What Happens When Rolling Over 401k?

[oldtoyota]

I had a 401K invested in Vanguard via GreatWest via an employer plan.

What happens on the backend when I rollover my 401k?

Essentially, I will be rolling it over from Vanguard funds via GreatWest into Vanguard funds via my direct account.

Am I paying for this to happen?

In the long run, is it better just to roll it over into my direct account because I end up being charged less by Vanguard?

[Spork]

It's been a few years, but when I last did this:  I contacted both sides (GWRS and Vanguard in your case) and told them what I wanted to happen.  Vanguard has good customer service and they gave me very explicit directions -- how the check should be made out, etc.

My employer plan mailed me a check... and I sent it on to Vanguard.  It was painless and without penalties or costs.

In my case, I had very limited fund choices at my 401k and extremely little control.  I have no problems with an employer hosting my 401k... but I just don't want my ex-employer involved.  Too complicated.

[James]

I don't know what your fees are at GreatWest, are they more than the fees on a regular Vanguard account? I have a rollover at Vanguard from two previous employers, both accounts were brought into the one rollover account, and neither time did it cost me anything. I don't know of any reason not to rollover your funds, but if the fees are the same then it probably wouldn't make any difference. I do like the simplicity of my Vanguard rollover and the ability to rollover any future 401k (403b) into that single account.


But Vanguard has excellent customer support, please talk to a representative and fully discuss your situation. They will let you know any advantage either way, and help you with the process. For me it was very easy and fees were much lower than the previous accounts.

[oldtoyota]

But Vanguard has excellent customer support, please talk to a representative and fully discuss your situation. They will let you know any advantage either way, and help you with the process. For me it was very easy and fees were much lower than the previous accounts.

Thanks! I do not see the fees on my statements from GW. I think a recent law will make these kinds of companies make their fees more obvious. I hope so.

I will call Vanguard tomorrow and ask them about this. I do have one rollover account from a different employer in my direct account already, so I'll ask if this other one can be added to that or not.

[The_Dude]

Make sure you are doing a roll over for the right reasons.  I did a roll over from my former employers plan in 2011 because everyone says 401k fees are so high.  However, since then I've learned a lot more and realize it was a mistake for three reasons.

1. 401k had access to vanguard institutional shares which had cheaper expense ratios than admiral shares.
2. 401k has much stronger legal protections than an IRA if ever sued (something I think about more as my net worth grows)
3. Biggest and most important.  I lost my ability to do tax free back door ROTH IRA contributions...

[aj_yooper]

The_Dude makes good points about expenses; efficient investing is crucial.  401k's do tend to be more legally protected than IRAs.  Personally, when I left a job, I transferred my assets to keep things simpler. 

Keeping a low profile, having adequate insurance, and risk reduction measures are also helpful in protecting a stash.