[Illah]

So I found a new gig and have to figure out what to do with my 401K. My current job is where I started my 401K contributions so I'm not sure what's the best option from here (never dealt with it before).

From reading around:

1. Transfer to new employer's plan.
2. Transfer to IRA.
3. Do nothing

The control-freak within me likes the IRA idea since that's not tied to any job, but I have no idea where to begin. I'm not expecting expert financial advice, but any guidance would be appreciated and I can take care of the details.

Thanks!

--Illah

 

[grawk]

2. is preferrable, then you have control. The only reason to do 1 is if they offer fidelity funds that you want to be in that you can't otherwise get in.

Never do 3.

 

[3x331m]

Quote:

Originally Posted by Illah /img/forum/go_quote.gif So I found a new gig and have to figure out what to do with my 401K. My current job is where I started my 401K contributions so I'm not sure what's the best option from here (never dealt with it before). From reading around: 1. Transfer to new employer's plan. 2. Transfer to IRA. 3. Do nothing The control-freak within me likes the IRA idea since that's not tied to any job, but I have no idea where to begin. I'm not expecting expert financial advice, but any guidance would be appreciated and I can take care of the details. Thanks! --Illah

1 ... if the new plan has better features and investment options. Each plan is different, depending on each employer.
2 ... if you know what to do with your IRA plan. You have more control.
3 ... if you could not find anything better than the current plan.

Good luck. It's your hard earned money, so do your home work...

 

[GlendaleViper]

An IRA will generally give you a wider variety of fund choices and more flexibility with regard to access to your money, but it isn't ALWAYS the best option.

My suggestion would be to wait and see what the new employer's 401K offers (be sure to THOROUGHLY read the plan's rules) and then make your decision from there. As mentioned, some 401ks have access to limited or even outright frozen funds, and even Stock-fund options. Shop around for IRAs in the meantime.

Under ERISA, plans are forced to allow you to keep the funds in a 401K after you leave with full transactional ability (less deferrals, obviously, and sometimes loans) unless your balance falls under a certain threshold (usually $5000) and forces a deminimus payout, or if you are old enough to require MRD (minimum required distributions).

Shop around - you can only benefit!

 

[Blitzula]

What can a 401k plan offer that an IRA wouldn't? Don't get the logic there...

 

[senns&nonsense]

What can a 401K offer? They can be set up to allow loans to the participants - not a great idea usually, but might be useful at some point.... Also, might have access to some funds that an individual could not otherwise access. But given the huge number of choices these days, this is pretty meaningless.

The best option is probably to open your own IRA. You will have more choices and control. You can still go to the 401k meetings and read your employers' plans advice and commentary and use that info to supplement what you do on your own and with the (potential) advice from whatever brokerage holds your rollover IRA. Likely to be cheaper as well as the 401K admin fees are prolly higher than what you will pay on your IRA if careful.

 

[RYCeT]

I transferred my 401k from my last job to Vanguard Roth IRA and use the funds for stock trading.

 

[Illah]

Cool, thanks for the advice. Anyone know a good site for newbies to this stuff? I Googled it but this is one of those industries that's optimized and marketed to death...the search results are essentially one enormous ad as far as I can tell

--Illah

 

[scompton]

Quote:

Originally Posted by GlendaleViper /img/forum/go_quote.gif An IRA will generally give you a wider variety of fund choices and more flexibility with regard to access to your money, but it isn't ALWAYS the best option. My suggestion would be to wait and see what the new employer's 401K offers (be sure to THOROUGHLY read the plan's rules) and then make your decision from there. As mentioned, some 401ks have access to limited or even outright frozen funds, and even Stock-fund options. Shop around for IRAs in the meantime. Under ERISA, plans are forced to allow you to keep the funds in a 401K after you leave with full transactional ability (less deferrals, obviously, and sometimes loans) unless your balance falls under a certain threshold (usually $5000) and forces a deminimus payout, or if you are old enough to require MRD (minimum required distributions). Shop around - you can only benefit!

Aren't you Canadian? If so, you know an awful lot about US retirement options

 

[GlendaleViper]

I'm a byproduct of outsourcing - not all of us are in India!

I can tell you one thing: If you get in with a company that has a Fidelity administered 401k, you're in for a treat. NetBenefits is the sweetest novice investor's tool going. Just too bad it's not the same in Canada!

 

[scompton]

My company has Vanguard which I like better than Fidelity. Lots of choices and very low costs.

 

[GlendaleViper]

Maybe true - but don't let my (biased) opinion come off as a recommendation. Simply a comment that the website and associated tools available to NetBenefits customers is pretty well unprecedented both in scope and user-friendliness.

 

[yage]

Quote:

Originally Posted by Illah /img/forum/go_quote.gif Cool, thanks for the advice. Anyone know a good site for newbies to this stuff? I Googled it but this is one of those industries that's optimized and marketed to death...the search results are essentially one enormous ad as far as I can tell --Illah

I strongly suggest posting a new thread on the Bogleheads' Forum. You'll get some great advice on what to do with your 401(k).

Good luck!

 

[pkshiu]

Quote:

Originally Posted by Illah /img/forum/go_quote.gif Cool, thanks for the advice. Anyone know a good site for newbies to this stuff? I Googled it but this is one of those industries that's optimized and marketed to death...the search results are essentially one enormous ad as far as I can tell --Illah

The Motley Fool site is actually pretty good for intro material:
http://www.fool.com/

What to invest in depends a lot of your age and life situation. How much risk are you willing to take etc.

One other thing to think about, consolidating all your $$ in one (reputable) place sometimes have the advantage of easy control, and combined balance may get you some goodies with the (bank/brokerage) company as well.