So I am riolling over three old 401k, 457b and 401a retirement accounts from past jobs. Should I roll these over to my current employers 401k or open an IRA and roll into that?

Background:
-My current employer has a 401k and a also a Retirement Savings Plan (pension)
-The three old accounts are combined about $10,000 in value

2/22/2009 6:30:27 PM

If you want to consolidate them into 1 place and are happy with the choices of investments in your current employers 401k, then go ahead. Otherwise put them in an IRA.

2/22/2009 6:57:58 PM

Rollover IRA, no questions asked. I did the same thing with my three accounts when moving from my old employer (403b instead of 401k). IRAs have different restrictions on them than 401ks do ... i.e. you can withdraw from an IRA under certain conditions without penalty.

I'm not a financial advisor, but for retirement purposes:
1) Match up to what your company offers the max match on
2) Max out your IRA contributions every year
3) If you still have leftover money at this point, DO talk to a financial advisor to figure out how to invest / spend.

2/24/2009 8:17:56 PM

related question.

I'm leaving a job and will need to do something with my 401k, but my new employer doesn't offer a 401k until after 90 days. Should I:

1. just roll the current one into an IRA and then open up a new 401k when its available.
2. leave the current one open if I can and then roll it into the new 401k when its available.


- current 401k only has like $2000 in it.

3/4/2009 1:17:50 PM

never leave a 401(k) open from a previous job. ^^ has the best advice. Roll it over to an IRA. You can decide if you prefer a deposit IRA (ie. with SECU that has a set interest rate) or if you want to open an investment account IRA (SECU also offers) where you let it sit in a mutual fund - be sure you pick one that has LOW expense ratios, ie Vanguard. Low is around 25 basis points (.25%)... most in the industry are going to be between 1-2%.

The expense ratio makes a HUGE difference on your return.

Also, I should point out first that I do work for SECU/CUIS as an investment specialist. I would urge any of you to go in your branch and speak with an investment rep... no commissions and even if you don't want to open an account we can still answer some questions for you. I don't feel bad putting this here because there are absolutely no incentives for any of the reps with SECU....

[Edited on March 4, 2009 at 1:26 PM. Reason : added ]

3/4/2009 1:22:02 PM

could I roll it into an IRA and then the IRA into the new 401k without penatly?

^ might go talk to SECU actually, good point.

[Edited on March 4, 2009 at 1:31 PM. Reason : ,]

3/4/2009 1:29:57 PM

Quote :

"never leave a 401(k) open from a previous job."

Why not? My old 401k is doing excellent and so far I see no reason to roll it over into an account that might be less exceptional. The money is not at risk, and it's through Fidelity, the only downside is that I cannot contribute anymore. If I was to move the money, I would lose out on the options that have earned me 13k in less than 2 years.

[Edited on March 4, 2009 at 3:38 PM. Reason : -]

3/4/2009 3:35:52 PM

^ earned you $13k in 2 years?

REALLY...

That's remarkable considering the market the past 2 years.

Dow on 3/2/07 = 12,114
Dow on 3/2/09 = 6,763

That is a 44% drop in market and you claim you earned 13,000 in your 401(k) that you cant contribute to... REALLY.... REALLY....

ahh, see you said you were dealing with options.... I also see you said since the money is "not as risk"

REALLY........

Ahh, see you said you were dealing with fidelity... tell us, what expense ratio are you paying?

REALLY....

[Edited on March 4, 2009 at 4:21 PM. Reason : REALLY]

[Edited on March 4, 2009 at 4:23 PM. Reason : why not add another REALLY]

3/4/2009 4:19:35 PM

^
Expense ratio of Fidelity / Vanguard are both fairly low, less than 1% each. Depends on the mutual fund picked of course. And yes, wouldn't hurt to have anybody talk to a financial advisor to get some ideas. (Mine is supplied through graduate coursework, own research and free financial advising services through employer).

^^
I had my 403b through Fidelity, and rolled it over into a Rollover IRA through Fidelity, and now have a 401k with my new employer through Fidelity. Notice a pattern here? A Rollover IRA also can then be converted to a Roth IRA, which will (depending, talk to a financial advisor) likely get you more money in the long-term than going through a 401k due to taxation sooner rather than later. My 403b and Rollover IRA use the exact same funding.

3/4/2009 10:02:35 PM

Quote :

"I would lose out on the options that have earned me 13k in less than 2 years. "

Really. From Nov, 2006 - Nov, 2008. I contributed 25% of my salary to ultra conservative international money market accounts provided by my previous employeer and now have 13,000 dollars. I'll definitely give Fidelity a call and ask them for advice, but if I were to lose my stock options which have weathered the storm already, I probably won't touch the account.

Quote :

"FID BALANCED $3,011.92 NAV $11.55 Change $0.16 FID DIVERSIFIED INTL $787.80 NAV $17.28 Change $0.60 FID GROWTH COMPANY $919.09 NAV $42.83 Change $1.13 FID MID CAP STOCK $785.02 NAV $13.23 Change $0.44 FIDELITY RETIRE MMKT $3,179.03 NAV $1.00 Change $0.00 FIDELITY US BD INDEX $3,236.53 NAV $10.63 Change -$0.03 SPARTAN US EQ INDEX $1,693.22 NAV $25.32 Change $0.60 Total $13,612.61"

[Edited on March 5, 2009 at 10:32 AM. Reason : -]

3/5/2009 10:27:05 AM

^ are you including the amount contributed in the amount you are saying you "earned"

3/5/2009 10:29:58 AM

Regardless, for being 26 years old, I have invested wisely and see no reason to alter the account for the sake of disassociating it from my previous employeer. A new account will need to be just as financially stable if not more robust for me to consider switching options. Technically, I only "earned" around 8,000 dollars. However, I changed my contribution rate from 25% to only 6% (company match) after I passed the 9k mark at some point during 2007, so I could of made even more in theory.

[Edited on March 5, 2009 at 10:41 AM. Reason : -]

3/5/2009 10:36:07 AM

Quote :

"Technically, I only "earned" around 8,000 dollars. "

..... i'm not sure someone who thinks there is "technically" no difference between saving and earning should be giving out investment advice

3/5/2009 10:43:06 AM

^^ ok everyone can stop now i think - it's pretty clear you're not sure what you're talking about and are using words differently than the rest of the world that's why you were getting the sarcastic comments from calliphish and others

it's safe to just ignore stimwalt in threads like this

3/5/2009 10:43:14 AM

You can argue over words, but the balance speaks for itself.

^^

I was not giving out investment advice, I was asking for advice... Reading comprehension.

[Edited on March 5, 2009 at 10:51 AM. Reason : -]

3/5/2009 10:47:32 AM

asking for advice based on false information is just as useless

not to say you are doing a bad job saving because anything is better than a lot of people but my best guess is that most of people posting with good information in this thread and the stock market thread have well over 20k invested by the time they are 26

3/5/2009 10:52:48 AM

My balance is what I posted. You can ignore the balance over the misuse of a single word, but that doesn't change the results of my investment strategy. I have made money during an economic downturn, that by definition means I have made good decisions.

^

I don't believe that, lol. This is TWW, you people jump on the misuse of words like it's your job. I even posted the exact options that I used to get where I'm at, that is more than anyone else has in this thread. Good information, lol.

[Edited on March 5, 2009 at 11:01 AM. Reason : -]

3/5/2009 10:58:09 AM

^ wow.


Perlith, I checked FINRAs expense analyzer with 6 randomly selected Fidelity mutual funds (all A shares) and only one was less than 1%. Vanguard is going to be .23-.25% likely. Thats pretty significant in my opinion.

3/5/2009 10:59:46 AM

I'd be willing to bet that most of you pretending to be authorities on this subject don't have results or balances to back up your facade. Have fun in fantasy land, you've earned it, lol.

3/5/2009 11:13:14 AM

Stimwalt: let me explain in plain english for you since you still seem to be disconnected from reality.

You (mis)stated that your retirement account grew by 16k in the most difficult market environment in 60 years. Either that means you've been investing with Bernie Madoff and Allen Stanford, or you lost %25~50 like the rest of us and have no clue what you are talking about.

We dont give a fuck about your balance, we wanted you to back up your relative growth.

3/5/2009 11:22:14 AM

^^ I am a registered principal. I have a LOT more knowledge and experience than you. I never said anything about results/balances - in fact you were the one entering this thread boasting about a 13% gain when the market was down 44%. You sir have no sense of what you are talking about and even after everyone explains to you your common sense errors you still ramble on. IF you had a 13% gain with Fidelity I promise you all you would hear about in the news would be Fidelity. The rest of the world has taken our hits, but at least we know that we have taken a hit.

It's ironic to me that a guy named confusion just summed up everything wrong with what you are saying. You guys should switch names b/c he sounds like a wall street guru.

[Edited on March 5, 2009 at 11:30 AM. Reason : edit.]

3/5/2009 11:28:30 AM

^^

Quote :

"Technically, I only "earned" around 8,000 dollars."

he claims he earned 8k. Which by any normal definition would mean he put in $5k in contributions, and it grew to $13k through the investments he made. Of course, it's been shown he does not use "normal definitions" of words, so who knows what that means.

Stimwalt - anyone can save money during a downturn. So you put 25% or 6% of your paycheck into a retirement fund. BFD. Just because your fund is growing by a couple hundred dollars every month because of your contributions doesn't mean you "earned" that money.

[Edited on March 5, 2009 at 11:31 AM. Reason : .]

3/5/2009 11:30:56 AM

Quote :

" Personal Rate of Return from 01/01/2009 to 03/04/2009 is -13.8%"

Oh Fidelity YtD change link....how you vex me so

3/5/2009 11:35:09 AM

^ 14.8 for me... I just opened up a brokerage link account though. I can move my 401(k) money into this account with fidelity and buy individual stocks. That account, ironically, is doing better than my mutual funds, for now anyway.

3/5/2009 11:39:36 AM

Quote :

"Personal Rate of Return from 01/01/2009 to 03/04/2009 is -7.4%"

3/5/2009 1:43:42 PM

wat?

3/5/2009 1:44:27 PM

^^ I hope that smile means you realized you are an idiot and not that you are uber conservative for a 26 year old.

3/5/2009 2:52:03 PM

It should be fairly obvious why I'm smiling, look at my percentage compared to the others mentioned.

3/5/2009 3:01:19 PM

i don't get it.
How can you have "earned $8k" and have a -7% return?

3/5/2009 5:08:53 PM

^ He doesn't get it either.

3/6/2009 10:37:03 AM

ignore the facts - he's smiling and that's all that matters haha

3/6/2009 10:38:23 AM

Don't hate because I made better decisions. You can have all the theory in the world on a subject under your belt, but if you cannot deliver results, none of that matters. In theory and in practice are different realms entirely. Money talks.

3/6/2009 11:01:19 AM

wait so the new game is brag how little you've lost instead of how much you've made?

3/6/2009 11:03:27 AM

cognitive dissonance is a bitch.

and oh yeah, ignorance is bliss

3/6/2009 11:06:48 AM

^^^ I have had a fulltime job for about a year and have been a lazy ass. I haven't put anything into a 401k like I should have and have just been putting it in a savings account.

So, I have made 0% on this money, which appears to be more than you. Based on your logic, I have made the better decision.
In short, you can be a complete idiot and still luck out with a net "better decision".

3/6/2009 11:34:29 AM

You people, lol. You know, if this wasn't hilarious to me, I would probably just stop. However, since you get so worked up over minor mistakes and ignore the fact that I'm doing very well in this market despite any schooling in said subject, it would be a great injustice for me to not continue this game.

3/6/2009 11:45:58 AM

you can't back out of this one by laughing it off.

what you said previously in this thread is not the result of a "minor mistake". It shows a complete lack of understanding on the subject of investing. If you're doing "very well" or not, it's obviously not because of a wealth of investment knowledge on your part.

3/6/2009 12:05:44 PM

Quote :

"However, since you get so worked up over minor mistakes and ignore the fact that I'm doing very well in this market despite any schooling in said subject"

MINOR??? You have to be fucking kidding me... minor?

IGNORING THE FACTS THAT YOU ARE DOING VERY WELL?? WTF?? We just pointed out you are a fucking idiot claiming a 13% gain in a market that is down over 40%... we aren't saying a 7% loss is worse than a 14 drop either, but I did say that means you are way too fucking conservative for a 26 year old. When the market rebounds all of us who are dollar cost averaging are going to see higher gains in our portfolio than yours - which must be a lot of bonds. My grandpa is more aggressive than you.

The only thing in your whole paragraph that has any truth is the "despite any schooling in said subject" because that is more and more apparent to all of us. It's amazing really.

3/6/2009 12:34:47 PM

Yes, everything about this forum, this thread, and you as individuals is indeed minor.

From (0 to 13k+) in less than 2 years in my 401k from my previous job. I'm not even mentioning my new accounts.

I'm quite pleased, don't hate.

3/6/2009 2:11:14 PM

Ahh, I think I finally get it... you've obviously been kidding with us all this whole time... b/c no reasonable person (certainly someone capable of getting into NCSU) would ever be so dumb to say/keep saying this shit you type.

3/6/2009 2:55:35 PM

yes, congratulations on your savings. That is, indeed, very important and above average.

Your investing, though, seems quite average.

3/6/2009 3:53:58 PM

13k in 2 years is below par in my opinion - depending on on when the 2 years were you could have put in 31k

3/6/2009 5:08:37 PM

There are really only a few reasons you would ever leave your savings in an old employers 401k plan.

1) You are still paying back a loan on the 401k (some companies will allow you to do this even after you separate service). The reason is if you roll the money over prior to paying off the loan the balance will default and you only have 60 days to deposit the loan balance into an IRA to avoid taxes & penalties.

2) Your company allows you to take loans against the 401k even after you separate service (very few companies allow this option) and you feel this will be a future need.

3) Your plan has an institutional fund that will not be available in IRA's. Typically, these will be like a GIC or an income fund. I mean I saw an income fund that paid 7% in 2008. Clearly, you wouldn't have much incentive to dump that.

4) Your plan has a negotiated share class where the expense ratio is lower in the employer plan than the retail shares they would convert to if you rolled it over.

4) You separated from your company in the year in which you turned 55 years old. Leaving it in the 401k would allow you to take penalty free withdrawals from the plan whereas if you roll it to an IRA you will have to wait until you reach 59.5 years old (unless you qualify for penalty free w/d's like medical bills exceeding 7.5% of your income, $10k for first time home purchase, college tuition, or 72t periodic payments)

5) There used to be some laws for doctors & lawyers where their money was better protected from lawsuits in a 401k as opposed to an IRA. This applies to very few if any states anymore but I wouldn't want to make a decision without consulting a tax advisor if this applied.

6) You work in the financial services industry where your current employer would require you to roll over to their IRA and you don't particularly care for their investment options, fee structure, etc and you have better options leaving it in your old 401k plan.


On the other hand there are MANY reasons not to leave the money in an old employer plan.

1) You are limiting your investment options drastically. Many 401k plans offer only relatively expensive funds.

2) Most 401k plans limit how often you can trade or even what days of the year you can trade on.

3) Your old employer makes the rules. They can change the rules at anytime and dictate absolutely everything. Most only allow a lump sum withdrawal, many restrict fund specific withdrawals, how many withdrawals you can take per year, charge fees for withdrawals, can change the funds you currently own by mapping them into new options without your consent, etc

4) If your company goes out of business it can be an absolute nightmare to get your money. Let's say for instance you have your 401k plan with an employer who requires a signature from your plan administrator (an employee of your past employer) before the record keeper (Fidelity, Principal, Hewitt, etc) will process a withdrawal. Now the company goes out of business and the plan administrator is an ex-employee with a no longer in service email address and telephone contact number. What will the record keeper do for you? If you're lucky they will supply you the number to contact the Department of Labor. Other than that, be prepared to spend months to years of hellacious hours on the phone and stacks of paperwork with the DOL before you may see those funds.


5) If your company goes out of business it CAN negatively affect your fund's perfomance. Don't believe me? Ask Lehman Brother employees who were invested in the plan's stable value fund. Due to a negotiated agreement a few of the companies who supported the fund were able to pull their obligations to the fund after Lehman Brothers filed for bankruptcy. Shareholders woke up one morning to find the stable value fund had lost 2% in one day. Whoops.


6) If you withdraw money from a 401k you create a bigger tax liability for yourself than if you withdraw from an IRA. This is due to mandatory tax withholding on all 401k withdraws whereas IRA"s you can choose your tax withholding. Essentially your tax withholding will create a bigger tax burden for you because the IRS will tax and penalize (if you're underage) you on the money you SEND THEM. You get penalized on the taxes for god's sake.

7) From a beneficiary standpoint there are several reasons why a beneficiary would be much better off inheriting an IRA than an old 401k plan. They are often required to make forced withdraws from the 401k within 5 years of the death and also MRD's from the IRA will typically be smaller than they are from the 401k because the accounts use a slightly different divisor in the formula.


There are many other reasons but I'm sure you get the point, if anyone would like clarification on any of the points above I'd be glad to help...



[Edited on March 8, 2009 at 9:57 PM. Reason : a]

3/8/2009 9:52:40 PM

And by reading the original post again I realized I addressed a slightly different issue in my response.

The response is similar though:

Only roll your account to a new employer plan if

1) they have terrific institutional funds that are unavailable in a rollover IRA (fairly infrequent)

2) you need to take a loan against the account and your new employer allows for you to borrow against rollover sources


Other than that you would typically want to roll over to the rollover IRA for

1) Better investment options
2) Professional guidance
3) Tax savings on standard withdrawals
4) Penalty free withdrawals with certain qualifications
5) More control over the funds and the account (Only subject to IRS rules rather than IRS and Company rules)

3/8/2009 10:05:28 PM

Quote :

"My balance is what I posted. You can ignore the balance over the misuse of a single word, but that doesn't change the results of my investment strategy. I have made money during an economic downturn, that by definition means I have made good decisions."

I'm late to the thread and I'm sure someone pointed this out, but we can't have a fucking discussion about this when you can't delineate what you contributed, what was matched, and how much was gained via increases in the funds you are invested in.

Who cares if you made money during the downturn, while the economy was still humming I made more on the increase in the markets than you have in your account...and my account isn't drastically larger than yours (it isn't 6 figures just yet).

Quote :

"I'd be willing to bet that most of you pretending to be authorities on this subject don't have results or balances to back up your facade. Have fun in fantasy land, you've earned it, lol."

My play money account is the size of your 401k.

Quote :

"Either that means you've been investing with Bernie Madoff and Allen Stanford, or you lost %25~50 like the rest of us and have no clue what you are talking about"

I pulled my funds that was in a 2045 out in Sept when the S&P was at 1213. Still, up to that point, the 8k I had stuck in plus 6k match from my employer was smoked on the market drop. It could have been worse for me.

3/8/2009 10:32:45 PM

calliphish said

Quote :

"Perlith, I checked FINRAs expense analyzer with 6 randomly selected Fidelity mutual funds (all A shares) and only one was less than 1%. Vanguard is going to be .23-.25% likely. Thats pretty significant in my opinion. "

why are you comparing loaded funds to non loaded funds? this seems pretty ridiculous. for self directed investors you would want to invest in non loaded funds. how bout we now compare two similar international funds and their expenses? Fidelity Spartan International Index: expense ration of .1%. Vanguard total international index expense ratio of .34%. I would think a a registered principle would know better than to compare expenses from loaded funds to non loaded funds.

[Edited on March 8, 2009 at 11:06 PM. Reason : ]

3/8/2009 11:05:55 PM

Fidelity's low cost funds have a lower expense ratio than Vanguard's low cost funds.


Fidelity's low cost funds have higher minimum initial purchases though.

I don't think you can get a Fidelity index fund (outside of a 401k) for under $10,000.

3/9/2009 11:00:37 PM

This made me sad when I looked at it.


Personal Rate of Return from 01/01/2009 to 03/09/2009 is -11.5%

3/10/2009 11:17:18 AM