Author Topic: New Job Need help w/ 401K rollover options  (Read 432 times)

Buell

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New Job Need help w/ 401K rollover options
« on: August 27, 2019, 02:53:50 PM »
Hey everyone,
 Long time lurker first time poster, first off just wanted to say thank you to everyone in the community that has helped me out so far! Now to my question. I will begin a new job here in a couple of weeks, and have a 401k at my current employer. I also currently have a Roth IRA. I was wondering what my best option to do with my current 401k should be, as of right now I believe I have four options.
1. Leave 401k with current employer
2. Roll over 401k to new employer
3. use sign on bonus to pay taxes on current 401k and roll over into existing Roth IRA account
4. Roll current 401k into traditional IRA.

A little more background is that salary and bonus could/probably will be higher than the max income allowed for Roth IRA. With that in mind I am inclined to use my sign on bonus to roll it into my existing Roth IRA, so that I can avoid the pro rata formula when doing the backdoor Roth in the future.
As always any and all opinions welcomed. If anyone knows of any other options I could do I would love to hear them as well.
Thank you!!!

RWD

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Re: New Job Need help w/ 401K rollover options
« Reply #1 on: August 27, 2019, 03:00:29 PM »
Number 3 is by far the worst option. The best choice between numbers 1, 2, or 4 depends on fund selection and management fees. Numbers 4 (Rollover IRA) is guaranteed to have the best funds and low expense ratios/fees if you choose a place like Vanguard. But either one of the 401k plans might have Institutional funds which have even lower expense ratios. Also, I believe a 401k has better protections in the case that you ever get sued, which may be the deciding factor if everything else is roughly equal.

MDM

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Re: New Job Need help w/ 401K rollover options
« Reply #2 on: August 27, 2019, 06:01:52 PM »
1. Leave 401k with current employer
2. Roll over 401k to new employer
If these were your only choices, what would you do and why?

Buell

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Re: New Job Need help w/ 401K rollover options
« Reply #3 on: August 27, 2019, 08:16:14 PM »
I believe that I would probably roll over to my current employer 401k. Currently I have my 401k broken into roughly 35% s&p fidelity index fund and 65% 2055 target date fund, so as long as these funds or similar funds exist with my new employer 401k then I would roll it all over into one, just for simplicity sake.
 I would like to hear other opinions though!
As always thank you for the advice

MDM

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Re: New Job Need help w/ 401K rollover options
« Reply #4 on: August 27, 2019, 09:24:04 PM »
...so as long as these funds or similar funds exist with my new employer 401k then I would roll it all over into one, just for simplicity sake.
Simplicity can indeed be a good reason.  Was hoping to see something about the fees (both overall account and individual fund) at the two employers.  If the fees are comparable, simplicity wins.  If the fees aren't comparable - and the older account is better - then complexity may be a reasonable price to pay.