I'm starting a new job tomorow. I managed to amass a fair decent chunk of change through my previous employer's 401K program. Since I have over $5,000 I do not have move my money, can keep everything there and have access to the full fund list through my former employer's program.

I currently invest through AG Edwards and I could certainly roll the money over there. But would I be making a mistake by doing this?

Thoughts?

 

There is no downside to rolling a 401k into an Traditional IRA that I'm aware of. The only possible reason not to would be if AG Edwards charges higher fees than the company that manages the 401k. But that is doubtful.

There is one thing about the procedure that you need to watch. The best thing to do is have the 401k get transferred directly to the IRA. ie. No check cut to Scrib and then you cutting a check to AG Edwards. While you can have the check cut in your name the IRS may come looking for an explanation. You sure don't want an audit triggered just because you did a rollover.

 

Scrib, not enough disclosure.

Are you satisfied with the fund choices you have w/ your old 401(k)? How about plan expenses? How about your new employer, do they have a competitive 401(k) program - if so, consider rolling over into your new plan.

If you are happy w/ AG Edwards, that is an obvious choice - but it's safe to say that your advisor, no matter how good he is, is not worth paying a 4-5% load. Just my

 

I'm pretty happy with the plan I had. Pretty much anything Fidelity has, I could get. Fees were very low.

As for the new employer, I'll find out more about who they use. My guess is Fidelity, but I don't know.

And ya, the load is bullshit. But I've done well there. This guy has taken care of my father for years, so we get a break on the fees. We'll see.

 

I roll my 401ks, but I also self manage them. This allows me to buy any fund I want no load since I'm buying the shares. I can also buy any stock I want. Also since the days of sitting at one company for 40 years and retiring with pension are gone you will most likely be changing jobs and have lots of 401ks soo this is a nice little way of keeping all your money in one place.

By the way, you're 29, good time to start a Roth IRA too if you haven't already.

 

You will roll it into a Rollover IRA, not a traditional. And the roll has no real downside, and opens up your investment choices. What loads? Select No load funds if that is a concern.

AG E is fine, I moved all my stuff to Fidelity and have no complaints. The trades are significantly less expensive.

 

big


I rolled a Fidelity managed 401k plan to a Fidelity Rollover IRA. I managed to double my money in 3 years time once all the funds and stocks were available to me.

 

Fidelity's funds suck though, and their expenses are sometimes high.

You're better off transferring to a wire house and then buying broad based indexes combined with sector index investing to take advantage of market upswings. ETFs have low expenses and practically zero turn over when it comes to capital gains/dividends. This works for both qualified and taxable money, but is very tax efficient in an after tax account.

 

Just FYI, although I wouldn't suggest it because I would always prefer someone else to do the work, you can ask to get a check for the amount in your account and deposit it in another 401(k) plan wherever you wish (i.e. work, your own firm, etc.). You just have to complete the transaction within 60 days. That's the big part. There are 7 ways you can get out of the penalty (10%) for early withdrawal if you need the money or care to throw it in a Roth IRA, but you will pay ordinary taxes on it at your rate (just like if you made more money this year) either way.

Long story short: roll it over unless you're starving or the new investment company is charging that much more than everyone else.

Although I don't know much about your income level at this point, nor about what it will be in the future, if you expect it to go up by a good deal (therefore, higher tax rates), a Roth IRA would definitely be good advice (as noted earlier by aesir11). You go ahead and pay taxes on it now (say, at 15 or 25% or something nice a low) and when you're making the big bucks and paying the big rates (somewhere north of 30%), you can withdraw $$ to your heart's content without paying tax on you money (again).

 

Elected to roll it into an IRA. I have a rollover from a previous job, so I'll just dump it in there.