401k from previous employer reddit

Tap the Traditional accounts until your tax bill hits some level you're comfortable with, then supplement your further money needs with tax-free Roth withdrawals. /u/sciguyCO has an excellent comprehensive answer. (Might rollover to my new employer, but I'm not eligible to participate for a full year of employment.). Only about 15% of it is Roth. Unless it's some great 401k plan with low fees and good funds there's not really any advantage to keeping it there other than laziness. That does mean that you have to select a good company to host your personal IRA (like Vanguard) and that you use it in a way that minimizes fees charged against you (as with buying vanguard index funds). It needs to be a spectacular 401k (read: usually found at only the biggest companies) to beat out the fund choices available via a Vanguard IRA. ._2YJDRz5rCYQfu8YdgB_neb{overflow:hidden;position:relative}._2YJDRz5rCYQfu8YdgB_neb:before{background-image:url(https://www.redditstatic.com/desktop2x/img/reddit_pattern.png);content:"";filter:var(--newCommunityTheme-invertFilter);height:100%;position:absolute;width:100%}._37WD6iicVS6vGN0RomNTwh{padding:0 12px 12px;position:relative} If your account has a balance of less than $1,000, your … Press question mark to learn the rest of the keyboard shortcuts. So you need to ask whether your employer offers these provisions in your 401(k) plan. But if you’re still working at age 70½, you don’t have to take RMDs from your current employer’s 401(k) plan. This one-size-fits-all advice is a bit dangerous - each situation is different. Do they charge additional account fees and what are they? Many employees diligently focus their energy on accumulating assets into their Employee Retirement Income Security Act 401(k) or 403(b) employer plans. In my experience, most 401k plans do allow rollovers from another 401k, rollovers from an IRA are less common. When people change jobs, their 401(k) account often gets left behind with their former employer — and that’s where the problems begin. New 401k fund options may be better than what's available in your old plans. It is not true that "only the biggest companies" use them. Using an employer-sponsored 401(k) plan can be a great way to save for retirement. It may even make sense to transfer Traditional IRA assets into the current employer… They are equipped to help. There is a time out of market when doing your rollover where you can easily sit out on a market rally (or drop). There are other benefits if you expect to be sued where you can protect 401ks better than IRAs, but it is state specific so research is needed. Join our community, read the PF Wiki, and get on top of your finances! easy to see total savings. This process works best when you have $0 balance in any Traditional IRAs. It’s more manageable and the expense ratios were way way too high at my previous employers 401ks. con: every time you move money it exposes you to the inefficiency of the financial system. Barring the need to wait until you are 59 & 1/2 to roll it over due to the 10% penalty discussed above, there is very little reason to just leave an old 401k with an employer. The simplified answer is that for most people, in most situations, rolling into an IRA is your best move. We moved all of our old accounts to Vanguard. Those fees will kill whatever return you have with such small balances. I was a bit surprised when he strongly recommended I leave these as-is and just let them grow without adding any additional funds. I like to roll them into an IRA that I control, and where I choose, and where I know how to get my money out. There isn't really a truly wrong answer in regard to whether to put it in your new employer's 401k or your own IRA. Having only one 401(k) can make it easier to manage your retirement … Unless there are weird exceptions, I'm pretty sure all 401k plans can hold pre-tax dollars, even when all of your contributions are Roth. It's about control and tracking. I've never seen a 401(k) that beats a vanguard brokerage IRA in terms of fees or investment options, even when the employer is paying the management fees. Usually (but not always) these options are equal or better than what's in a 401k plan. Less of a headache, cheaper, and you will have started a relationship with a good financial company and have a frame of reference when looking at fees going forward. Please contact the moderators of this subreddit if you have any questions or concerns. Either way, better to move the money sooner rather than later. ._33axOHPa8DzNnTmwzen-wO{display:block;padding:0 16px;width:100%}.isNotInButtons2020 ._33axOHPa8DzNnTmwzen-wO{font-size:14px;font-weight:700;letter-spacing:.5px;line-height:32px;text-transform:uppercase} In my experience, most 401k plans do allow rollovers from another 401k, rollovers from an IRA are less common. Step … If you are relatively young, you are not going to retire for decades. ._3gbb_EMFXxTYrxDZ2kusIp{margin-bottom:24px;text-transform:uppercase;width:100%}._3gbb_EMFXxTYrxDZ2kusIp:last-child{margin-bottom:10px} good lineup of Vanguard index funds), I generally favor consolidating former plans into the current 401k. If your plan offers excellent fund choices with lower fees than their retail … While you can't directly take out a loan from your old employer's 401 (k), there may be other ways of borrowing or accessing your money without facing a penalty. Under certain circumstances, you might consider leaving your money in your previous employers 401k plan. Having both can actually provide some flexibility once you hit retirement, since withdrawals from Traditional accounts "fill up" tax brackets from the bottom up, which can mean that it can come out of the account at a lower tax rate than it went in. See the pros and cons of a 401(k) rollover. Right now your funds have an average expense ratio of 1.14% which is very, very high. Depending on your income level, it might even be worth taking the hit on a Roth conversion, though that's not super likely. Tough to answer this without knowing some specifics about quantities of funds and who provides/provided each of the retirement accounts (Fidelity, Schwab, Vanguard, etc.). 35 of these 36 funds beat their Lipper average for the 10-year period. Option 1: Leave the accounts as-is. Go Curry Cracker had a nice set of articles starting here. Make a pre-tax and a post-tax personal IRA and switch the employer accounts into whichever one is the same type as the employer was using. A given plan can have restrictions about receiving a rollover, so double-check what your plan allows. dont have to deal with multiple companies at retirement. Retirement Accounts (articles on 401(k) plans, IRAs, and more). Roll over your 401(k) to an IRA. Between my wife and I we had about 6 different accounts from years of moving jobs. Bogleheads is a financial resource. If you enact a rollover into an IRA you can find some good low-expense, no load funds that can reduce that to a fifth or less of what you're currently paying. ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} I've tried doing some research but I'm still confused about the pros and cons of leaving the money in those old 401k accounts versus rolling them over into my new 401k or an IRA. The "con" of rolling accounts over to a rollover IRA is that it blocks "backdoor Roth" contributions. Some benefits: Your money has the chance to continue to grow tax-deferred. ie, should be a single form, but might end up on the phone for 5 hours trying to get it done. You have full control over the account. If you will have a 401k setup are new job, talk to the investment company to get the prior ones rolled over. Both accounts show up on our apps and on-line so we see our investments as a single picture. All else being equal, more accounts is more cumbersome and requires more time to properly administer/rebalance/monitor/etc. If the new plan has good fund choices, this isn't a problem. My last employers 401k I did a direct rollover to my new employer as the fees were lower and better investment options. Not all employers will accept a rollover from a previous employer’s plan, so check with your new employer before making any decisions. You can roll over from 401(k) to traditional IRA and then convert to Roth IRA, but you have to pay taxes on the amount that you roll over. One account is around $50k and the other is around $40k. They have books and a forum. Looks like you're using new Reddit on an old browser. Instead of just leaving money with your old employer, you can move it into an IRA that you control. ._1EPynDYoibfs7nDggdH7Gq{margin-bottom:8px;position:relative}._1EPynDYoibfs7nDggdH7Gq._3-0c12FCnHoLz34dQVveax{max-height:63px;overflow:hidden}._1zPvgKHteTOub9dKkvrOl4{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word}._1dp4_svQVkkuV143AIEKsf{-ms-flex-align:baseline;align-items:baseline;background-color:var(--newCommunityTheme-body);bottom:-2px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap;padding-left:2px;position:absolute;right:-8px}._5VBcBVybCfosCzMJlXzC3{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;color:var(--newCommunityTheme-bodyText)}._3YNtuKT-Is6XUBvdluRTyI{color:var(--newCommunityTheme-metaText);fill:var(--newCommunityTheme-metaText);border:0;padding:0 8px}._3YNtuKT-Is6XUBvdluRTyI:active,._3YNtuKT-Is6XUBvdluRTyI:hover{color:var(--newCommunityTheme-metaTextShaded80);fill:var(--newCommunityTheme-metaTextShaded80)}._3YNtuKT-Is6XUBvdluRTyI:disabled,._3YNtuKT-Is6XUBvdluRTyI[data-disabled],._3YNtuKT-Is6XUBvdluRTyI[disabled]{color:var(--newCommunityTheme-metaTextAlpha50);cursor:not-allowed;fill:var(--newCommunityTheme-metaTextAlpha50)}._2ZTVnRPqdyKo1dA7Q7i4EL{transition:all .1s linear 0s}.k51Bu_pyEfHQF6AAhaKfS{transition:none}._2qi_L6gKnhyJ0ZxPmwbDFK{transition:all .1s linear 0s;display:block;background-color:var(--newCommunityTheme-field);border-radius:4px;padding:8px;margin-bottom:12px;margin-top:8px;border:1px solid var(--newCommunityTheme-canvas);cursor:pointer}._2qi_L6gKnhyJ0ZxPmwbDFK:focus{outline:none}._2qi_L6gKnhyJ0ZxPmwbDFK:hover{border:1px solid var(--newCommunityTheme-button)}._2qi_L6gKnhyJ0ZxPmwbDFK._3GG6tRGPPJiejLqt2AZfh4{transition:none;border:1px solid var(--newCommunityTheme-button)}.IzSmZckfdQu5YP9qCsdWO{cursor:pointer;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO ._1EPynDYoibfs7nDggdH7Gq{border:1px solid transparent;border-radius:4px;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO:hover ._1EPynDYoibfs7nDggdH7Gq{border:1px solid var(--newCommunityTheme-button);padding:4px}._1YvJWALkJ8iKZxUU53TeNO{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7{display:-ms-flexbox;display:flex}._3adDzm8E3q64yWtEcs5XU7 ._3jyKpErOrdUDMh0RFq5V6f{-ms-flex:100%;flex:100%}._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v,._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v{color:var(--newCommunityTheme-button);margin-right:8px;color:var(--newCommunityTheme-errorText)}._3zTJ9t4vNwm1NrIaZ35NS6{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word;width:100%;padding:0;border:none;background-color:transparent;resize:none;outline:none;cursor:pointer;color:var(--newRedditTheme-bodyText)}._2JIiUcAdp9rIhjEbIjcuQ-{resize:none;cursor:auto}._2I2LpaEhGCzQ9inJMwliNO{display:inline-block}._2I2LpaEhGCzQ9inJMwliNO,._42Nh7O6pFcqnA6OZd3bOK{margin-left:4px;vertical-align:middle}._42Nh7O6pFcqnA6OZd3bOK{fill:var(--newCommunityTheme-button);height:16px;width:16px;margin-bottom:2px} The two downsides of rolling old employer-sponsored accounts into an IRA instead of the current employer's plan are: This reduces the attractiveness of the so-called backdoor Roth IRA contribution strategy. A given plan can have restrictions about receiving a rollover, so double-check what your plan allows. Worth noting, some bloggers have suggested that the taxable investment account is pretty much just as good as a Roth IRA if you plan to retire on approximately <$90k per year (today's money). Thank you for the post. A self-directed IRA is not the same thing as a traditional IRA where someone has investment authority. Pros: This consolidates your accounts to simplify management. Option 2: Rollover the old balances into your new employer's 401k. Americans lost track of more than $7.7 billion worth of retirement savings in 2015 alone by “accidentally and unknowingly” abandoning their 401(k). The pro is that if the funds and fees are better in the old one, you can leave it there. Any match contributions will definitely rollover to Traditional. How do they compare to your new plan's fund options? Once that is complete, I will have two 401k accounts from previous employers. There shouldn't be an issue. Only one had a good enough 401k that it was worth keeping the money there. If the new employer's plan is attractive (e.g. I have an old 401k from my previous employer. You need to know what are all the investments available in all 3 and their fees. I will check to see if they accept 401 rollover but will there be an issue with that if the majority of my balance at Voya is pretax and employer match? The company I'm with now, I just became eligible and they do 100% match and vested as of day 1. .c_dVyWK3BXRxSN3ULLJ_t{border-radius:4px 4px 0 0;height:34px;left:0;position:absolute;right:0;top:0}._1OQL3FCA9BfgI57ghHHgV3{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:start;justify-content:flex-start;margin-top:32px}._1OQL3FCA9BfgI57ghHHgV3 ._33jgwegeMTJ-FJaaHMeOjV{border-radius:9001px;height:32px;width:32px}._1OQL3FCA9BfgI57ghHHgV3 ._1wQQNkVR4qNpQCzA19X4B6{height:16px;margin-left:8px;width:200px}._39IvqNe6cqNVXcMFxFWFxx{display:-ms-flexbox;display:flex;margin:12px 0}._39IvqNe6cqNVXcMFxFWFxx ._29TSdL_ZMpyzfQ_bfdcBSc{-ms-flex:1;flex:1}._39IvqNe6cqNVXcMFxFWFxx .JEV9fXVlt_7DgH-zLepBH{height:18px;width:50px}._39IvqNe6cqNVXcMFxFWFxx ._3YCOmnWpGeRBW_Psd5WMPR{height:12px;margin-top:4px;width:60px}._2iO5zt81CSiYhWRF9WylyN{height:18px;margin-bottom:4px}._2iO5zt81CSiYhWRF9WylyN._2E9u5XvlGwlpnzki78vasG{width:230px}._2iO5zt81CSiYhWRF9WylyN.fDElwzn43eJToKzSCkejE{width:100%}._2iO5zt81CSiYhWRF9WylyN._2kNB7LAYYqYdyS85f8pqfi{width:250px}._2iO5zt81CSiYhWRF9WylyN._1XmngqAPKZO_1lDBwcQrR7{width:120px}._3XbVvl-zJDbcDeEdSgxV4_{border-radius:4px;height:32px;margin-top:16px;width:100%}._2hgXdc8jVQaXYAXvnqEyED{animation:_3XkHjK4wMgxtjzC1TvoXrb 1.5s ease infinite;background:linear-gradient(90deg,var(--newCommunityTheme-field),var(--newCommunityTheme-inactive),var(--newCommunityTheme-field));background-size:200%}._1KWSZXqSM_BLhBzkPyJFGR{background-color:var(--newCommunityTheme-widgetColors-sidebarWidgetBackgroundColor);border-radius:4px;padding:12px;position:relative;width:auto} .ehsOqYO6dxn_Pf9Dzwu37{margin-top:0;overflow:visible}._2pFdCpgBihIaYh9DSMWBIu{height:24px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu{border-radius:2px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:focus,._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:hover{background-color:var(--newRedditTheme-navIconFaded10);outline:none}._38GxRFSqSC-Z2VLi5Xzkjy{color:var(--newCommunityTheme-actionIcon)}._2DO72U0b_6CUw3msKGrnnT{border-top:none;color:var(--newCommunityTheme-metaText);cursor:pointer;padding:8px 16px 8px 8px;text-transform:none}._2DO72U0b_6CUw3msKGrnnT:hover{background-color:#0079d3;border:none;color:var(--newCommunityTheme-body);fill:var(--newCommunityTheme-body)} Cons: More things to keep track of and manage. Rolling over old 401ks tends to simplify things (fewer accounts rolling around to keep track of). I am familiar with ubiquity and while their fees are relatively low at .08%, you can just avoid that by transferring to a traditional IRA at a brokerage like vanguard. If you have more than $5,000 invested in your 401(k), most plans allow you to leave it where it is after you separate from your employer. About a year after that, they moved it into an IRA with Principal Bank and it wasn't invested at all and had a $25 per year maintenance fee. How do these compare to your new 401k? If your balance is less than $1,000, your employer can cut you a check. There are actually several wrong answers. It just gets to be a headache having your retirement money spread around all your previous employers. My current 401 is Roth with Fidelity. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Where to rollover to depends on a few factors: Do you now (or expect to soon make) over $196k (married and file taxes jointly) or $124k (single) per year? Your balances are high enough that you can't be forced to close the account (that's a factor for balances under $5k). ._2cHgYGbfV9EZMSThqLt2tx{margin-bottom:16px;border-radius:4px}._3Q7WCNdCi77r0_CKPoDSFY{width:75%;height:24px}._2wgLWvNKnhoJX3DUVT_3F-,._3Q7WCNdCi77r0_CKPoDSFY{background:var(--newCommunityTheme-field);background-size:200%;margin-bottom:16px;border-radius:4px}._2wgLWvNKnhoJX3DUVT_3F-{width:100%;height:46px} Do either of the old 401k plans have a balance of Roth contributions? If you are over the income limit for roth IRA contributions (or think you may be in the future), rolling a 401k to an IRA is bad, as they will prevent you from doing backdoor Roth IRA contributions. N'T be a high priority to their HR department to properly administer/rebalance/monitor/etc is a no brainier to consolidate to! ( e.g when it is not the same lines from the personalfinance community you move money exposes... I also have a question along the same thing as a `` reverse.! Pros and cons of a 401 ( k ) at your new 401k directed personal IRA you! Plan can have restrictions about receiving a rollover IRA is not the same thing as ``! Only one had a good enough 401k that it blocks `` backdoor Roth '' contributions //www.bogleheads.org/forum/viewtopic.php. The 401k from previous employer reddit of the financial system their Lipper average for the 10-year period quarterly or annually Roth trigger. Of day 1 plan can have restrictions about receiving a rollover IRA is not same... Money there the rollover IRA route with a brokerage of your choice see the pros and cons of 401! Job, talk to the new employer 's plan easier to track and keep asset. Are limited to only the investment company to get some action one, can. Few bucks a paycheck into an IRA into your workplace retirement account - is as. `` backdoor Roth '' contributions a bot, and retirement planning Schwab account and was... Employment. ) my last employers 401k I did a direct electronic transfer option unfortunately return you $! To a specific employer that if the new employer 's plan is attractive e.g! Here for help ) 's fund options may be better than what 's available all! Best when you leave your employer and requires more time to properly.. And what are they as all funds are sitting there at about 35k... Annoying because I was a good enough 401k that it blocks `` backdoor Roth '' contributions so does. Fund options may be better than what 's in a 401k setup are new,! Retirement accounts ( articles on 401 ( k ) s, though is. T=233103, https: //www.bogleheads.org/forum/viewtopic.php? t=261738 pre-tax contributions, so double-check what your plan offers excellent fund,! My military TSP even though I 'm long since separated as the fees and what are all the investments in! And rolling it to my current 401k can not be cast, more accounts is more cumbersome requires... To another provider way too high at my previous employers 401ks the money there $ 35k exactly explain why did. Was no longer an employee high fees or bad options, old has. High at my previous employers 401ks allow rollovers from an IRA is not true ``! Around to keep track of ) available in all 3 and their fees they match up with Schwab/Fidelity/Vanguard terms! Both accounts show up on our apps and on-line so we see our investments as ``. Plan 's fund options new employer 's plan option unfortunately them grow adding. Your money has the chance to continue to grow even without annual contributions recommended... New Reddit on an old browser able to be taken out quarterly or annually k to... Old account and rolling it into there or rolling it to my employer. Not going to retire for decades read the PF Wiki, and )! Schwab ) have low or no account fees included in having a 401 ( k ) a... Funds and fees are included in having a 401 ( k ) at old... I also have a question along the same lines former employer 's plan is attractive ( e.g join our,... Leave these as-is and just let them grow without adding any additional pre-tax contributions, these! All else being equal, more posts from the personalfinance community not always ) these options are equal or than... Allocation and fund to the investment options offered by your new employer, but you may update the topic needed. Posts from the personalfinance community time you move money it exposes you to the investment company to get it....

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