Retirement Savings question

[Dalko43]

Originally Posted by Whostheboss

There are plenty of threads on this topic but i need a quick answer, i don't want to scroll through pages and pages.

I left my old company and i have some money saved up in my 401k, i'm fully vested in all the money in there.
Question: Should i roll into IRA? Roth IRA?
or
Should i roll into my new jobs 401K? (this is highly unlikely)

Thanks

There is a lot of context needed to fully address this question.

What type of all-in expenses are you encountering with either option? This includes the fund fees and the management fees (if you, or your firm's 401k program, has a financial adviser).

What is your expected retirement timeline? How far out are you?

How much are you contributing?

How much do you plan on withdrawing after retirement and in what kind of increments?

Those are just a few questions that should be answered.

My advice: go find an independent registered investment adviser (RIA) or certified financial planner (CFP) in your locale and get his/her expertise on these issues...I strongly recommend avoiding any big corporate investment advisory groups (like Edward Jones) or any big investment banks (UBS, ect.) because while they definitely have some smart people there, they also have a major incentive to bring you in as a client, even if its not in your best interests.

If you are going to seek out an IRA option on your own (outside of a corporate 401k) I would highly recommend looking at Vanguard's offerings; not only are they at the forefront of low-cost index-based investing, they are owned by the fund investors (ie you), not by some mogul billionaire or alliance of hedge fund managers...they're a lot less likely to leave you, the client, high and dry if the market craps itself.

[Whostheboss]

Originally Posted by shadow191

If you're married, spouse has to be primary unless they waive that right. But that waiver has to be notarized.

And OP, if your account balance is over $5K, they won't "force" it out and issue you a check. The force outs are done to make the plan easier to administer so small balances are kicked out. If it's under $1K, they'll issue you a check after taxes are taken out. If it's under $5K, most plans will roll the money into an IRA on your behalf and no tax consequences. But you get several notification letters, it's not immediate, usually after 30 days or 60 days.

Yea it's over $5K

Originally Posted by shadow191

As others have said, however you put the money into the account - pretax or Roth is going to determine your rollover options.

Look into fees and investment options before doing anything unless you have to due to a force out rule. Rolling into an IRA makes sense if you want more investment options as you can buy pretty much anything. But fees can be higher depending on where you get your IRA from and what investments you pick.

Rolling into your new company's 401(k) can actually make sense if their plan is well run, has good investment options and low fees. Keep in mind that rollover money is always separated from your regular contributions so it's not subject to the same vesting rules and if you change your mind down the line, you typically can roll it back out into an IRA. Sometimes a large company's 401(k) plan can have much lower fees on funds than an IRA due to the plan's size. Where we are, the expense ratios are in the single digit basis points (under .1%). That's hard to get even with low cost funds like Vanguard.

Just don't let anyone talk you into anything, especially if they have a financial incentive. There are lots of stories lately showing how people would have been better off leaving their money in a 401k vs. rolling it over to an IRA.

Good points there. I didn't know i can roll into my new company's 401K and then decide to convert to IRA.
Yea, that's going to be hard, almost any financial advisor i talk to is trying to reel me into their business.

Originally Posted by Dalko43

There is a lot of context needed to fully address this question.

What type of all-in expenses are you encountering with either option? This includes the fund fees and the management fees (if you, or your firm's 401k program, has a financial adviser).
I haven't really looked at the fees, i was just wondering which on will be a better option.

What is your expected retirement timeline? How far out are you?
I'm 32 now. I probably will plan to retire by 60yrs.

How much are you contributing?
With my old employer, I was contributing a very small % of my paycheck. The company didn't have any matching but they offered profit sharing each year which averaged about $6K

My new employer does not have profit sharing but they pay a bonus check during Christmas based on my performance which i estimate should average around $4k-$6k.

I want to mimic the same style i had with the old employer.
I plan on doing this by first, rolling over my old retirement savings from my old employer into an IRA.
And then when i get my Christmas bonus, i will treat it like a "profit sharing check" and deposit it into my IRA

That's my plan.

How much do you plan on withdrawing after retirement and in what kind of increments?
I haven't thought that far out yet lol.

Those are just a few questions that should be answered.

My advice: go find an independent registered investment adviser (RIA) or certified financial planner (CFP) in your locale and get his/her expertise on these issues...I strongly recommend avoiding any big corporate investment advisory groups (like Edward Jones) or any big investment banks (UBS, ect.) because while they definitely have some smart people there, they also have a major incentive to bring you in as a client, even if its not in your best interests.

If you are going to seek out an IRA option on your own (outside of a corporate 401k) I would highly recommend looking at Vanguard's offerings; not only are they at the forefront of low-cost index-based investing, they are owned by the fund investors (ie you), not by some mogul billionaire or alliance of hedge fund managers...they're a lot less likely to leave you, the client, high and dry if the market craps itself.

[Mlugo3]

If you are serious about needing help, feel free to call me 321-961-1600 this is what my team does. This question really has a ton of variables and possible tax implications that can affect you if you don't do it correctly. Check out my website if you'd like www.jglwealth.com. Anyway I can help just let me know...

[Dalko43]

Originally Posted by Whostheboss

Yea, that's going to be hard, almost any financial advisor i talk to is trying to reel me into their business.

Yes it will be hard, but it will be well worth your time if you can find the right one. It gives you a chance to meet with face-to-face with someone to ask these questions. And you'll get feedback that is much more tailored and specific to your situation than what you'll get off of any online forum.

Seeing as you live in CT, at least according to your profile, I would start by checking out this CT Department of Banking site to review what you should be looking for in a financial planner:

http://www.ct.gov/dob/cwp/view.asp?a=2235&q=297924

If you do end up meeting with a financial planner or adviser, just make sure you establish up front that you're not looking for someone to manage your money, but rather that you just want advice. That relationship may change depending on what you learn/decide, but at least establish those expectations up front.

[Whostheboss]

Originally Posted by Dalko43

Yes it will be hard, but it will be well worth your time if you can find the right one. It gives you a chance to meet with face-to-face with someone to ask these questions. And you'll get feedback that is much more tailored and specific to your situation than what you'll get off of any online forum.

Seeing as you live in CT, at least according to your profile, I would start by checking out this CT Department of Banking site to review what you should be looking for in a financial planner:

http://www.ct.gov/dob/cwp/view.asp?a=2235&q=297924

If you do end up meeting with a financial planner or adviser, just make sure you establish up front that you're not looking for someone to manage your money, but rather that you just want advice. That relationship may change depending on what you learn/decide, but at least establish those expectations up front.

Great points!