Author Topic: Old-Employer 401K and IRA  (Read 4807 times)

Eburg Elk

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Old-Employer 401K and IRA
« on: April 01, 2015, 04:17:08 PM »
Hello everyone,

Just joined the forum. Have a roll over question.

After reading the posts I decided to open a Vanguard Index fund. Opened a VTSMX fund with $3K.

In Feb I changed employers and have my old 401K that has $12K invested. My question is, should I move this account over to Vanguard or into my employers sponsored account.

My new employer will fully match up to 6% and a potential additional 6% profit sharing at the end of the year. I will be contributing at least 6% into this account.

In addition I have a IRA with E-Trade that has $600 in it. My plan is to move that over to Vanguard.

My age is 23.

Thanks for the help,

TS

BarkyardBQ

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Re: Old-Employer 401K and IRA
« Reply #1 on: April 01, 2015, 04:26:21 PM »
Where is your new 401k at?

You can open your new traditional IRA with Vanguard and roll over your old 401k to it.

Eburg Elk

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Re: Old-Employer 401K and IRA
« Reply #2 on: April 01, 2015, 04:27:55 PM »
New one is at John Hancock

a1smith

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Re: Old-Employer 401K and IRA
« Reply #3 on: April 01, 2015, 04:34:51 PM »
Evaluate the investment options you have in John Hancock 401k versus IRA with Vanguard and choose the one with the best investment options.  My guess is that you will decide to rollover your previous 401k to Vanguard.

Some 401k's have really great options though.  Mine has an SSgA SP500 index fund with an expense ratio of 0.005% which is even better than their SPY ETF.

You won't get matching on a rollover so you won't lose out there.  It also won't count against your annual contribution limit.

forummm

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Re: Old-Employer 401K and IRA
« Reply #4 on: April 01, 2015, 06:25:01 PM »
You most likely will want to roll your old 401k into a Vanguard IRA. And probably will want to do that anytime you change jobs.

forummm

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Re: Old-Employer 401K and IRA
« Reply #5 on: April 01, 2015, 06:27:01 PM »
Some 401k's have really great options though.  Mine has an SSgA SP500 index fund with an expense ratio of 0.005% which is even better than their SPY ETF.

That's insane! Are you sure? It must be subsidized by your employer. Or you're looking at some fee charged on top of the ER that's inside the fund. How else could it be literally 10 times more efficient than Vanguard?

a1smith

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Re: Old-Employer 401K and IRA
« Reply #6 on: April 01, 2015, 07:07:29 PM »
Some 401k's have really great options though.  Mine has an SSgA SP500 index fund with an expense ratio of 0.005% which is even better than their SPY ETF.

That's insane! Are you sure? It must be subsidized by your employer. Or you're looking at some fee charged on top of the ER that's inside the fund. How else could it be literally 10 times more efficient than Vanguard?

It's actually less than 0.005%.  On the Performance Summary for the 401k choices it used to show 0.00% for net expense ratio and I thought it was employer subsidized.  But, I recently found this note at the end of the document:

(7) The net expense ratio for the SSgA Large Cap Index Fund is less than 0.005% (less than half of a basis point) and has historically been shown as 0.00% due to rounding.

Not bad, eh?  :-)

Right now, the gross expense ratio is 0.01% and the net is as shown in note 7.  So, either SSgA is giving us a break on the ER or employer is subsidizing some.  A lot of funds have lower net ER than gross ER so I think it is SSgA giving us a break.  Worst case, even if they get rid of the break it will go up to 0.01%

State Street Global Advisors (SSgA) is another big fish in the pond along with Vanguard, Fidelity, etc.

EDIT - one more interesting tidbit.  The ER is so low that the performance of the fund since inception, 7/01/07, to EOY 2014 is 6.63% vs 6.57% for the SP500. The index fund actually performed BETTER than the SP500.  I'm guessing this is because of price differences of when stocks were bought/sold to reflect changes in SP500, etc the performance ended up being a little better and it shows up since there is literally no drag from ER.
« Last Edit: April 01, 2015, 07:21:34 PM by a1smith »

forummm

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Re: Old-Employer 401K and IRA
« Reply #7 on: April 01, 2015, 08:12:31 PM »
Some 401k's have really great options though.  Mine has an SSgA SP500 index fund with an expense ratio of 0.005% which is even better than their SPY ETF.

That's insane! Are you sure? It must be subsidized by your employer. Or you're looking at some fee charged on top of the ER that's inside the fund. How else could it be literally 10 times more efficient than Vanguard?

It's actually less than 0.005%.  On the Performance Summary for the 401k choices it used to show 0.00% for net expense ratio and I thought it was employer subsidized.  But, I recently found this note at the end of the document:

(7) The net expense ratio for the SSgA Large Cap Index Fund is less than 0.005% (less than half of a basis point) and has historically been shown as 0.00% due to rounding.

Not bad, eh?  :-)

Right now, the gross expense ratio is 0.01% and the net is as shown in note 7.  So, either SSgA is giving us a break on the ER or employer is subsidizing some.  A lot of funds have lower net ER than gross ER so I think it is SSgA giving us a break.  Worst case, even if they get rid of the break it will go up to 0.01%

State Street Global Advisors (SSgA) is another big fish in the pond along with Vanguard, Fidelity, etc.

EDIT - one more interesting tidbit.  The ER is so low that the performance of the fund since inception, 7/01/07, to EOY 2014 is 6.63% vs 6.57% for the SP500. The index fund actually performed BETTER than the SP500.  I'm guessing this is because of price differences of when stocks were bought/sold to reflect changes in SP500, etc the performance ended up being a little better and it shows up since there is literally no drag from ER.

I'm looking at their site, and I only see fees much higher than that. This is the cheapest class of S&P 500 fund I can find:
http://www.ssgafunds.com/product/fund.seam?ticker=SVSPX

Not terrible, but still 3x Vanguard. Is yours class N?

a1smith

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Re: Old-Employer 401K and IRA
« Reply #8 on: April 01, 2015, 09:33:20 PM »
I'm looking at their site, and I only see fees much higher than that. This is the cheapest class of S&P 500 fund I can find:
http://www.ssgafunds.com/product/fund.seam?ticker=SVSPX

Not terrible, but still 3x Vanguard. Is yours class N?

The funds listed on the website are the publicly traded funds.  The one in my 401k is institutional class so it isn't published on their website.

I've attached some screenshots from the Performance Summary in a PDF file.
« Last Edit: June 21, 2015, 09:15:52 AM by a1smith »

forummm

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Re: Old-Employer 401K and IRA
« Reply #9 on: April 02, 2015, 10:27:07 AM »
I'm looking at their site, and I only see fees much higher than that. This is the cheapest class of S&P 500 fund I can find:
http://www.ssgafunds.com/product/fund.seam?ticker=SVSPX

Not terrible, but still 3x Vanguard. Is yours class N?

The funds listed on the website are the publicly traded funds.  The one in my 401k is institutional class so it isn't published on their website.

I've attached some screenshots from the Performance Summary in a PDF file.

Super cool. I wonder how they can get their costs down so low. Any insights?

Mississippi Mudstache

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Re: Old-Employer 401K and IRA
« Reply #10 on: April 02, 2015, 12:03:57 PM »
You most likely will want to roll your old 401k into a Vanguard IRA. And probably will want to do that anytime you change jobs.

Generally this is true. I lucked out with my last company - their 401k was with Vanguard, and I get institutional rates as long as I keep my money there. If I rolled it over to an IRA - even one with Vanguard - I would be doubling my expense ratios.

My current 401k is with MassMutual, and most of their funds are crap. If/when I leave, I will immediately roll it into an IRA.

a1smith

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Re: Old-Employer 401K and IRA
« Reply #11 on: April 02, 2015, 12:34:34 PM »
I'm looking at their site, and I only see fees much higher than that. This is the cheapest class of S&P 500 fund I can find:
http://www.ssgafunds.com/product/fund.seam?ticker=SVSPX

Not terrible, but still 3x Vanguard. Is yours class N?

The funds listed on the website are the publicly traded funds.  The one in my 401k is institutional class so it isn't published on their website.

I've attached some screenshots from the Performance Summary in a PDF file.

Super cool. I wonder how they can get their costs down so low. Any insights?

Big company, so maybe we get a volume discount.

TomTX

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Re: Old-Employer 401K and IRA
« Reply #12 on: April 04, 2015, 02:34:07 PM »
I'm looking at their site, and I only see fees much higher than that. This is the cheapest class of S&P 500 fund I can find:
http://www.ssgafunds.com/product/fund.seam?ticker=SVSPX

Not terrible, but still 3x Vanguard. Is yours class N?

The funds listed on the website are the publicly traded funds.  The one in my 401k is institutional class so it isn't published on their website.

I've attached some screenshots from the Performance Summary in a PDF file.

Super cool. I wonder how they can get their costs down so low. Any insights?

Big company, so maybe we get a volume discount.

We get institutional pricing on the Vanguard S&P 500 @ work (0.02%) - BUT there is a separate 401(k) maintenance fee listed elsewhere which ends up being 0.20-0.35% extra.

a1smith

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Re: Old-Employer 401K and IRA
« Reply #13 on: April 04, 2015, 10:32:47 PM »
I checked my wife's 401k and she has SSgA S&P 500 Index Fund - Class A.  It is the same as my SSgA Large Cap Index Fund; they are both S&P 500 Index Funds.  Her's has a 0.01% ER.  Her company is smaller than mine so I guess SSgA charges that to everyone.  For both of us, it is the only fee they charge; no maintenance fees.  I've attached the 3-page flyer, the ER ratio is listed in microscopic lettering at the bottom of the third page; it is in the 2nd paragraph of the fee disclosure.  Example shows $10,000 invested for 10 years has $12.89 in fees!

So forummm, if you want it in your 401k you can give the flyer to your 401k administrators and tell them you want it!  :-)