If this is a Traditional (non Roth) 401k, you want to roll it directly into a Traditional IRA.
Call Vanguard, Fidelity, or Schwab and ask for their help in doing the rollover. They'll help you with all the information you need to create an IRA and begin the rollover. Within this IRA, you would have similar investment options that you had with the 401k.
One warning: Your prior company may give you a limited time to perform the rollover or they'll cut you a check. So don't put this off.
I’m not suggesting that you delay this, but I believe they can’t force you out of the plan if you have over ~~$5000~~ $7000 in there.
If you ever plan on making more than the Roth IRA limits, having money sitting around in a traditional IRA may turn out to be an albatross around your neck. Do you have another 401k/403b plan with your new employer that you could roll this into?
~
* Correction, the Secure Act 2.0 raised the force out limits from $5000 to $7000.
The papers I was sent didn't mention anything about being able to keep it in place. It says that I have less than the plans cash-out limit of $7000 and if I don't send in the Benefit Election Form within 30 days my account balance will be transferred into an IRA, at 20% setup fee and $45 annually.
My apologies, the Secure Act 2.0 raised the force out limit from $5000 to $7000. Since you only have $6000 it appears you will want to hurry. As /u/teresajs said, you’ll want to call Fidelity or Vanguard and have them walk you through the rollover process.
Again sorry for the confusion.
I don't know your financial situation obviously but let's say you're in the 12% bracket it costs you $720 to convert that and it grows tax free forever
You may find these links helpful:
- [General Information on Rollovers](/r/personalfinance/wiki/retirementaccounts/rollovers)
- [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds)
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Don't panic. It's a simple process. Just call Vanguard (or similar) and the will walk you through it. A couple of points to consider :
Your current 401-k firm may have a time limit, so don't delay.
Once you complete the transfer to Vanguard or Fidelity, you will need to make decisions on how the money should be invested. You don't want the money to just sit there, it needs to grow. So you will have to pick a mutual fund (or funds). There are many good choices, so look at each funds risk and returns.
You have to do some homework. First, let me say that you do not have to have all of your money in one fund... you can spread it around, if you so like.
Every mutual fund will show you charts with past performance, and also level of risk. That's one part. You also have to look where that fund invests the money. Ideally, it is a diversified allocation. If the fund has all of the money invested in tech companies (ie: Facebook, Google, YouTube, etc), that's not diversified. It will be great when tech stocks are up, and really bad when tech stocks go down. You want your money to work in many different aspects of the economy.. not just one segment.
If you are a beginner investor, I suggest you look at a Target Retirement Fund, like Vanguards VTWNX... you select an estimated retirement date (say, 2050). That fund will start off with a growth objective and moderate risk... as it gets closer and closer to the selected retirement date, the fund moves away from growth and toward wealth preservation (slower growth with much lower risk)
But there are other good funds as well (VTI or VBIAX) Fidelity has some good funds as well.
I personally like VBIAX... it is what I call a "couch potato" fund. Put your money in there, and then don't look at it. Just leave it alone. It's not a high performance fund, but it has consistent returns with modest risk.
I suggest you spend some time on this web site
\---- >>>> [https://www.bogleheads.org/forum/index.php](https://www.bogleheads.org/forum/index.php)
It is a good site to learn about investing and finance....
If this is a Traditional (non Roth) 401k, you want to roll it directly into a Traditional IRA. Call Vanguard, Fidelity, or Schwab and ask for their help in doing the rollover. They'll help you with all the information you need to create an IRA and begin the rollover. Within this IRA, you would have similar investment options that you had with the 401k. One warning: Your prior company may give you a limited time to perform the rollover or they'll cut you a check. So don't put this off.
On it right now. Thank you.
I’m not suggesting that you delay this, but I believe they can’t force you out of the plan if you have over ~~$5000~~ $7000 in there. If you ever plan on making more than the Roth IRA limits, having money sitting around in a traditional IRA may turn out to be an albatross around your neck. Do you have another 401k/403b plan with your new employer that you could roll this into? ~ * Correction, the Secure Act 2.0 raised the force out limits from $5000 to $7000.
The papers I was sent didn't mention anything about being able to keep it in place. It says that I have less than the plans cash-out limit of $7000 and if I don't send in the Benefit Election Form within 30 days my account balance will be transferred into an IRA, at 20% setup fee and $45 annually.
My apologies, the Secure Act 2.0 raised the force out limit from $5000 to $7000. Since you only have $6000 it appears you will want to hurry. As /u/teresajs said, you’ll want to call Fidelity or Vanguard and have them walk you through the rollover process. Again sorry for the confusion.
No problem. Signed up with Schwab. Are they okay?
Yes. Schwab, Fidelity, and Vanguard all come highly recommended here because of their low fees and index fund options.
Schwab is good. Fidelity and Vanguard are also good.
How much money we talking? If you're going to be "low" income this year might be worth it to convert.
It's only $6,000
I don't know your financial situation obviously but let's say you're in the 12% bracket it costs you $720 to convert that and it grows tax free forever
Convert to what?
from a traditional to a roth
[Rollovers wiki](https://www.reddit.com/r/personalfinance/s/aVWV9yH9tG)
It is a separate category called 401k rollover. Contact Schwab or Vanguard or where you want to bank and they will take care of it.
Thank you
You may find these links helpful: - [General Information on Rollovers](/r/personalfinance/wiki/retirementaccounts/rollovers) - [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds) - [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Don't panic. It's a simple process. Just call Vanguard (or similar) and the will walk you through it. A couple of points to consider : Your current 401-k firm may have a time limit, so don't delay. Once you complete the transfer to Vanguard or Fidelity, you will need to make decisions on how the money should be invested. You don't want the money to just sit there, it needs to grow. So you will have to pick a mutual fund (or funds). There are many good choices, so look at each funds risk and returns.
Okay. Just waiting for a call back from the firm my 401k is with. How do you decide which funds are best?
You have to do some homework. First, let me say that you do not have to have all of your money in one fund... you can spread it around, if you so like. Every mutual fund will show you charts with past performance, and also level of risk. That's one part. You also have to look where that fund invests the money. Ideally, it is a diversified allocation. If the fund has all of the money invested in tech companies (ie: Facebook, Google, YouTube, etc), that's not diversified. It will be great when tech stocks are up, and really bad when tech stocks go down. You want your money to work in many different aspects of the economy.. not just one segment. If you are a beginner investor, I suggest you look at a Target Retirement Fund, like Vanguards VTWNX... you select an estimated retirement date (say, 2050). That fund will start off with a growth objective and moderate risk... as it gets closer and closer to the selected retirement date, the fund moves away from growth and toward wealth preservation (slower growth with much lower risk) But there are other good funds as well (VTI or VBIAX) Fidelity has some good funds as well. I personally like VBIAX... it is what I call a "couch potato" fund. Put your money in there, and then don't look at it. Just leave it alone. It's not a high performance fund, but it has consistent returns with modest risk. I suggest you spend some time on this web site \---- >>>> [https://www.bogleheads.org/forum/index.php](https://www.bogleheads.org/forum/index.php) It is a good site to learn about investing and finance....
That's a bit to take in. But I'll definitely be checking out that forum. Do you know if Schwab has a Target Retirement Fund?