Author Topic: 401k possible IRA rollover question  (Read 1502 times)

rubybeth

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401k possible IRA rollover question
« on: January 11, 2016, 06:56:08 AM »
So my husband left his employer at the end of last summer to do his graduate program's internship. He got an internship with another part of the same organization where he'd worked, an unpaid internship, so he's been getting all of the internal updates on the changes to the 401k plan--basically, the employer moved 401k providers to save some money. We got the updated plan documents, and his funds have been transferred from the S&P index  fund with the old provider to another S&P index fund (Vanguard 500 Index Admiral, looks like maybe an annual fee of $20 plus .05% which is the lowest fee of all the fund options, not surprisingly). The possibility exists that he could once again be employed with this agency, and would keep adding to his 401k--or he may not--so we could just wait until after he graduates and is job-hunting to make any decisions, too. So, my questions:

1) Since he's no longer an employee, and he's fully vested, we could just roll this into an IRA for him--should we? Or not?

2) What would be the advantages of a rollover (I am thinking accessing money would be easier, but not sure)? We have accounts with both Vanguard and Fidelity, so a rollover would be easy.

3) Are "Admiral" shares of a stock really 'better' than regular investor shares?

Any other advice/wisdom you can share.

For other background info., his 401k is a good chunk of our retirement savings (let's say 20%) and we are looking at retirement in 12-15 years, possibly sooner, around ages 45-50. DH may or may not continue working longer than me, since he's starting this new career at age 34.

matchewed

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Re: 401k possible IRA rollover question
« Reply #1 on: January 11, 2016, 07:02:59 AM »
1) He can. It depends. As a not really an employee anymore he could incur some fees for the 401k being with his "former" employer. Double check the documents.

2) Control and possible fee avoidance. Nothing else really unless there is an alternative investment you would make with the cash.

3) No just cheaper.

Cromacster

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Re: 401k possible IRA rollover question
« Reply #2 on: January 11, 2016, 07:22:45 AM »
I would have two questions.

2)  Do you ever expect to be high enough income household to consider utilizing the backdoor Roth?

1) Are you working?  Or what is your household income?  If your household income is low or non-existant I would consider rolling part of it over to a Roth.  The amount would depend on your current income.

rubybeth

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Re: 401k possible IRA rollover question
« Reply #3 on: January 11, 2016, 07:26:23 AM »
I would have two questions.

2)  Do you ever expect to be high enough income household to consider utilizing the backdoor Roth?

1) Are you working?  Or what is your household income?  If your household income is low or non-existant I would consider rolling part of it over to a Roth.  The amount would depend on your current income.

1) Probably not. My income is $52k and is only going up about 1% per year (government type job), and DH is likely to start around $40k a year, maybe a bit more or less, depending on what kind of first job he can get.

2) Yes, I'm the only one working right now. Household income last year (2015) was around $72k before tax, this year is hard to predict because he may not get a job right after graduation in May.