The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: oldtoyota on January 06, 2014, 10:46:28 AM

Title: Rolling over old 401K into Bonds?
Post by: oldtoyota on January 06, 2014, 10:46:28 AM
I have an old 401K that I need to rollover. It's currently invested in a stock mutual fund.

Since I have to pull out of that investment anyway when I roll the money over, would it make sense to roll it over into bonds since I need more bonds in my portfolio? After the rollover, the money would be inside an IRA.

My allocation is currently 90% stocks and 10 percent bonds. My target is 70-30.



Title: Re: Rolling over old 401K into Bonds?
Post by: KingCoin on January 06, 2014, 10:55:21 AM
Since there's no tax consequence for moving around assets in your retirement accounts, why would you not adjust them to your targeted allocation?
Title: Re: Rolling over old 401K into Bonds?
Post by: Will on January 06, 2014, 11:00:44 AM
Yes, it makes sense, since it gets you closer to your targeted allocation.

Was this a trick question?
Title: Re: Rolling over old 401K into Bonds?
Post by: oldtoyota on January 06, 2014, 12:32:31 PM
Yes, it makes sense, since it gets you closer to your targeted allocation.

Was this a trick question?

Nope. I am really short on sleep though. ;-) I forgot how sleep exhaustion affects my brain. =-)

Title: Re: Rolling over old 401K into Bonds?
Post by: oldtoyota on January 06, 2014, 12:36:43 PM
Also, it's hard to explain, but I'll try.

I always saved a lot, but I was not doing things the way I think I should have. Now, I'm going through everything in great detail.

So, I have this old 401K. I get it in my mind that I am going to roll it over to stocks. That process gets delayed due to paperwork complications. Time passes. Later, I set a goal to work on asset allocation, sorta kinda forgetting about the 401K to be rolled over (because I am still waiting to deal with paperwork issues).

Eventually, I remember that old 401K and think, "Hey, maybe this thing could help me with this other problem." They were not related in my mind before. Now, they are.

I have found there's not always a linear process to getting my finances in apple pie order.



Title: Re: Rolling over old 401K into Bonds?
Post by: Carolina on My Mind on January 06, 2014, 01:41:39 PM
I'm in a very similar situation, oldtoyota -- have spent the last couple years doing housecleaning, moving my savings around to where it should have been all along . . . .  A few months ago I finally rolled a very old 401K into an IRA and went from all stocks to all bonds.  Got me closer to the allocation I want (70-30), and I saw no down side.
Title: Re: Rolling over old 401K into Bonds?
Post by: aj_yooper on January 06, 2014, 02:15:21 PM
Good for you in straightening out dormant accounts! 
Title: Re: Rolling over old 401K into Bonds?
Post by: oldtoyota on January 06, 2014, 02:38:47 PM
I'm in a very similar situation, oldtoyota -- have spent the last couple years doing housecleaning, moving my savings around to where it should have been all along . . . .  A few months ago I finally rolled a very old 401K into an IRA and went from all stocks to all bonds.  Got me closer to the allocation I want (70-30), and I saw no down side.

Cool. Thank you for adding in your thoughts here. I also wanted to triple check that there wasn't a reason NOT to do what I was thinking.

Title: Re: Rolling over old 401K into Bonds?
Post by: oldtoyota on January 06, 2014, 02:39:20 PM
Good for you in straightening out dormant accounts!

Thanks! Long overdue. And it feels good to get everything straightened out. =-)