Company bought out, 401K questions

[robbyho]

So my company was bought out by a bigger company and as such, we are all transferring to a new 401k provider.  I wasn't too thrilled with my 401k investor choices before, and I'm not thrilled with the choices of the new company. My question is what to do with my current 401k? My options are to roll it over to the new 401k plan, or roll it over to another qualified retirement plan. I assume that means an IRA?

I just started investing last year.

I have about $8000 in my 401k
I have about $1000 in my betterment account.

My thought is to put the money into an IRA through Betterment. Any reason I would roll over the money to the new 401k?


Thanks.

[LAGuy]

This just recently happened to me. Our company went bankrupt, and then we were offered new positions by the company that bought the old companies assets. Despite the break in service, we still weren't given an option on what to do with our 401k. In order to be "helpful" the new company just rolled at all over for us to their service provider. How convenient! No need to make any decisions whatsoever about what is going to be done with MY money.

If you're being given a choice, get it out ASAP. Roll it over to your own IRA be Betterment, Vanguard, or any of the other low fee brokerages (I use Fidelity and Schwab myself).

[frugalnacho]

You should almost certainly roll it over into your own IRA.  I prefer vanguard, but there are a number of good low cost options.  If you only have $1000 in betterment you aren't tied to them.  You aren't tied to them anyway, you can roll your IRA to any company you want (they may charge a fee for that though, which may not make sense if it's just a small amount - ie don't pay a $200 fee to roll your $1,000 betterment IRA to vanguard, just leave it).

[robbyho]

Thanks, started my rollover today. Hopefully I can get it into some better investments. The good news is that my new 401k has a better employer match.

[Derrian]

With $8,000 in your 401k it may make more sense to roll it over into vanguard as opposed to betterment. I like betterment and use it for my taxable accounts (TLH has more than covered the fees I will pay this year and next) but its benefits for tax advantaged accounts (IRAs) are much more limited as TLH does not apply. If I were in your shoes, I would roll over the 401k into an IRA at vanguard at put it into an appropriate target date fund. You will end up saving around 0.35 per year in fees (0.25 if you have over 10k in betterment).