Author Topic: Selling 401k stock funds to buy traditional IRA bond funds  (Read 1977 times)

dirtyhippy

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Selling 401k stock funds to buy traditional IRA bond funds
« on: January 19, 2016, 02:34:54 PM »
Hi All,

Through my work 401k I currently have all of my funds going to: the Vanguard 2060 retirement fund: https://personal.vanguard.com/us/funds/snapshot?FundId=1691&FundIntExt=INT

The fees on this are high, .9% - I also have a Traditional IRA through Vanguard where I'm invested in 100% VTSAX, of course the fees are WAY lower, .05%.

I've been considering rolling over my 401k just to move money out of it into my IRA and buying VTBLX admiral class shares.  But I'd like advice on if this is a good idea.  I don't care about the % that it's down, I have a long time before I need this $ and understand how it can go up and down etc, but maybe it's not a good idea to roll over the 401k before leaving the company?  Additionally maybe it's not a good idea to roll over to a bond fund since my current fund is down so much and it's essentially locking in losses (even if I re-buy?).  On the flip side if the market continues to go down maybe it would be a good move as my "losses" would be less in Bonds, evening out the original losses built in... so many possibilities!

Regardless of if it happens now when I leave this job I will roll over the 401k and diversify into bonds AND VTSAX according to whatever allocation I feel like at the time.

Any opinions and thoughts are much appreciated.

MustacheAndaHalf

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Re: Selling 401k stock funds to buy traditional IRA bond funds
« Reply #1 on: January 19, 2016, 08:55:30 PM »
Through my work 401k I currently have all of my funds going to: the Vanguard 2060 retirement fund: https://personal.vanguard.com/us/funds/snapshot?FundId=1691&FundIntExt=INT

The fees on this are high, .9% - I also have a Traditional IRA through Vanguard where I'm invested in 100% VTSAX, of course the fees are WAY lower, .05%.
The link you provided shows an expense ratio of 0.18%, not 0.90%.  Follow your own link and look at the middle right of the screen.  Having confirmed the 0.18% expense ratio, do you still feel the need to switch funds?

Vagabond76

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Re: Selling 401k stock funds to buy traditional IRA bond funds
« Reply #2 on: January 19, 2016, 09:52:55 PM »
Through my work 401k I currently have all of my funds going to: the Vanguard 2060 retirement fund: https://personal.vanguard.com/us/funds/snapshot?FundId=1691&FundIntExt=INT

The fees on this are high, .9% - I also have a Traditional IRA through Vanguard where I'm invested in 100% VTSAX, of course the fees are WAY lower, .05%.
The link you provided shows an expense ratio of 0.18%, not 0.90%.  Follow your own link and look at the middle right of the screen.  Having confirmed the 0.18% expense ratio, do you still feel the need to switch funds?

I read this to suggest the 401k administration fees + fund fee is .9%. OP would be better off to dump the 401k upon leaving the employer. I would be surprised if the company allows in-service roll-over. If so, everyone would contribute to get a match and then roll out of it at the first opportunity.

dirtyhippy

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Re: Selling 401k stock funds to buy traditional IRA bond funds
« Reply #3 on: January 28, 2016, 04:27:35 PM »
Through my work 401k I currently have all of my funds going to: the Vanguard 2060 retirement fund: https://personal.vanguard.com/us/funds/snapshot?FundId=1691&FundIntExt=INT

The fees on this are high, .9% - I also have a Traditional IRA through Vanguard where I'm invested in 100% VTSAX, of course the fees are WAY lower, .05%.
The link you provided shows an expense ratio of 0.18%, not 0.90%.  Follow your own link and look at the middle right of the screen.  Having confirmed the 0.18% expense ratio, do you still feel the need to switch funds?

Ah, sorry my point was that going direct to Vanguard I can get .18 but through my work fund the same thing is .9.

dirtyhippy

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Re: Selling 401k stock funds to buy traditional IRA bond funds
« Reply #4 on: January 28, 2016, 04:28:44 PM »
Through my work 401k I currently have all of my funds going to: the Vanguard 2060 retirement fund: https://personal.vanguard.com/us/funds/snapshot?FundId=1691&FundIntExt=INT

The fees on this are high, .9% - I also have a Traditional IRA through Vanguard where I'm invested in 100% VTSAX, of course the fees are WAY lower, .05%.
The link you provided shows an expense ratio of 0.18%, not 0.90%.  Follow your own link and look at the middle right of the screen.  Having confirmed the 0.18% expense ratio, do you still feel the need to switch funds?

I read this to suggest the 401k administration fees + fund fee is .9%. OP would be better off to dump the 401k upon leaving the employer. I would be surprised if the company allows in-service roll-over. If so, everyone would contribute to get a match and then roll out of it at the first opportunity.

Okay good point, thanks for the advice.

Geekenstein

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Re: Selling 401k stock funds to buy traditional IRA bond funds
« Reply #5 on: January 28, 2016, 05:10:04 PM »
As long as you are with the company it makes sense to stay in the 401k and do whatever you need to to get the max company match.

Assuming you are already doing that, don't worry too much about the fees,  A fee of .9 in a 401k isn't awful.  It's higher than you would like but that's not unusual in 401k's.  It could be a lot worse.  The good news is that some of that is getting offset by your company match which is free dough.

Above that, if you qualify, you can always toss anything you can afford to invest into a Roth.  You could do that a Vanguard, and if you need to get to the money you can always pull out any amount less than you total contributions, no penalty.