401K and Pension balance from prior job. What to do?

[Khameleon]

I have a 401k and a pension balance with my previous employer  (I left 3 years ago).

401k = $120,000
Pension (cash balance) = ~$50,000

I have a 401k (through Fidelity) with my current employer that has about $25,000 in it.

I have read some pros and cons of roll-overs, but I was wondering what the general consensus is here.

Do I role the old 401k into my new Fidelity one (or into Vanguard or Betterment?) Do I leave it alone?

I have a couple options with the pension balance too, I can role it to an IRA, wait until I can take monthly payments from it, (I think 59 1/2), take it in a lump sum now (get hit on fees taxes, etc)

I know some with tell me I need to figure out the expense ratios and fees of the 401ks etc, but I was wondering besides convenience and maybe saving some on fees, am I missing something significant?

Thoughts welcome, can provide more info if needed.

Also, I'm 36

[Frankies Girl]

If it was me, I'd roll it over (401K to rollover IRA) just so I had everything in one place (and that is actually what I'm doing right now). I have 401Ks, IRAs, Roth IRAs and Rollover IRAs and all those little accounts were bugging the crap out of me and I wanted them where I could log in and see ALL of it.

I really love Fidelity's website and it's easy-peasy to get that stuff set up (you can do transfers online most of the time - but at most have to print out and get a medallion sig at a bank and then mail or scan the forms) and invest and run different investment scenarios too.

[Khameleon]

Thanks... anyone have any thoughts on the pension piece?

[quilter]

I would not take anything out of the accounts, but do rollovers. Why pay penalties unless you were in totally dire straights? 

My decision on the pension would be based on how trustful I was the company would still be solvent when pension time came around.  I would not be, so would roll it over too, but only you know the details of what the plan is and promises.

[garrettld]

You're right to look at expense ratios and fees. Keep in mind that institutional expense ratios are often different than the expense ratios for personal investors. Also, some funds grant lower expense ratios once certain balance thresholds are achieved. Vanguard has Admiral Shares at $10k, other investments have thresholds of $50k or $100k. Rolling over your funds may allow you to get all your money into these lower-cost versions.

All my comments below ignore fees and expense ratios.

Your goals right now should be to minimize taxes paid, avoid any fees or penalties due to early withdrawal, and increase convenience. That means don't cash anything out, and only roll over funds into other accounts that have the same tax status. If you don't mind logging into 4 different websites to look at your accounts (or if you're using a service like Mint), then there's no problem with keeping your funds where they are.

There's no reason to treat your pension any differently than your 401(k). If your pension is after-tax dollars, just use a Roth IRA instead of a Traditional IRA.

If you want access to this money before 59 & 1/2, you should check out this article on madFIentist.

Personally, I'd roll over everything immediately, because it's almost certain that you can save money by rolling over to a fund with lower expense ratios.

[Another Reader]

A pension is an annuity.  To figure out whether it is better to leave the money in or roll it over to an IRA, you need to know what the payments will look like.  Is the pension based on years of service?  Usually that's the case and you get a percentage of your average salary over your 1 to 3 final years with the company.  Some have COLA increases, others are flat.  Government pensions tend to have a higher percentage for each year of service, earlier full retirement ages, and COLA's.  Private pensions vary, with older plans usually being more generous.  You can price the same annuity through Vanguard and compare the cost to the amount you would get if you rolled the account into an IRA.  However, if the company is shaky or the pension is many years in the future, I would lean towards the rollover.  Better to take the bird in hand than to deal with the PBGC lurking in the bush.

[On_a_slow_boat]

Regarding the Pension (Cash Balance).

I am the same age with a similar style pension from my employer. Though I am still working for them so don't have the option to move it.

One thing I had thought about regarding FIRE and my cash balance is the Interest Crediting Rate.

Just as some background that you likely know: Each period (this can be monthly,quarterly,annually) your cash balance account is credited with interest. This interest rate is typically linked to the yield of a specific treasury index. Also it is very common to have a floor interest rate.

For example mine is tied to the yield of the 30 year treasury rate and has a floor or minimum crediting rate of 4.25%. 
I work in the industry and have seen some to be as bad as ...... the 1 year treasury with a floor of 0%.

In one case if the money is being credited with a somewhat above market guaranteed rate of return it makes it attractive to leave the money there. Here is also when you consider how your cash balance could fit into your portfolio as one of the fixed income pieces.

The other case is if the crediting rate is very poor, and your time horizon is long really creates an incentive to move the funds else lose the real value.

Other factors you have already heard, like the protection you get from the PBGC, ability to annuitize, company risk of default.

hope you found this helpful.

[Khameleon]

Thanks so much for all the advice. I'll do some research into my options and the specifics of my plans, and post what I find out.

Very helpful insights.