Author Topic: newbie question: 401k rollovers  (Read 1293 times)

thricesplice

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newbie question: 401k rollovers
« on: December 19, 2014, 02:35:15 PM »
I have a 401k with troweprice, one of those target retirement XX year funds.

It's not very aggressive, does not have as much growth as s&p500 index funds.  Troweprice gives some other options too, but they are difficult to navigate through and I haven't found any thing equivalent to a S&P500 index fund.

I figure since I can't touch the stuff for 30 years, I might as well invest high risk high growth...  If there is a reasonably long horizon, and I have enough money available to me that I can easily handle emergencies, is there any reason not to dump all of my money into very aggressive growth oriented index funds; e.g. VIGAX.  ???  With the long horizon, it should be enough time to outlast the ups and downs.

The other question I have is, I don't understand 401k rollovers.  Can I transfer my workplace TRowePrice 401k to Vanguard, or are 401k's generally stuck with the company that the employer has selected?

Eric

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Re: newbie question: 401k rollovers
« Reply #1 on: December 19, 2014, 02:57:43 PM »
I'll answer these backwards, as your 2nd question is more straightforward.

The other question I have is, I don't understand 401k rollovers.  Can I transfer my workplace TRowePrice 401k to Vanguard, or are 401k's generally stuck with the company that the employer has selected?

This is called an In-Service Distribution.  Some plans let you move the money to Vanguard, say once a year, while most do not.  With the majority of plans, you're stuck with your employer's chosen provider until you leave.  You'll have to check your specific plan.

I have a 401k with troweprice, one of those target retirement XX year funds.

It's not very aggressive, does not have as much growth as s&p500 index funds.  Troweprice gives some other options too, but they are difficult to navigate through and I haven't found any thing equivalent to a S&P500 index fund.

You can always pick the furthest date available as your target date to keep things more aggressive.  But you should also consider the Expense Ratios of the funds and generally shoot for the funds with the lowest fees. (while maintaining your chosen asset allocation -- see below)

I figure since I can't touch the stuff for 30 years,

Well, don't figure that, because it's not true.  You can access your 401k or Traditional IRA money penalty free by doing Roth Conversions or SEPP withdrawals.
Read this for more info:
http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/


I might as well invest high risk high growth...  If there is a reasonably long horizon, and I have enough money available to me that I can easily handle emergencies, is there any reason not to dump all of my money into very aggressive growth oriented index funds; e.g. VIGAX.  ???  With the long horizon, it should be enough time to outlast the ups and downs.

You should invest according to your pre-determined asset allocation as written in your investor policy statement.  In general, there's nothing wrong with being heavy in stocks with a long time frame, but you also want to be diversified.  Please keep in mind that your asset allocation spans your entire portfolio, so each account can hold anything, but together they should roughly match your desired allocation.

I also think you should read through some lazy portfolio examples to get some ideas of easy diversified AA's.
http://www.bogleheads.org/wiki/Lazy_portfolios

thricesplice

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Re: newbie question: 401k rollovers
« Reply #2 on: December 19, 2014, 03:41:32 PM »
thanks!  I've read some but not all of those links before, but refreshers never hurt.