by sooppa » Sun Jan 26, 2014 6:41 pm
I have two 401ks from two old jobs, one is almost 50k, one is almost 20k.
I am paying $100 a year to Fidelity. I called them and asked if I could move to something without a fee. They suggested moving to a free IRA.
I am pretty clueless about it, is this good advice?
I know I shouldn't be so clueless, but it's all a little overwhelming when I've tried to look into it. I'm not stupid by any means, but i am stupid in this important matter, for sure! (Time is also an issue with two young kids!)
Thanks!
P.s how would I get a good financial planner? I tried calling Fidelity but I don't really want to go with the guy or girl who answers the phone (unless they blew me away with their knowledge which they never have.)
Posts: 2
Joined: 26 Jan 2014
Re: 401k or IRA
by SteveKL » Sun Jan 26, 2014 8:31 pm
Welcome to the forum! You almost certainly do not need a financial planner. You will receive excellent advice here. Yes, you can move your 401k's into an IRA (a process called a "rollover") and that may be an excellent move on your part. But there are other options, and one of those may be a better fit for you.
Do you currently have a 401k or other retirement plan available at work?
Posts: 315
Joined: 3 Sep 2012
Re: 401k or IRA
by Johm221122 » Sun Jan 26, 2014 8:45 pm
Welcome to forum,
Try getting started
John
Posts: 4113
Joined: 13 May 2011
Re: 401k or IRA
by Jeff7 » Sun Jan 26, 2014 8:47 pm
A rollover can be done, straight into a traditional IRA. Wiki entry on rollovers.
(It must be a rollover. This does not mean that you cash out your 401k and then put that money into an IRA. If you do that, you will pay taxes on the money, and you may also incur an early-withdrawal penalty charge. The company where you'll be holding the IRA can help with the rollover process. The funds or investments are transferred directly from the 401k account to the IRA.)
- What are your fund options in the old 401k plans, along with their expenses? In some cases, the fund options in 401k plans are very good. But, in my opinion, it is worth it to put them into an IRA. This gives you much more control over what goes on with your investments. Funds like Vanguard Total Stock Market Admiral (VTSAX, ER = 0.05%) or Fidelity's Spartan Total Market Fund (FSTMX, ER=0.10%) are tough to beat in terms of cost and diversification.
- Financial planner? This forum works quite well for that purpose 
, and a nice spreadsheet can handle the rest.
, and a nice spreadsheet can handle the rest.
Though some of the recommended reading isn't free:
This is my own recommendation: Bogleheads' Guide to Investing, or you could also go with the Bogleheads' Guide to Retirement Planning. I found there to be a good bit of overlap between the two.
Or if you're into reading something a lot longer: Common Sense on Mutual Funds. My summary of it is: Cost Matters. Diversify. Professional fund pickers aren't nearly worth their cost. People can't see the future, no matter how hard they try to sell you on the idea that they can.
Thanks to those books, and to this forum, I started a Roth IRA, and also dramatically increased my 401k contributions (I'd never even heard of an index fund until finding this forum), and I incurred $0 in financial service worker costs. 
Posts: 175
Joined: 24 Nov 2012
Re: 401k or IRA
by whaleknives » Sun Jan 26, 2014 8:54 pm
You can roll your old 401(k)'s into a new employer's 401(k) or an IRA in a personal account with Fidelity or another investment firm. Vanguard discusses it here: See if a 401(k) rollover is right for you:
- "What you can do
- Move a traditional 401(k) into a traditional IRA, tax-free.
- Move a Roth 401(k) into a Roth IRA, tax-free.
- Move a traditional 401(k) into a Roth IRA—this would be considered a "Roth conversion," so you'd owe taxes.
- What you can't do
- Convert a Roth 401(k) to a traditional IRA."
I prefer to consolidate accounts when permitted, to simplify my life. You can compare Vanguard to Fidelity and other firms.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 17Aug2007) | International maritime signal flag W (Whiskey): "I require medical assistance."
Posts: 134
Joined: 24 Jun 2012
Re: 401k or IRA
by JW Nearly Retired » Sun Jan 26, 2014 10:25 pm
sooppa wrote:I have two 401ks from two old jobs, one is almost 50k, one is almost 20k.
I am paying $100 a year to Fidelity. I called them and asked if I could move to something without a fee. They suggested moving to a free IRA.
I am pretty clueless about it, is this good advice?
I know I shouldn't be so clueless, but it's all a little overwhelming when I've tried to look into it. I'm not stupid by any means, but i am stupid in this important matter, for sure! (Time is also an issue with two young kids!)
If you are, or will eventually be, a highish income family there are good reasons not to rollover your old 401ks to an IRA. By high income I mean someone who cannot contribute directly to a Roth IRA. Currently for MFJ that right to contribute phases out over a MAGI range of $181k - $191k.
If you are high income having an existing rollover or other IRA snuffs out the "backdoor Roth" option.http://www.bogleheads.org/wiki/Backdoor_Roth_IRA
JW
Retired Summer 2013
Posts: 3341
Joined: 16 Dec 2007
Re: 401k or IRA
by sooppa » Mon Jan 27, 2014 1:45 pm
Thanks for the thoughtful replies - it's exciting to have discovered this forum:
I currently am not working (am a mother of a toddler and a baby) but am starting to work again now - part time/freelance from home - so no current work retirement plan.
I would love to be "high income" one day, but my max wage ever was 95K and I'm nowhere near that now.
Jeff in answer to your questions, here are my allocations (and anybody's feedback is welcome - I like the suggestion of Vanguard or Fidelity for an Ira, thanks for that)
401k #1 is "moderately aggressive" with $18K. I am coming up on 40th bday.
PIMCO: tot rtn; inst....14%
Vanguard Instl Indx; Inst.....35%
Fidelity Sp ltl ldx; Inst......33%
Vanguard Md-Cp Idx;Inst....17%
Since last quarter (Oct 2013) they seem to have moved 1% from Pimco to Vanguard Md-cp, but that's it. (Is this little movement just to prove they are earning their $100 a year?!)
It says since enrollment, the account has increased $2K "since enrollment" (it calls 'enrollment" since 7/5/13, when I actually signed up for this 401k in 2004".
Iit has increased 1K in last quarter (10/11/13-1/10/14).
401k #2 has 48k
AF AMCAP R6...15%
Dodge & Cox Stock....5%
Fid Freedom K 2040....17%
MSIF Mid Cap Grth I...10%
PIM Total Rt Inst...8%
Sptn 500 Index Inst....30%
1st Eagle Overseas...15%
If I'm reading it correctly, it looks like the allocations haven't changed since last quarter, (and will stay the same next quarter) and it gained almost 10K from Jan-Dec 2013. Great news after seeing such a sink...
This one doesn't say the increase since enrollment (that I can see)
Posts: 2
Joined: 26 Jan 2014
Re: 401k or IRA
by Laura » Mon Jan 27, 2014 10:48 pm
If these are your only investments then I suggest rolling both over to Vanguard and investing in a Target Retirement fund. With just one fund you can invest in the US stock and bond market and the international stock and bond market. Vanguard will do the work of maintaining your asset allocation for you. Ignore the date on the fund and instead, pick the fund with the asset allocation that matches your target.
However, we normally recommend you look at all investment accounts together so you should blend this with your husband's accounts to have one broadly diversified portfolio that crosses all accounts.
Laura
by sooppa » Sun Jan 26, 2014 6:41 pm
I have two 401ks from two old jobs, one is almost 50k, one is almost 20k.
I am paying $100 a year to Fidelity. I called them and asked if I could move to something without a fee. They suggested moving to a free IRA.
I am pretty clueless about it, is this good advice?
I know I shouldn't be so clueless, but it's all a little overwhelming when I've tried to look into it. I'm not stupid by any means, but i am stupid in this important matter, for sure! (Time is also an issue with two young kids!)
Thanks!
P.s how would I get a good financial planner? I tried calling Fidelity but I don't really want to go with the guy or girl who answers the phone (unless they blew me away with their knowledge which they never have.)
Posts: 2
Joined: 26 Jan 2014
Re: 401k or IRAby SteveKL » Sun Jan 26, 2014 8:31 pm
Welcome to the forum! You almost certainly do not need a financial planner. You will receive excellent advice here. Yes, you can move your 401k's into an IRA (a process called a "rollover") and that may be an excellent move on your part. But there are other options, and one of those may be a better fit for you.
Do you currently have a 401k or other retirement plan available at work?
Posts: 315
Joined: 3 Sep 2012
Re: 401k or IRAby Johm221122 » Sun Jan 26, 2014 8:45 pm
Welcome to forum,
Try getting started
John
Posts: 4113
Joined: 13 May 2011
Re: 401k or IRAby Jeff7 » Sun Jan 26, 2014 8:47 pm
A rollover can be done, straight into a traditional IRA. Wiki entry on rollovers.
(It must be a rollover. This does not mean that you cash out your 401k and then put that money into an IRA. If you do that, you will pay taxes on the money, and you may also incur an early-withdrawal penalty charge. The company where you'll be holding the IRA can help with the rollover process. The funds or investments are transferred directly from the 401k account to the IRA.)
- What are your fund options in the old 401k plans, along with their expenses? In some cases, the fund options in 401k plans are very good. But, in my opinion, it is worth it to put them into an IRA. This gives you much more control over what goes on with your investments. Funds like Vanguard Total Stock Market Admiral (VTSAX, ER = 0.05%) or Fidelity's Spartan Total Market Fund (FSTMX, ER=0.10%) are tough to beat in terms of cost and diversification.
- Financial planner? This forum works quite well for that purpose , and a nice spreadsheet can handle the rest.
, and a nice spreadsheet can handle the rest.
Though some of the recommended reading isn't free:
This is my own recommendation: Bogleheads' Guide to Investing, or you could also go with the Bogleheads' Guide to Retirement Planning. I found there to be a good bit of overlap between the two.
Or if you're into reading something a lot longer: Common Sense on Mutual Funds. My summary of it is: Cost Matters. Diversify. Professional fund pickers aren't nearly worth their cost. People can't see the future, no matter how hard they try to sell you on the idea that they can.
Thanks to those books, and to this forum, I started a Roth IRA, and also dramatically increased my 401k contributions (I'd never even heard of an index fund until finding this forum), and I incurred $0 in financial service worker costs.
Posts: 175
Joined: 24 Nov 2012
Re: 401k or IRAby whaleknives » Sun Jan 26, 2014 8:54 pm
You can roll your old 401(k)'s into a new employer's 401(k) or an IRA in a personal account with Fidelity or another investment firm. Vanguard discusses it here: See if a 401(k) rollover is right for you:
- "What you can do
- Move a traditional 401(k) into a traditional IRA, tax-free.
- Move a Roth 401(k) into a Roth IRA, tax-free.
- Move a traditional 401(k) into a Roth IRA—this would be considered a "Roth conversion," so you'd owe taxes.
- What you can't do
- Convert a Roth 401(k) to a traditional IRA."
I prefer to consolidate accounts when permitted, to simplify my life. You can compare Vanguard to Fidelity and other firms.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 17Aug2007) | International maritime signal flag W (Whiskey): "I require medical assistance."
Posts: 134
Joined: 24 Jun 2012
Re: 401k or IRAby JW Nearly Retired » Sun Jan 26, 2014 10:25 pm
sooppa wrote:I have two 401ks from two old jobs, one is almost 50k, one is almost 20k.
I am paying $100 a year to Fidelity. I called them and asked if I could move to something without a fee. They suggested moving to a free IRA.
I am pretty clueless about it, is this good advice?
I know I shouldn't be so clueless, but it's all a little overwhelming when I've tried to look into it. I'm not stupid by any means, but i am stupid in this important matter, for sure! (Time is also an issue with two young kids!)
If you are, or will eventually be, a highish income family there are good reasons not to rollover your old 401ks to an IRA. By high income I mean someone who cannot contribute directly to a Roth IRA. Currently for MFJ that right to contribute phases out over a MAGI range of $181k - $191k.
If you are high income having an existing rollover or other IRA snuffs out the "backdoor Roth" option.http://www.bogleheads.org/wiki/Backdoor_Roth_IRA
JW
Retired Summer 2013
Posts: 3341
Joined: 16 Dec 2007
Re: 401k or IRAby sooppa » Mon Jan 27, 2014 1:45 pm
Thanks for the thoughtful replies - it's exciting to have discovered this forum:
I currently am not working (am a mother of a toddler and a baby) but am starting to work again now - part time/freelance from home - so no current work retirement plan.
I would love to be "high income" one day, but my max wage ever was 95K and I'm nowhere near that now.
Jeff in answer to your questions, here are my allocations (and anybody's feedback is welcome - I like the suggestion of Vanguard or Fidelity for an Ira, thanks for that)
401k #1 is "moderately aggressive" with $18K. I am coming up on 40th bday.
PIMCO: tot rtn; inst....14%
Vanguard Instl Indx; Inst.....35%
Fidelity Sp ltl ldx; Inst......33%
Vanguard Md-Cp Idx;Inst....17%
Since last quarter (Oct 2013) they seem to have moved 1% from Pimco to Vanguard Md-cp, but that's it. (Is this little movement just to prove they are earning their $100 a year?!)
It says since enrollment, the account has increased $2K "since enrollment" (it calls 'enrollment" since 7/5/13, when I actually signed up for this 401k in 2004".
Iit has increased 1K in last quarter (10/11/13-1/10/14).
401k #2 has 48k
AF AMCAP R6...15%
Dodge & Cox Stock....5%
Fid Freedom K 2040....17%
MSIF Mid Cap Grth I...10%
PIM Total Rt Inst...8%
Sptn 500 Index Inst....30%
1st Eagle Overseas...15%
If I'm reading it correctly, it looks like the allocations haven't changed since last quarter, (and will stay the same next quarter) and it gained almost 10K from Jan-Dec 2013. Great news after seeing such a sink...
This one doesn't say the increase since enrollment (that I can see)
Posts: 2
Joined: 26 Jan 2014
Re: 401k or IRAby Laura » Mon Jan 27, 2014 10:48 pm
If these are your only investments then I suggest rolling both over to Vanguard and investing in a Target Retirement fund. With just one fund you can invest in the US stock and bond market and the international stock and bond market. Vanguard will do the work of maintaining your asset allocation for you. Ignore the date on the fund and instead, pick the fund with the asset allocation that matches your target.
However, we normally recommend you look at all investment accounts together so you should blend this with your husband's accounts to have one broadly diversified portfolio that crosses all accounts.
Laura
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