ADVICE NEEDED: 403b termination options (401k vs. IRA)?

[a1pharm]

All,

I'm looking for the wisdom you fine folks about what I should do with my terminated 403b cash.  I have three options:

1. Convert to the new 401k at my employer
2. Convert to an external IRA
3. Take a lump sum (I won't do this, just including it for completeness' sake)

My employer offers VSMPX, which is essentially VTSAX but has a 0.02% expense ratio.  They also offer personal choice if I want to go that route.

What are your thoughts on either staying with the 401k or going with an IRA?  I'm 50/50 on either option right now.

[maizefolk]

My view:

If you anticipate needing to make backdoor Roth IRA contributions in the future, move the money into the new 401k, as it'll avoid complications down the road. If that particular activity isn't something you're likely to engage in then put it in the IRA as it'll give you more control and equal or greater numbers of investment options.

[a1pharm]

My view:

If you anticipate needing to make backdoor Roth IRA contributions in the future, move the money into the new 401k, as it'll avoid complications down the road. If that particular activity isn't something you're likely to engage in then put it in the IRA as it'll give you more control and equal or greater numbers of investment options.

I'm leaning towards the 401k now - the expense ratio is better on the total stock index fund than I can get in an IRA.  Plus, I have access to loans with a 401k (not with IRA).  I am electing to forgo an emergency fund, and instead will rely on HELOC and then 401k loan if things go sour in my industry for an extended period of time.  I shouldn't have to worry about backdoor Roth while in my current role (which is terminal) because my MAGI will likely not exceed 196k/yr (maybe right before retirement, but that is not in the very near future).

Aside from infinite investment choice with the IRA, are there any other benefits to it over a 401k at this point in time?

[cincystache]

maizefolk covered it quite well...

Watch out if there are any other hidden fees in your 401k that aren't being reflected in the fund expense ratios.