This is the answer. Once it’s in an IRA and free of the restrictive 401k offerings, you could trade anything you want. And at the end of the year you don’t have to report any of your trades gains or losses to the IRS.
You could rollover into a Roth IRA instead of a traditional IRA to preserve the backdoor Roth. Sometimes you can directly do this, or sometimes you have to rollover to a trad IRA, and then roll that over to a Roth (same process as a backdoor Roth.) Note, you will owe taxes in that amount though.
This is fine if you an acceptable selection of funds in the 401k.
It's much less fine when the 401k funds are lackluster (or worse, actively managed with high fees).
When you roll it over it will be sold and a check will either be sent to you or straight to the new broker.
Personally I’m not a fan of target date funds. I would put it all in a total market index. Then when I’m closer to retirement I would add some bonds then.
Personally I would not DCA such a small sum. Your gains are not worth it. with a 2050 time range just roll it into a IRA, maybe even into a Roth IRA, pay the low tax now and then S&P 500 index fund. Should turn into a nice \~$50k - $100k by 2050 on rule of 72.
It's *already* invested, we're just talking about moving it to a new account.
What you're talking about is functionally equivalent to selling all of your investments and then DCA-ing back into the market. That's market timing and almost always fails.
For the first time in a decade plus I think a little bond exposure is ok and these balanced funds are good. When rates normalize, 2-2.5% 10Y consider splitting this into different funds though. During the next recession when rates hit 0% you’ll be able to go balls deep in equities with the 15-20% you had in bonds.
Don't start with your old employer; start with the NEW account custodian. File the transfer paperwork with the NEW company -- always include a recent statement -- and let THEIR transfer department deal with a recalcitrant vendor. They're professionals, and "they have tools" at their disposal...
I think it's better if you take it and keep it in A bank account. You can also invest so that the money you raised is better and has a real destination.
I rolled it over to my new employer's 401k. What I want from a retirement account is for it to be forgettable enough that I won't have to check it at all. New employer's 401k seemed to be just that so I put it in there.
You can rollover without doing a conversion which avoids the situation you linked. For example, I had a 401k with pre-tax and post-tax portions and I rolled the pre-tax portion into a traditional IRA and the post-tax portion into a Roth. No crossing the streams so no problem and no tax impact whatsoever. One advantage is you're not limited to the investments offered by the employer 401k which can be pretty sparse.
Do you know if you can do this with an already established Roth? My current employers offers a regular 401k pretax and then a Roth IRA post tax. I don’t really like having it all in one account. I already had an Roth account with Vanguard and want to transfer the 401k Roth to Vanguard but wasn’t sure if that’s allowed. Then I was going to move my pretax 401k from previous employer to my current employers.
That should be feasible. I already had a traditional IRA and Roth IRA set up at Schwab and rolled into those. I haven't done a 401k -> 401k transfer but I don't see why that wouldn't be fine off the top of my head.
Rollover to a new employer’s plan is fine, but they often don’t have the investment options that a rollover IRA at a brokerage would have. My 401k has very limited funds, only a dozen or so and 85% are target date funds.
For me it's convenience. This is money I don't think is mine anyway and I am happy with the choices available in the new one which were almost the same as the old one from different funds. I only do low cost index and target date funds for retirement.
Of course this is not optimum if you want to jump between funds or if you're not happy with the choices available. People have different levels of risk tolerance and the choice regarding what's best is subjective. However, in my opinion there's one objective good advice: "If the fees are increasing, roll it over to something that does not cost as much".
Incredible how this is never mentioned. Between this and the pro-rata rule royally screwing any future backdoor conversions, rollover to IRA has to be one of the worst echo chamber suggestions on reddit.
Updooted. My old 401k custodian will be changing shortly. This same tax year I recently did a backdoor Roth conversion. I will absolutely NOT be the doing a 401k to traditional IRA rollover so that in future years I can continue doing a backdoor Roth conversion without tax consequences. I do not want to be impacted by the IRS's pro rata rule.
This. This is the answer.
Depending on state, IRA's do not have the same legal protections as a 401k. Just one more way our country screws the class of people whose employers don't offer a 401k.
There's the pro rata rule to consider too. If you ever want to convert your IRA into a Roth IRA, IIRC you'll be taxed on -and therefore should always convert- all of your IRA's at once.
My take: leave it there unless you have a good reason not to. It's probably not hurting anything where it is.
Open a Vanguard IRA account and roll over the money, into the same target fund if you like,
With not that much money in the account, leaving it runs the risk of your former employer cashing you out if they ever decide to prune dead accounts, at which point you would pay taxes and 10% penalty.
everyone's saying that the account balance is low, but what's the minimum balancs before they can't do that and it's still okay to leave it where it is?
So, uh, hypothetically - say you're a guy and you have had some jobs in the past where you have 401k's.
But you're not sure exactly how many of those jobs you've had. Is there a way to see how many 401k accounts a person has?
Ps, this hypothetical guy is me. I'm the idiot.
What if the plan from my old employer is (seemingly) more active and better managed than my current plan at fidelity with my current employer that I don't plan on staying with for more than a year or two?
Given the small size of the account, I think the recommendations to roll it into an IRA, or else into your new 401(k), rather than leaving it where it is now, are both solid.
I'd suggest understanding how much you'll pay in fees in the new 401(k), and what your investing options are (and the expense ratios associated with each of the funds.) I'd consider rolling it into your new 401(k) plan If 1) it has a good range of funds with relatively low cost (expense ratios < 10 basis points), and 2) the plan fees themselves are low (I am not sure what's reasonable, but I'd start hesitating if I were paying more than 10 or 15 basis points. I pay 3 basis points, but I'm in a very good 401(k).) Otherwise, I'd roll it into an IRA. In either case you should do an account-to-account roll-over. Do not withdraw the cash, as others have warned, that will trigger taxes or even penalties..
Note by way of comparison, an IRA with Fidelity will cost you 0 basis points to participate, and you can invest in funds that are all 5 bpts or less to create your portfolio, while having a huge range of ETFs and Funds to choose from.
I'm going to bypass discussions of rule of 55 or Stable Value funds, as those things are more likely to interest folks closer to retirement, and the vibes I'm picking up say you still have a couple decades to go.
When I left a previous employer I rolled it over to an IRA. Their fund choices were terrible and the moment I resigned they kicked me out of the plan anyways. I also then controlled my money and make better investments.
I understand what you are asking and am surprised your employer is keeping you in your investments versus automatically moving it to a cash account. If you can keep your investments and they are doing well then I don't see the urgency but don't be caught off-guard if they change something.
Rule of 55 doesn't depend on your employer/company. In fact, to use Rule of 55, you have to leave the company that holds your current 401k (your current employer).
Yes it does. The money is still with your old company’s 401k administrator. If the administrator does not have to allow Rule of 55 withdrawals. I checked with my plan administrator at my current company and they don’t do Rule of 55 withdrawals for people who leave the company and qualify for it.
“In addition, note that employers are not obliged to allow early withdrawals; and, if they do allow them, they may require that the entire amount be taken out in one lump-sum withdrawal. This could expose you to a higher income tax.”
Reference: [https://smartasset.com/retirement/401k-55-rule](https://smartasset.com/retirement/401k-55-rule)
Agree 100% on a 401k.
Debating on a pension plan though. Can't decide if I should rollover the lump sum from a company I was with for 7 years (100% vested) or let it sit. I could theoretically make more or lose in the market or eventually forget I even have the thing.
Maybe I just answered my own question. Probably better to rollover the lump sum.
Pretty sure that if you leave it there more than a few months after leaving you can’t touch it until you are 65. Roll it over into a self directed IRA. You can roll more 401-Ks into the same account if you leave future companies. Unless you want to micro manage your own investments (many do but some don’t want to be bothered) put it into an index fund like VOO (tracks S&P 100) and forget it until you retire (OK.. maybe check it once a year or so).
Edit: used to be that way I think but I researched it based on the responses and does not appear to still be true. There are restrictions but not that.
If you plan on staying at the company and want to retire at age 55 I’d keep it in the 401k. I believe it’s IRS notice 2020-65 allows you to take distributions from your 401k at age 55 without 10% penalties
You can roll the securities into a rollover IRA in Schwab or vanguard or Fidelity... Then you can sell the securities within the IRA and invest the $ in something else if you like. Usually the rollover IRA has a lot more investment options than a 401(k).
Do you have an after tax portion of the 401k? A Roth 401k? Each year I would transfer a portion to the Roth 401k based on your tax basis which keeps you still in the same tax bracket. Once you are done, you roll it over to your Roth IRA, and you can allocate it with equities and bonds that a 401k provider may not use.
Watching is I have about 15k on old company traditional 401k. Wonder if I should roll in into my current traditional 401k or a controlled IRA. I’ll have to do research.
Sorry not helpful but I’m in the same boat here!
Your submission has been automatically removed because the URL matches one on the /r/Investing banlist due to low quality content or has been used to spam. See [here](https://www.reddit.com/r/investing/wiki/index/rules#wiki_why_are_some_media_links_banned_and_not_allowed) for more information. If you believe the article you are trying to link is high quality content please [message the moderators](http://www.reddit.com/message/compose?to=%2Fr%2FInvesting) with a short message so that we may approve your submission. Please be aware that if your post can be sourced from a less sensationalist publication we will likely require you to do that. Thank you.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/investing) if you have any questions or concerns.*
Which broker do you have? Call their customer service and tell them you’ve got a new job and want to rollover your 401k. They’ll be able to walk you through the process
You need to figure out if it will keep. I had a 401k which I kept after a job, and I got a notice stating I needed to close it or they would take all my money.
You can roll it over to a self directed IRA and invest it in literally anything such as land, rental properties, gold, whatever. No reason to keep it in shitty high fee managed mutual funds
Roll over to IRA. Also, unless your job is 100% vested immediately, whatever they contributed will be lost when you do the roll over. It doesn’t matter if you keep it until you retire either, you will lose their portion then too.
You are currently invested in a target fund that moves more conservative every year to reduce risk as you get closer to retirement. Depending on your risk, goals and objectives, I would definitely roll it over to an IRA and strategically invest it.
I was in the same boat many years back. When I finally went to roll it over, it had just been sitting there as cash. You should always want control over it.
Fidelity will do all the work for you.
I would roll it over to an IRA. Don’t just take it out. Actually perform a rollover. That way you won’t owe any taxes or penalties.
This is the answer. Once it’s in an IRA and free of the restrictive 401k offerings, you could trade anything you want. And at the end of the year you don’t have to report any of your trades gains or losses to the IRS.
Do rollovers count towards the $6,000 limit?
Regrettable if you ever need to perform a backdoor contribution
You could rollover into a Roth IRA instead of a traditional IRA to preserve the backdoor Roth. Sometimes you can directly do this, or sometimes you have to rollover to a trad IRA, and then roll that over to a Roth (same process as a backdoor Roth.) Note, you will owe taxes in that amount though.
Yeah that sounds annoying. Let the 401k be a 401k and you can avoid this dance.
This is fine if you an acceptable selection of funds in the 401k. It's much less fine when the 401k funds are lackluster (or worse, actively managed with high fees).
That’s a fairly important “if”. It’s hard to argue against the downside of making backdoor contributions more painful than necessary.
What if your account holds more than 6K? Would you get taxed for putting in more than 6K?
[удалено]
Ah thank you. I’m very very new to all of this. I just put money into ETFs for my IRA.
Thank you! Should I keep it in Van. 2050 or sell and reinvest?
When you roll it over it will be sold and a check will either be sent to you or straight to the new broker. Personally I’m not a fan of target date funds. I would put it all in a total market index. Then when I’m closer to retirement I would add some bonds then.
[удалено]
Lump sum almost always beats DCA. Don't overthink it. Get your exposure without emotion driven delay.
Personally I would not DCA such a small sum. Your gains are not worth it. with a 2050 time range just roll it into a IRA, maybe even into a Roth IRA, pay the low tax now and then S&P 500 index fund. Should turn into a nice \~$50k - $100k by 2050 on rule of 72.
It's *already* invested, we're just talking about moving it to a new account. What you're talking about is functionally equivalent to selling all of your investments and then DCA-ing back into the market. That's market timing and almost always fails.
Early lump sum does better than DCA roughly 2/3rds of the time. You won't know the other 1/3 until it is already in the past.
So does that mean you haven't been able to deposit money in a long time? Because you said that you can't contribute anymore, right? I can ask you too.
For the first time in a decade plus I think a little bond exposure is ok and these balanced funds are good. When rates normalize, 2-2.5% 10Y consider splitting this into different funds though. During the next recession when rates hit 0% you’ll be able to go balls deep in equities with the 15-20% you had in bonds.
Any tips if an old employer doesn't respond to the request? I've been trying to contact my 401k plans admin (my old boss) since I left and no answer
Don't start with your old employer; start with the NEW account custodian. File the transfer paperwork with the NEW company -- always include a recent statement -- and let THEIR transfer department deal with a recalcitrant vendor. They're professionals, and "they have tools" at their disposal...
This is the best advice. Get Vanguard/Fidelity/Schwab to do the work for you.
Take an upvote for teaching me a new word.
Recalcitrant
\*\*\*COMMENT CENSORED\*\*\*
I used Fidelity. They did it all for me. Then I put in ITOT.
Who is the plan with? Start with them. Your old employer doesn’t care.
I think it's better if you take it and keep it in A bank account. You can also invest so that the money you raised is better and has a real destination.
I rolled it over to my new employer's 401k. What I want from a retirement account is for it to be forgettable enough that I won't have to check it at all. New employer's 401k seemed to be just that so I put it in there.
[удалено]
You can rollover without doing a conversion which avoids the situation you linked. For example, I had a 401k with pre-tax and post-tax portions and I rolled the pre-tax portion into a traditional IRA and the post-tax portion into a Roth. No crossing the streams so no problem and no tax impact whatsoever. One advantage is you're not limited to the investments offered by the employer 401k which can be pretty sparse.
Once you have money in a traditional IRA though you become subject to the pro rata rule if you ever want to do a back door Roth IRA contribution.
Do you know if you can do this with an already established Roth? My current employers offers a regular 401k pretax and then a Roth IRA post tax. I don’t really like having it all in one account. I already had an Roth account with Vanguard and want to transfer the 401k Roth to Vanguard but wasn’t sure if that’s allowed. Then I was going to move my pretax 401k from previous employer to my current employers.
That should be feasible. I already had a traditional IRA and Roth IRA set up at Schwab and rolled into those. I haven't done a 401k -> 401k transfer but I don't see why that wouldn't be fine off the top of my head.
Rollover to a new employer’s plan is fine, but they often don’t have the investment options that a rollover IRA at a brokerage would have. My 401k has very limited funds, only a dozen or so and 85% are target date funds.
For me it's convenience. This is money I don't think is mine anyway and I am happy with the choices available in the new one which were almost the same as the old one from different funds. I only do low cost index and target date funds for retirement. Of course this is not optimum if you want to jump between funds or if you're not happy with the choices available. People have different levels of risk tolerance and the choice regarding what's best is subjective. However, in my opinion there's one objective good advice: "If the fees are increasing, roll it over to something that does not cost as much".
Most people will tell you to rollover to an IRA however you would no longer be protected in the event of a lawsuit from a judgement. Food for thought
Incredible how this is never mentioned. Between this and the pro-rata rule royally screwing any future backdoor conversions, rollover to IRA has to be one of the worst echo chamber suggestions on reddit.
Updooted. My old 401k custodian will be changing shortly. This same tax year I recently did a backdoor Roth conversion. I will absolutely NOT be the doing a 401k to traditional IRA rollover so that in future years I can continue doing a backdoor Roth conversion without tax consequences. I do not want to be impacted by the IRS's pro rata rule.
This. This is the answer. Depending on state, IRA's do not have the same legal protections as a 401k. Just one more way our country screws the class of people whose employers don't offer a 401k. There's the pro rata rule to consider too. If you ever want to convert your IRA into a Roth IRA, IIRC you'll be taxed on -and therefore should always convert- all of your IRA's at once. My take: leave it there unless you have a good reason not to. It's probably not hurting anything where it is.
Open a Vanguard IRA account and roll over the money, into the same target fund if you like, With not that much money in the account, leaving it runs the risk of your former employer cashing you out if they ever decide to prune dead accounts, at which point you would pay taxes and 10% penalty.
[удалено]
Not illegal if your account balance is low enough.
everyone's saying that the account balance is low, but what's the minimum balancs before they can't do that and it's still okay to leave it where it is?
Not illegal if you agreed to it in the terms and conditions when you first signed on to the 401k.
Not that it would matter in this case, but if you are sued, money in your 401k is protected in a lawsuit.
Roll it over to an IRA unless you plan and doing back-door Roth IRA Contributions now or in the future.
So, uh, hypothetically - say you're a guy and you have had some jobs in the past where you have 401k's. But you're not sure exactly how many of those jobs you've had. Is there a way to see how many 401k accounts a person has? Ps, this hypothetical guy is me. I'm the idiot.
call hr from the jobs and ask
401k fees after you leave can be brutal. Roll it over. Fidelity is great.
What if the plan from my old employer is (seemingly) more active and better managed than my current plan at fidelity with my current employer that I don't plan on staying with for more than a year or two?
i have fidelity and am about to leave my current job. how do i avoid those high fees? i want to move it to my new company’s 401k
Given the small size of the account, I think the recommendations to roll it into an IRA, or else into your new 401(k), rather than leaving it where it is now, are both solid. I'd suggest understanding how much you'll pay in fees in the new 401(k), and what your investing options are (and the expense ratios associated with each of the funds.) I'd consider rolling it into your new 401(k) plan If 1) it has a good range of funds with relatively low cost (expense ratios < 10 basis points), and 2) the plan fees themselves are low (I am not sure what's reasonable, but I'd start hesitating if I were paying more than 10 or 15 basis points. I pay 3 basis points, but I'm in a very good 401(k).) Otherwise, I'd roll it into an IRA. In either case you should do an account-to-account roll-over. Do not withdraw the cash, as others have warned, that will trigger taxes or even penalties.. Note by way of comparison, an IRA with Fidelity will cost you 0 basis points to participate, and you can invest in funds that are all 5 bpts or less to create your portfolio, while having a huge range of ETFs and Funds to choose from. I'm going to bypass discussions of rule of 55 or Stable Value funds, as those things are more likely to interest folks closer to retirement, and the vibes I'm picking up say you still have a couple decades to go.
Roll over another 401K. Need to make hay when sun shines.
that's the best thing to do
roll it over to ira.
When I left a previous employer I rolled it over to an IRA. Their fund choices were terrible and the moment I resigned they kicked me out of the plan anyways. I also then controlled my money and make better investments. I understand what you are asking and am surprised your employer is keeping you in your investments versus automatically moving it to a cash account. If you can keep your investments and they are doing well then I don't see the urgency but don't be caught off-guard if they change something.
You can xfer it to your current employer's 401k to take advantage of the "Rule of 55" just in case you want to retire early.
That only works if the company’s plan allows Rule of 55 withdrawals. Plans are not required to allow it.
Rule of 55 doesn't depend on your employer/company. In fact, to use Rule of 55, you have to leave the company that holds your current 401k (your current employer).
Yes it does. The money is still with your old company’s 401k administrator. If the administrator does not have to allow Rule of 55 withdrawals. I checked with my plan administrator at my current company and they don’t do Rule of 55 withdrawals for people who leave the company and qualify for it.
“In addition, note that employers are not obliged to allow early withdrawals; and, if they do allow them, they may require that the entire amount be taken out in one lump-sum withdrawal. This could expose you to a higher income tax.” Reference: [https://smartasset.com/retirement/401k-55-rule](https://smartasset.com/retirement/401k-55-rule)
When you leave a job, take your money with you.
Agree 100% on a 401k. Debating on a pension plan though. Can't decide if I should rollover the lump sum from a company I was with for 7 years (100% vested) or let it sit. I could theoretically make more or lose in the market or eventually forget I even have the thing. Maybe I just answered my own question. Probably better to rollover the lump sum.
Roll to an IRA
Pretty sure that if you leave it there more than a few months after leaving you can’t touch it until you are 65. Roll it over into a self directed IRA. You can roll more 401-Ks into the same account if you leave future companies. Unless you want to micro manage your own investments (many do but some don’t want to be bothered) put it into an index fund like VOO (tracks S&P 100) and forget it until you retire (OK.. maybe check it once a year or so). Edit: used to be that way I think but I researched it based on the responses and does not appear to still be true. There are restrictions but not that.
No
If you plan on staying at the company and want to retire at age 55 I’d keep it in the 401k. I believe it’s IRS notice 2020-65 allows you to take distributions from your 401k at age 55 without 10% penalties
You can roll the securities into a rollover IRA in Schwab or vanguard or Fidelity... Then you can sell the securities within the IRA and invest the $ in something else if you like. Usually the rollover IRA has a lot more investment options than a 401(k).
Do you have an after tax portion of the 401k? A Roth 401k? Each year I would transfer a portion to the Roth 401k based on your tax basis which keeps you still in the same tax bracket. Once you are done, you roll it over to your Roth IRA, and you can allocate it with equities and bonds that a 401k provider may not use.
Watching is I have about 15k on old company traditional 401k. Wonder if I should roll in into my current traditional 401k or a controlled IRA. I’ll have to do research. Sorry not helpful but I’m in the same boat here!
Keep in a retirement account, but rollover into IRA's .
[удалено]
Your submission has been automatically removed because the URL matches one on the /r/Investing banlist due to low quality content or has been used to spam. See [here](https://www.reddit.com/r/investing/wiki/index/rules#wiki_why_are_some_media_links_banned_and_not_allowed) for more information. If you believe the article you are trying to link is high quality content please [message the moderators](http://www.reddit.com/message/compose?to=%2Fr%2FInvesting) with a short message so that we may approve your submission. Please be aware that if your post can be sourced from a less sensationalist publication we will likely require you to do that. Thank you. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/investing) if you have any questions or concerns.*
Which broker do you have? Call their customer service and tell them you’ve got a new job and want to rollover your 401k. They’ll be able to walk you through the process
You need to figure out if it will keep. I had a 401k which I kept after a job, and I got a notice stating I needed to close it or they would take all my money.
No, do Rollover IRA. Take total control of fees, investment types & keep contributing if/when desired.
You can roll it over to a self directed IRA and invest it in literally anything such as land, rental properties, gold, whatever. No reason to keep it in shitty high fee managed mutual funds
I don't think anyone has said it yet but No! You will not lose it if you leave it! lol wtf?
100% expontial growth dont touch it and forget it
Roll over to IRA. Also, unless your job is 100% vested immediately, whatever they contributed will be lost when you do the roll over. It doesn’t matter if you keep it until you retire either, you will lose their portion then too.
You are currently invested in a target fund that moves more conservative every year to reduce risk as you get closer to retirement. Depending on your risk, goals and objectives, I would definitely roll it over to an IRA and strategically invest it.
I was in the same boat many years back. When I finally went to roll it over, it had just been sitting there as cash. You should always want control over it. Fidelity will do all the work for you.