Over at Brightscope we read the following discussion: I have an Aetna plan, Fidelity Plan and my
most recent is J.P Morgan plan. I am looking into consolidating all of them
into my current J.P. Morgan plan. I need to know if that is a smart decision.
They are all aggressive and receiving around the same amount every quarter so
would it be best to combine or leave separate?
19 hours ago by
Marisol
-----------------------------------------------
Curt Sheldon,
EA, AIF® Level 19
You
have a few options. You can...
1.
Consolidate, like you
mention. This makes sense if your current 401(k) has acceptable investment
choices and equal or lower expenses than your old 401(k)s. It also has the
benefit of simplifying your life...only one account/one statement
2.
Roll your two
"old" 401(k) plans into a Traditional IRA. This makes sense if you
want/need access to asset classes that aren't available through your existing
401(k)s and if the expenses are acceptable. You may be accepting some increased
risk to your assets if you are sued and have funds invested funds in an IRA
3.
Leave things alone.
Nothing wrong with leaving them where they are, but I can't really think of how
that would help you either.
Whatever
you decide DO NOT physically touch the funds. Do a trustee to trustee transfer.
If you don't, you could end up with unexpected taxes and penalties.
Depending
on your investment appetite you can open an IRA at a Mutual Fund, Brokerage
Account, with an Investment Advisor or a bank. The process is pretty simple.
You complete an account application very similar to opening a bank account and
then you fill out a form to transfer your assets in. Once you have moved the
funds, then you just have to select your investment options.
Report | 15
hours ago near Alexandria, VA
James D. Kinney,
CFP™ Level 17
You
have 3 options. 1. Leave them alone. I generally don't like leaving money in
ex-employers 401ks. Harder to manage 3 accounts, if they are small, they get
forgotten over time. So I don't like this one. 2. If your new plan will accept
the old money, you can roll the old plans into the new one. This is attractive
for its simplicity. One single account to manage and keep track of. 3. You can
roll the old accounts into an IRA account at an institution of your choice. If
you aren't "into" investing, or if $ amounts are small, you may find
this more trouble than it is worth. Advantage is that you have more investment
options - but you need to know what to do with all these options! An investment
advisor can help here. If you do decide to work with an advisor, choose a fee
only advisor who isn't going to sell you expensive and overly complicated
products (like variable annuities with living benefits).
An
IRA is just a tax deferred account. You can open one at any financial
insttution. So if you want to put the money in a bank CD, you go to the bank
and tell them you want to open an IRA account to hold the CD. Likewise, you can
open an IRA with any mutual fund company through their websites, or any online
brokerage account. If you do not know how to select a mutual fund or how to
invest in a brokerage account, you will definitely need to hire an investment
advisor. You can find one at www.letsmakeaplan.or www.napfa.org, or
www.fpanet.org.
Report | 17
hours ago near Bridgewater, NJ
Rich Winer Level
20
Since
Curt and James have accurately identified your various options, I will provide
you a simple recommendation. If you aren't concerned about being sued and the
asset protection provided by having your retirement savings inside a
"qualified" plan, I would recommend that you consolidate your
investments by rolling your three 401K accounts to an IRA. This will provide
you more (nearly unlimited) investment options, mostly likely at a lower cost.
Many 401K plan sponsors allocate the plan's administrative costs among the plan
participants. So, by having your money in an IRA, you would not be subject to
those costs.
Once
you consolidate your retirement savings in an IRA, you may want help from a
financial advisor, either to advise you in regard to your investments and
retirement planning, or to manage the investments for you. Depending on your
level of financial and investment expertise, a good financial advisor could
help you maximize your investment returns while helping to manage your
investment risk. Feel free to ask any follow up questions.
An
IRA is essentially the "wrapper" that determines how your
contributions and withdrawals are treated for tax purposes. Inside the IRA, you
can invest in stocks, bonds, mutual funds, etc. - - the same investments you
might have in a taxable investment account. To get started, I would recommend
that you open an IRA account at a discount brokerage firm like TD Ameritrade or
Fidelity. To learn how to invest the funds in your IRA, you might read Ric
Edleman's The Truth About Money and The Lies About Money. Both have sections
that will help you determine how to invest your retirement funds appropriately
and effectively, but they will not give you specifics about what to buy. If you
would like to contact me privately and provide me more information about your
situation, I would be happy to provide you additional guidance to help you get
started.
Report | 17
hours ago near Woodland Hills, CA
0 comments:
Post a Comment