the 401(k), openeing the door to backdoor Roth (pun not intended but I like it). If you don't have one, open one today, either way.

In the current 401(k) I would choose:
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04% - meh as it's missing emerging markets.

If you decide to keep the old one:
Vanguard Total Bond Market Index Fund - Institutional Class 0.04
Vanguard Institutional Index Fund - Institutional Plus Class 0.02
Vanguard Small Cap Index Fund - Institutional Class 0.04
Vanguard Total International Stock Index Fund - Institutional Class 0.08

If you decide to keep the tIRA:
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04

If you go with total market funds (VTSAX at Vanguard, FSKAX at Fidelity), you don't need other US Stock funds as they will just duplicate stocks.

So the options as I see them:

(1) My personal choice - everything in the new 401(k).
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04%

^ If you have a taxable account and or a Roth IRA, remove FSPSX and buy either VTIAX or FTIHX there instead.

(2) Consolidate the 401(k) but keep the tIRA:

401(k):
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%

tIRA:
VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
Thank you so much pasadena! I am working towards the option 1 you listed :happy , similar to the advice I got earlier.
Thanks Bogleheads!
pasadena
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Location: PNW

Re: Old 401k transfer to new 401k or rollover to IRA, and funds selection

Post by pasadena »

fred2017 wrote: Mon May 16, 2022 10:36 pm
pasadena wrote: Mon May 16, 2022 9:16 am I would roll over to your current 401(k). It has everything you need and I'm all for simplification. I'm not a fan of the available funds for International Stocks, though. Do you have a taxable account?

If you're above the threshold for direct Roth IRA contributions, then I would also rollover the tIRA to the 401(k), openeing the door to backdoor Roth (pun not intended but I like it). If you don't have one, open one today, either way.

In the current 401(k) I would choose:
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04% - meh as it's missing emerging markets.

If you decide to keep the old one:
Vanguard Total Bond Market Index Fund - Institutional Class 0.04
Vanguard Institutional Index Fund - Institutional Plus Class 0.02
Vanguard Small Cap Index Fund - Institutional Class 0.04
Vanguard Total International Stock Index Fund - Institutional Class 0.08

If you decide to keep the tIRA:
15% VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
10% VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
25% VTSAX Vanguard Total Stock Market Index Admiral CL 0.04

If you go with total market funds (VTSAX at Vanguard, FSKAX at Fidelity), you don't need other US Stock funds as they will just duplicate stocks.

So the options as I see them:

(1) My personal choice - everything in the new 401(k).
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%
FID INTL INDEX (FSPSX)11/05/1997 Stock Investments No 0.04%

^ If you have a taxable account and or a Roth IRA, remove FSPSX and buy either VTIAX or FTIHX there instead.

(2) Consolidate the 401(k) but keep the tIRA:

401(k):
FID TOTAL MKT IDX (FSKAX)11/05/1997 Stock Investments No 0.02%
FID US BOND IDX (FXNAX)03/08/1990 Bond Investments No 0.03%

tIRA:
VBTLX Vanguard Total Bond Market Index Admiral CL 0.05
VTIAX Vanguard Total Intl Stock Index Admiral CL 0.11
VTSAX Vanguard Total Stock Market Index Admiral CL 0.04
Thank you so much pasadena! I am working towards the option 1 you listed :happy , similar to the advice I got earlier.
Thanks Bogleheads!
You're welcome. Since you also have a taxable account and a Roth IRA, I would use one (or both) of those for your International Stock allocation (FTIHX at Fidelity, or VTIAX at Vanguard), and would not buy FSPSX in the 401(k), because it's not nearly as good as those, despite the lower ER.

And once you have completed the transfer, you can do backdoor Roth :)
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