Author Topic: Job Change: Rollover 401k to new 401k or into tIRA  (Read 708 times)

Slow&Steady

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Job Change: Rollover 401k to new 401k or into tIRA
« on: February 08, 2018, 10:22:46 AM »
I have recently changed jobs and probably need to think about what to do with my old employer sponsored 401k, can anybody help me determine what my best long term option is?  If you want to take the time to explain why that would be awesome.  In the past I have always just rolled over everything to whatever the new plan is just so that it was easier for me to keep track of a single account but I am not sure that is my best option so should I:

Rollover to the new employer sponsored 401k (I do not know the ER at the new plan yet vs the old plan)
See if I can just leave it as is (I do not know the ER at the new plan yet vs the old plan)
Roll into a Vanguard tIRA
Any other option that I am unaware of

If helps to have a little more information, I only have the 401k account in my name and my spouse has a Roth IRA.  There are no other tax advantaged accounts, at this time.

GOFU

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #1 on: February 09, 2018, 07:27:05 PM »
I would check the expenses. 401k often has significantly higher expenses associated with the plan.

blinx7

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #2 on: February 09, 2018, 07:41:43 PM »

A Trad'l IRA may complicate your ability to fund a backdoor Roth later on.

Check the expense ratios and keep it if old one is lower or move if new one is lower. 

PDXTabs

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #3 on: February 10, 2018, 06:13:37 PM »
I would look at the investment options at the new 401k before deciding. The 401k has a couple of benefits, including being completely exempt from bankruptcy, and the ability to borrow from it. Obviously rolling it into an tIRA has different advantages.

Also, depending on the 401k, you can just leave it at the former employer indefinitely.

beattie228

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #4 on: February 10, 2018, 07:14:39 PM »
I'd recommend against leaving it at your old employer. Things can change and you can often be left out of the loop once you've left the group. I'd just roll it into the new 401k if it were me.

Slow&Steady

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #5 on: February 27, 2018, 08:46:46 AM »
Ok, I have a little more information now.  What should I do with my money that is currently sitting in my old company's 401k?  It is approximately $100k and I prefer as simple of an investment strategy as possible, if that information helps.

Old 401k - Currently in a Target Date Fund with ER of 0.64% (this has only been since Jan, when company switched 401k vendor)

New 401k - The Target Date Fund has even higher ER than the old 401k so I am thinking a 10/80/10 ratio of the below funds
 ---Vanguard Total Int Stock Index Admiral (ER 0.11%)
 ---Vanguard Total Stock Mrk Index Admiral (ER 0.04%)
 ---The lowest ER Total Bond Fund (ER 0.67%)

Vanguard IRA - DH's Target Date Fund has an ER of 0.15%

Jrr85

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #6 on: February 27, 2018, 09:02:21 AM »

A Trad'l IRA may complicate your ability to fund a backdoor Roth later on.

Check the expense ratios and keep it if old one is lower or move if new one is lower.

How big of a pain is this?  I have two separate 401ks that I'd like to just roll to vanguard, but didn't know how big of a pain the record keeping would be and how big the tax implications would be. 

So if I roll $170k out of 401k's and into a traditional IRA, then when I do my next backdoor roth, only 3.13% will be deemed to have come from the recent ira contribution, and I'll pay taxes on the other 96.87%.  But then the next year a small portion of the roll over will come from the previous year's IRA contribution, correct?  And a small portion of that will presumably be gains that needs to be taxed and the rest untaxed because it was a non-deductible contribution?  Is it an incredible pain in the ass to track?  Or will Vanguard do it for you? 

If they'll track it, it just depends on how I feel about paying for a 22% tax rate now on the taxable portion to move it to a roth.  I think I'd be ok with that as I'm probably going to have pension and traditional 401k distributions to put me into the 22% tax rate in retirement, but the record keeping is scaring me off from it.

 

NoStacheOhio

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Re: Job Change: Rollover 401k to new 401k or into tIRA
« Reply #7 on: February 27, 2018, 11:55:39 AM »
Ok, I have a little more information now.  What should I do with my money that is currently sitting in my old company's 401k?  It is approximately $100k and I prefer as simple of an investment strategy as possible, if that information helps.

Old 401k - Currently in a Target Date Fund with ER of 0.64% (this has only been since Jan, when company switched 401k vendor)

New 401k - The Target Date Fund has even higher ER than the old 401k so I am thinking a 10/80/10 ratio of the below funds
 ---Vanguard Total Int Stock Index Admiral (ER 0.11%)
 ---Vanguard Total Stock Mrk Index Admiral (ER 0.04%)
 ---The lowest ER Total Bond Fund (ER 0.67%)

Vanguard IRA - DH's Target Date Fund has an ER of 0.15%

Your 401k has excellent options. Assuming there aren't any additional plan fees, rolling into your new 401k makes sense.
The first step is acknowledging you have a problem, right?

https://forum.mrmoneymustache.com/journals/digging-out-of-a-hole/