401K Rollover

[PimpJuice]

I started a new job a couple months ago and have about 17K in my 401K at my previous employer which was my first job out of college. Does anybody have any advice on whether to keep the money in there or is there a better place to roll it over to? Any advice is appreciated. Thanks!

 

[xospec1alk]

can't you roll it over into your new employer's plan?

 

[Reel]

New employer's 401(k) or IRA. For IRA recommendations, search previous threads or view Fat Wallet Finance forum.

 

[vi edit]

Does your new company have a 401k plan and allow you to roll it into theirs? If not, it's probably in your best interest to roll it into an account you have control over. A personal rollover IRA account at Vanguard would be an example. You can still add to it as a traditional IRA ($4000 a year currently for non-catchup accounts) and with that much in there you won't be paying an annual fee. Many company based IRA's will charge you a service fee if you are no longer actively contributing.

40 years down the road it might be a major PITA to try and track down who is managing that 401k account and get your money out of it. If you roll it into your own control you make it much easier.

 

[kranky]

I wouldn't roll a 401k over to a new employer's plan unless it was so small you couldn't move it somewhere else without paying huge fees. It only restricts your investment options and you probably pay more in (hidden) fees than you would if you converted it to an IRA somewhere.

First two places I'd look into are Vanguard and Fidelity. Give them a call, ask all your questions.

If it was me, I'd rollover to a Vanguard IRA, and put the money into the Vanguard 500 Index fund for now.

 

[DaveSimmons]

Listen to Kranky. I prefer vanguard.com funds over Fidelity but both are a better choice than moving to a new employer.

Put the money into 1-2 good stock index mutual funds, leave it alone until retirement.

 

[Homerboy]

Met plays 6% on deposit... though I think that was for balances over $50K (I just moved my IRA from MONY/AXA to Met... the 6% was well above my surrender fees... AND I now have a minimum return of 6% no matter how bad the market gets)

 

[Ilikepiedoyou]

What is the max contribution one can add to an IRA and 401k? Can one contribute to both a roth and simple IRA?

 

[Safeway]

Originally posted by: Reel
New employer's 401(k) or IRA. For IRA recommendations, search previous threads or view Fat Wallet Finance forum.

Rollover, don't leave it where it is.

 

[vi edit]

Originally posted by: Ilikepiedoyou
What is the max contribution one can add to an IRA and 401k? Can one contribute to both a roth and simple IRA?

401k is around 15k per year pre-tax
Traditional IRA is 4k pre-tax.
Roth is 4k post-tax.
Roth 401k is around 14k post-tax.

Note - you can contribute to both a traditional and a Roth IRA in the same year, but the contributions can not exceed the $4000 limit for the two accounts combined.

 

[Ilikepiedoyou]

My IRA has had good returns, if I were to dump a lot of money into it, I would get penalized everytime I removed it correct?

 

[SoulAssassin]

Originally posted by: Ilikepiedoyou
My IRA has had good returns, if I were to dump a lot of money into it, I would get penalized everytime I removed it correct?

Your IRA should be used for funding retirement, not short term investing.

 

[flyfish]

I rolled my 401k over to Firstrade.com. I have most of it in No-Loads/Fee mutual funds. I have about 10% that I use for play --- buy and sell individual stocks, tax free!

 

[iamme]

question: if you have a very small amount in your company's 401K (only worked for a few months, like $400), what are your options?

can you even roll it over to anything? or do they force you to cash out and take any penalties?

 

[Ilikepiedoyou]

Originally posted by: SoulAssassin
<div class="FTQUOTE"><begin quote>Originally posted by: Ilikepiedoyou
My IRA has had good returns, if I were to dump a lot of money into it, I would get penalized everytime I removed it correct?</end quote></div>

Your IRA should be used for funding retirement, not short term investing.

What would you suggest for short term investing? I usually save all year but make big withdraws at the start of each semester.

 

[ghostman]

Since this thread has become an open 401K Rollover thread, I'll ask a question as well:

My gf left her job and she contributed to her 401K there for only a few months. She's doesn't really think about money, so she left it there for about a year now. Was there a time limit on when she could roll out her 401K? If she were to rollover the 401K to an IRA now, is there a penalty?

 

[Slikkster]

Originally posted by: ghostman
Since this thread has become an open 401K Rollover thread, I'll ask a question as well:

My gf left her job and she contributed to her 401K there for only a few months. She's doesn't really think about money, so she left it there for about a year now. Was there a time limit on when she could roll out her 401K? If she were to rollover the 401K to an IRA now, is there a penalty?

The only time limit penalties I am aware of are if you/she WITHDREW the money from the 401K and did not create a rollover account in a timely basis. Then, you/she would be subject to tax penalties. There should be no penalty for not rolling over a 401K from a previous company if it's still in their account. Actually, the companies themselves usually dictate that you have to close the account at some point. I'm assuming they would have sent her a check by now if that point were reached.

Absolutely create a rollover IRA with the money. If it's a small amount, I'd definitely consider making it a ROTH IRA. It will be considered taxable income for the current year, but at retirement time, it will have grown tax free. Plus, I'm pretty sure you can spread out ROTH IRA conversions over four years if you want to.

 

[alrocky]

Originally posted by: PimpJuice
I started a new job a couple months ago and have about 17K in my 401K at my previous employer which was my first job out of college. Does anybody have any advice on whether to keep the money in there or is there a better place to roll it over to? Any advice is appreciated.

The answer depends on what investment options are available at the old 401k and the new 401k. You could list your current old 401k holdings and the mutual funds you can select at both places. Generally speaking it's a good idea to move an old 401k to a no load low cost (low expense ratio) mutual fund company like Vanguard.

 

[vi edit]

Originally posted by: flyfish
I rolled my 401k over to Firstrade.com. I have most of it in No-Loads/Fee mutual funds. I have about 10% that I use for play --- buy and sell individual stocks, tax free!

Tax deferred. Not tax free. You still owe the gubment their monies when you go withdrawal.

Now if you had a Roth IRA, that would indeed be tax free.

 

[thomsbrain]

<div class="FTQUOTE"><begin quote>Originally posted by: Ilikepiedoyou
<div class="FTQUOTE"><begin quote>Originally posted by: SoulAssassin
<div class="FTQUOTE"><begin quote>Originally posted by: Ilikepiedoyou
My IRA has had good returns, if I were to dump a lot of money into it, I would get penalized everytime I removed it correct?</end quote></div>

Your IRA should be used for funding retirement, not short term investing.</end quote></div>

What would you suggest for short term investing? I usually save all year but make big withdraws at the start of each semester.</end quote></div>

for less than 1 year, you shouldn't be "investing." you should just dump it in a high-yield savings account. otherwise you could be caught at a bad market moment when you have to withdraw, and be forced to take losses.

and if you want to make plain investments (non retirement tax shelter), you just want a normal brokerage account. then you can move money in and out at your leisure with no penalties.

edit: if you're talking about your tuition money here, chances are you're not even talking about enough money to be worth investing anyway. you'll be lucky to break even after paying your trading costs, even if the market is good. just another reason to choose a savings account instead.

 

[Ilikepiedoyou]

Originally posted by: thomsbrain

edit: if you're talking about your tuition money here, chances are you're not even talking about enough money to be worth investing anyway. you'll be lucky to break even after paying your trading costs, even if the market is good. just another reason to choose a savings account instead.

You are right, it is only a few thousand dollars, I have been keeping it in an ING account and it looks like that is probably the best place for it you think?

 

[iamme]

Originally posted by: iamme
question: if you have a very small amount in your company's 401K (only worked for a few months, like $400), what are your options?

can you even roll it over to anything? or do they force you to cash out and take any penalties?

?