Any reason not to roll 401k's into Trad IRA?

[therethere]

I've been putting off consolidating some 401k's for a few years now. Recently unemployed so I have no 401k available. I have a small traditional IRA I contributed to one year only. Are there any main drawbacks to rolling the 401k's to a traditional IRA vs waiting until I have a current 401k available again?

[Spork]

My own personal opinion is that I would roll any 401k at the first opportunity I had.  My experience has been that tIRA's have more investment options at lower costs than any 401k I've had.  I'd much prefer to have the control.

[geekette]

The only reason I can think of to avoid rolling over would be if your old company had some great options with low costs.  Check management fees.

I was told when we consolidated that they can't charge a fee to transfer out of a 401k.  However you can get charged for changing companies with regular IRAs, so make sure if you transfer, it's where you want to stay. 

[modulus]

Depending on how high your income will be this year and in future years, having an existing IRA balance (but not 401k) will mess up doing a back door Roth IRA contribution.

[nouveauRiche]

Years ago, I had four small 401K accounts from old jobs.  I rolled all of them into an IRA at Vanguard.  Waaaaay better.  Never looked back.

[Bruinguy]

Depending on how high your income will be this year and in future years, having an existing IRA balance (but not 401k) will mess up doing a back door Roth IRA contribution.

+1

[shawndoggy]

Depending on how high your income will be this year and in future years, having an existing IRA balance (but not 401k) will mess up doing a back door Roth IRA contribution.

THIS.  If you ever think you might need the backdoor roth, don't roll out of the 401k.

[Papa bear]

In some states, IRA's are not protected by lawsuits, but 401(k)s are. 

I'm no expert, Ohio protects both so I've never looked into it any more than this. 


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[therethere]

I doubt we will ever have high enough income for the Backdoor Roth (due to income phaseout). I do have to complete a "Mega Backdoor Roth" with my After Tax contributions.

The fees are high on (2) of them which is why I want to move them. I've been delaying the move because they are all in VTSAX or Target Retirement funds and I have not done any research into proper allocation. This is probably the biggest hurdle for rolling them over is deciding what to invest them in.

I'll have to check on the states and IRA protections! Any other gotchas like that?

[jim555]

My legacy 401k started adding quarterly fees.  The only good thing was the fixed option, but the rates have not been keeping up. 

[Frankies Girl]

I researched this back a few years ago...

Reasons not to roll 401k to an IRA:

1. If you have access to institutional shares or other types of investments that would be unavailable if you left that company's 401k.

2. If you live in a state that offers better protection from lawsuits/judgements for 401ks. Some states consider 401k accounts off limits from an legal actions, but do not extend the same towards IRAs.

3. If you have any interest in backdoor IRA movements.

If none of these apply, then it makes more sense to roll to an IRA because you'll be able to invest in a wider variety of funds through an IRA, likely will avoid any management/account maintenance fees that may be charged by the 401k companies if you are no longer an employee (not that it happens all the time, but they could reasonable start assessing fees).