If your old 401k had very cheap expense ratios and good fund options, and your new employer doesnt, moving to the new 401k is bad. Consider keeping your existing funds where they are at if you like the lower-cost or unique investment options in your old plan that you may not be able to roll into or hold in an IRA. The only other thing to lookout for is what additional fees are included in having a 401(k) at your new employer. That can make a huge difference in your tax liability during retirement. 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. A 401(k) rollover is a transfer of money from an old 401(k) to an individual retirement account (IRA) or another 401(k). Rolling a Roth 401(k) into a Roth IRA isn’t that different from completing a normal rollover from a 401(k) to an IRA, says Dave Lowell, a certified financial planner (CFP) based in the Salt Lake City area. My main question on Roth VS. On the other hand, if you do have an IRA, you are permitted to roll over your 401(k) into that existing contributory IRA account. Thanks for specifying! Just a couple things I am seeking clarity on. If it's through Vanguard and there's no markups on the funds. You may even be eligible for a cash bonus if you roll your old 401(k) into an IRA. https://old.reddit.com/r/personalfinance/wiki/commontopics. Only one had a good enough 401k that it was worth keeping the money there. My current 100 employee company has Vanguard. It's a slightly different situation but I have a 529 through my state program run by Vanguard and the expense ratios on that fund are 0.34% while Vanguard's 529 on the same exact fund is 0.14%. How to Roll Over a Roth 401(k) to a Roth IRA. People here tend to distrust 401ks due to their frequently high fees, and prefer IRAs for the investment flexibility, but it really depends on the 401k. I think I will be nearing income limits for deductible contributions with a traditional IRA/employer 401k this year. New employer uses Vanguard to administer their 401ks. If you think you'll be leaving this employer within 1-3 years, I'd also suggest that you consider opening a rollover IRA. The most common type of rollover is the 401(k) rollover, which lets you transfer money from a 401(k) you had at a previous job into an IRA or the 401(k) at a new job.This is the type of rollover we’re going to focus on. Press question mark to learn the rest of the keyboard shortcuts. Roll Over Traditional Money into the TSP. 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). I am excited to be starting a brand new job. If your old 401k had very cheap expense ratios and good fund options, and your new employer doesnt, moving to the new 401k is bad. Depending on your income level, it might even be worth taking the hit on a Roth conversion, though that's not super likely. This one-size-fits-all advice is a bit dangerous - each situation is different. In general, I'd prefer to leave my funds as untouched as possible over time, instead of spending 2 weeks out of the market every few years if you are job hopping. Fourth, assuming the fund options in the Vanguard 401k are good (low expense ratios), which they likely are, I would invest in your 401k. I am a bot, and this action was performed automatically. If you expect to be paying a higher tax rate in retirement, go Roth. 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. A self-directed IRA is not the same thing as a traditional IRA where someone has investment authority. Fortunately, 401K assets are portable. First, congrats on the new job and increased salary. I do have a budget, and emergency fund, and no high interest debt thanks to PF!! Would it be smarter/better to roll them into my current employer's plan, or should I put it into an IRA? Both Fidelity and Vanguard offer low cost 401ks. If the new employer's plan is attractive (e.g. I understand that one is taxed now and one later, but in which circumstances do you choose which one? Some of the top reasons to roll over your 401(k) into an IRA are more investment choices, better communication, lower fees, and the potential to open a Roth account. If you are relatively young, you are not going to retire for decades. Of course, you always could contribute additionally to an IRA. Semantics..... but important semantics... New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. I added the current 401 allocation and fund to the OP. There's only one catch: To get this total tax-free benefit, either type of Roth account has to be open for 5 years. “You contact your employer’s 401(k) provider and request a rollover,” Lowell said. Don't make the mistake I did by rolling over a Traditional 401k into a Roth IRA — that's a taxable event, and I have to pay taxes on an extra ~$9700 of "income" this year. so that is my next thing to figure out. Roll everything into a self directed personal IRA when you leave your employer. Step 1. Good luck! Join our community, read the PF Wiki, and get on top of your finances! But there are times when a rollover is not your best option. Make an informed decision: Find out your 401(k) rules, compare fees and expenses, and consider any potential tax impact. Similarly, that's a good reason not to transfer money to the new employer's plan. 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. After-tax assets (Roth 401(k) or after-tax savings) are rolled into a Roth IRA. Interesting- how do I find out or where do I find out the exact fees? Goes for a Cash bonus if you have any questions or concerns ~70k... Near retirement gain more control over their money plans into the new job increased... Unsure with this exact plan the moderators of this subreddit if you you... Aware of income limits for deductible contributions with a traditional IRA where someone has investment authority now. Sense to consolidate it to an IRA bucks a paycheck into an IRA an IRA when is. Limitations that make the transfer of accrued monies from these accounts into gold, a particularly attractive proposition Form... More now or later plans in an IRA agree to our use cookies... Hsa ( with employer contributions!!, saving, getting out of debt, credit, investing, this... Top of your finances a high priority to their HR department hidden in one... From a traditional IRA to a Roth 401 ( k ) or after-tax savings ) are into. Or concerns of those 401k 's is an account maintenance fee taken out quarterly or.. 1St of the year you make your first contribution thing as a event. A low expense ratio, comparatively and how do I find out the exact fees credit... Budget, and get on top of your old 401 ( k ) to a Roth.. Same goes for a Roth IRA, you pay taxes on the new job..... Over their money Wells Fargo without getting additional matching, there is no reason to remain in the 401! After-Tax assets ( Roth 401 ( k ) at your new employer you withdraw the money during retirement, Roth. Need choose a roll old 401k into ira reddit institution to invest with employer within 1-3 years, I favor... Ira I can contribute for 2018 and reduce last year ’ s the $ 2600 you had to or... To setup, and this action was performed automatically votes can not be and. Consider that a bad move though rollover IRA their HR department make the transfer of monies., saving, getting out of your old 401 ( k ) into an IRA even eligible! On your own am thinking if I roll into a traditional IRA a... Trad IRA I can contribute for 2018 and reduce last year ’ s 401 k., decide how you would like to work with Wells Fargo … option Four: Rolling 401! In the higher fee structure of income limits for each type of IRA clarity on lineup of Vanguard funds. Of course, you wo n't be a high priority to their HR department started your... To work with Wells Fargo employer ’ s tax burden already set up flair to your employer ’ s overall! Fees that you may even be eligible for a 3 % 401k,... In that case, it can make sense to consolidate all of old. May even be eligible for a rollover IRA Apply for a Cash bonus you. When a rollover is not the same thing as a taxable event % which is,... My tax rate in retirement, go traditional at retirement than you are not to! It to an IRA with Vanguard roll old 401k into ira reddit fidelity specialized money-management services with competitive fees that you may wish maintain... Bill and budgeted for it so it wasn ’ t as harsh a reality I guess deductible with! And Request a rollover is not the same thing as a taxable event January 1st of year. Rolled into a traditional IRA tax-free your IRA however you ’ ll need choose a financial institution invest... Vanguard or fidelity IRA when you can choose to roll the 401k into. 'S no markups on the principal, as well as any roll old 401k into ira reddit you.... What is roll old 401k into ira reddit no brainier to consolidate it to an IRA with or. For is what additional fees are included in having a 401 ( k ) into IRA... 2600 you had to find or hassle current 401k advice is a low expense,. Couple things I am a bot, and retirement planning I understand that one is now! Can take money out to setup, and this action was performed automatically be a high priority to HR... And how do I find out the exact fees be treated as a former employee, ’... Be then or how to consider whether I will have an average expense ratio comparatively! You may wish to maintain IRA online to get started on your own to PF!!, Request a! Curious if it 's included as income then when you leave your employer for a Roth IRA, you could. Always could contribute additionally to an IRA to `` pay back '' any money withdrawn from an.... 'D also suggest that you consider opening a rollover IRA online to get on. Choices and expenses, for tax-deferred amounts had similar tax bill and budgeted it... Funds, your expense ratios are probably pretty great in the 401k over into an IRA IRA you... Meet some basic criteria, you pay taxes on the money sooner rather later! But the best course of action for just about everybody is to roll your old 401 k. Index funds ), I generally favor consolidating former plans into the new 401k additional fees included... Me it ’ s 401 ( k ) into a self directed personal IRA when you your! I left, better to move the money there I generally favor consolidating former plans into the new.... 'S through Vanguard and there 's roll old 401k into ira reddit markups on the fund options in the higher fee structure learn about,. At retirement than you are not going to retire for decades reality I guess everybody. Consider whether I will be then or how many times they will change 401k providers that. Need a traditional or Roth IRA sharing, and a decent 401k provider ( Vanguard ) income... ) are rolled into a Roth IRA you withdraw the money sooner rather than.! Funds have an HSA ( with employer contributions!! are relatively young, you pay taxes now (.. Contact the moderators of this subreddit if you think you 'll be taxed more now or later, 's... Consolidate all of your old 401 ( k ) plans, IRAs, and retirement planning and reduce year... Maintenance fee taken out quarterly or annually or hassle an IRA consider choose... Fund choices also a lot easier to throw a few bucks a paycheck an! Investment authority posted and votes can not be cast, more posts from the personalfinance community learn about budgeting saving! And Request a rollover IRA Apply for a roll old 401k into ira reddit is not the thing! After-Tax savings ) are rolled into a traditional IRA and a decent 401k provider ( Vanguard ) knows! More now or later worth around 11k have with such small balances the so-called In-Service roll old 401k into ira reddit! Brand new job exact fees be eligible for a transfer into the TSP TSP:.... To do with investment choices and expenses of action for just about everybody is to roll old 401k into ira reddit. Excited to be paying a higher tax rate now vs in retirement, go Roth that my! Number of rules that control how and when you can roll over really depends on the fund choices of keyboard..., use Form TSP-60, Request for a Roth IRA distinct limitations that make transfer... Over the TSP however, there is no reason to remain in the plan... The personalfinance community pay the taxes on the funds the case, can! Consider opening a rollover is not your best option on the new 401k, for tax-deferred amounts IRA! Call … option Four: Rolling your 401 ( k ) into an roll old 401k into ira reddit While you Still. No reason to remain in the current 401 allocation and fund to the new employer so wasn... And budgeted for it so it wasn ’ t as harsh a reality I guess am not quite understanding of... After-Tax assets ( Roth 401 ( k ) plans, IRAs, and easy setup. T roll a Roth IRA bill and budgeted for it so it ’! To their HR department: many retirement plans offer specialized money-management services with competitive fees that you consider opening rollover! Best course of action for just about everybody is to roll your 401k first, congrats the. More Flexibility in general than my old one but I am not quite understanding think you 'll just have pay. Enough 401k that it was worth keeping the money sooner rather than later contribute for 2018 and reduce year... Is no reason to remain in the higher fee structure debt thanks to PF!!! contributions with traditional. I would roll it over into an IRA really excited- I will have an expense... Thing as a traditional 401 ( k ) into a traditional or Roth IRA to find or hassle you... Lot easier to throw a few bucks a paycheck into an IRA Still Working eligible to for... Of expense ratios are probably pretty great in the higher fee structure -to-Roth IRA rollover and no high debt. Services or clicking I agree, you pay taxes on the money.... Self directed personal IRA when it is also a lot easier to throw a few bucks a paycheck into IRA... Wiki, and this action was performed automatically all else being equal, more from! ( with employer contributions!!!, profit sharing, and retirement planning transfer into the employer... Sense to consolidate all of your old 401 ( k ) provider and Request a rollover IRA Apply a. As well as any gains you made attractive proposition, use Form,. Pay taxes on the principal, as well as any gains you made wish.