Author Topic: 401k/403b leave it or rollover  (Read 4049 times)

lfusselm

  • 5 O'Clock Shadow
  • *
  • Posts: 4
401k/403b leave it or rollover
« on: May 24, 2015, 09:43:17 AM »
I am somewhat new active investor. Recently began a career and am now more active in my own portfolio. However, I have 2 old 401 k (18,000) and 403b (3000) accounts. 401k with transamerica and 403b with valid. Should I just keep these as is or roll them into a traditional roth with vanguard or another like company. Keep in mind I am a novice and would more than likely choose a managed account rather than one that I have to look at constantly. If you need more info to answer my question please let me know.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k/403b leave it or rollover
« Reply #1 on: May 24, 2015, 10:19:35 AM »
Just to be clear, there's no "traditional roth". There's a "traditional IRA" and a "Roth IRA". I assume you meant "traditional IRA".

What are your funds and expense ratios for the funds you currently have your money in?

Most likely you should just roll them over to a Vanguard traditional IRA. But it would be good to have more information.

lfusselm

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: 401k/403b leave it or rollover
« Reply #2 on: May 24, 2015, 10:30:57 AM »
It was meant to be typed as "traditional or roth"

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5104
Re: 401k/403b leave it or rollover
« Reply #3 on: May 24, 2015, 10:44:45 AM »
I would not leave money with Valic or Transamerica.  You could roll it over into a Vanguard or Fidelity IRA.  Since the original accounts were not Roth accounts, you would have to find the funds to pay tax on the conversion to a Roth IRA from outside the accounts.  You are likely better off to roll it over to a traditional IRA.

You do not need a financial "advisor."  If you feel you need someone to allocate and adjust the allocation over time, you could go with a Vanguard target date fund.  As the account nears the target date, the allocation is shifted away from equities to fixed income.  You can "set it and forget it" by doing this.  You could also go with a simple "three fund portfolio."  Meanwhile, you can spend some time learning about investing.

I have some retirement money in a lower cost actively managed fund, Vanguard Wellington.  It's about 65 percent equities and 35 percent bonds.  It's been a stable, well managed mutual fund for decades.

Any of these choices are many times better than Valic or Transamerica.  You will not pay the high fees those folks charge and you will likely get equal or better performance.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k/403b leave it or rollover
« Reply #4 on: May 24, 2015, 11:49:17 AM »
Yes, you probably want to roll it over to a traditional IRA. Vanguard Target Retirement Fund for the year you turn 65 (approximately) is a good choice for now. You can learn more over time and see if you want to do something a little different--but you could just stick with VTRF forever and that would be much better than what you're doing now.

lfusselm

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: 401k/403b leave it or rollover
« Reply #5 on: May 25, 2015, 05:35:51 PM »
thanks everyone. It seems that most everyone here is sold on vanguard as a top choice for handling your retirement. Is it just that their fees are low and investments are stable?

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5022
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: 401k/403b leave it or rollover
« Reply #6 on: May 25, 2015, 05:41:55 PM »
thanks everyone. It seems that most everyone here is sold on vanguard as a top choice for handling your retirement. Is it just that their fees are low and investments are stable?

Yes, pretty much this. They have easy-to-understand low-fee mutual funds, and they're owned by fund investors so you know their incentives are aligned with yours. Other places (Fidelity, Schwab, and a few others) offer low-fee funds that are basically as good as Vanguard, but if you're switching anyway you might as well switch to the best.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k/403b leave it or rollover
« Reply #7 on: May 26, 2015, 09:19:15 AM »
thanks everyone. It seems that most everyone here is sold on vanguard as a top choice for handling your retirement. Is it just that their fees are low and investments are stable?

Yes, pretty much this. They have easy-to-understand low-fee mutual funds, and they're owned by fund investors so you know their incentives are aligned with yours. Other places (Fidelity, Schwab, and a few others) offer low-fee funds that are basically as good as Vanguard, but if you're switching anyway you might as well switch to the best.

Yep. Fees are a huge cost over time.
https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost
https://investor.vanguard.com/mutual-funds/low-cost

Manguy888

  • Bristles
  • ***
  • Posts: 252
  • Location: Rhode Island
    • EA Mann, Writer
Re: 401k/403b leave it or rollover
« Reply #8 on: May 27, 2015, 10:06:37 AM »
I just went through the paperwork hell of rolling two of my wife's 403(b)'s and my 401(k) into Vanguard rollover IRAs. It took a dozen phone calls, 30+ pages of paperwork, and faxes that ping-ponged between employers, custodians, investment companies, etc, etc. Not fun, but I still did it and I'm glad I did.

There's the obvious fee stuff with Vanguard, but another point is that simpler is better. I log into Vanguard now and see all my money. It's easier to imagine asset allocation when you can fit it all in one browser window. Before these 403bs were like stray cats and dogs - I checked in on them occasionally but I didn't really give them the care they deserved.

Good luck with your rollovers - get a good scanner app for your iphone, and fax for free with faxzero.com. Most of these stodgy investment companies want real faxes.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k/403b leave it or rollover
« Reply #9 on: May 27, 2015, 11:14:45 AM »
I also did a rollover to Vanguard in the past. It took me maybe 5 calls for me, but was a hassle as you said. There was some additional hassle for me because I did a taxable conversion to a Roth. However, I've easily made thousands of dollars due to the change since then. And it is all in one location.

Manguy888

  • Bristles
  • ***
  • Posts: 252
  • Location: Rhode Island
    • EA Mann, Writer
Re: 401k/403b leave it or rollover
« Reply #10 on: May 27, 2015, 11:24:04 AM »
I should clarify that most of the paperwork burden was from the 403(b) companies that made it intentionally hard to roll out of: Oppenheimer and Metlife. Metlife was particularly opaque, and if you did something wrong they didn't call you - they sent a generic letter that you'd get 2 weeks later. rinse/repeat