Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Hi, Fools!

I recently switched jobs and need to take the money from my previous 401k out of that plan and put it somewhere by mid-January. I was earning approximately 15% average return with my previous plan, which was great. My total balance is around 30k. I am 32 and currently make 110k a year. I am planning on contributing 10% into my new company's 401k. BUT... I'm not sure how comfortable/confident I am in the current company's 401k plan (another email to follow on that topic). My question for this email is:

If I don't want to roll the old 401k into the new 401k, I understand I can roll it into a traditional IRA. But do I have to roll it all into just 1 IRA? In othe words, if I look at some of the funds on the Champion Fund section of the site and have my eye on more than one, can I invest about half of my money in TAVFX and the other half in something like DODFX, or will I need to choose a single fund to invest in with my old 401k?

I really appreciate any help you can give me. I owe my previous 15% returns to Fools in the first place. :)

Thanks,
Gina
Print the post Back To Top
No. of Recommendations: 1
If I don't want to roll the old 401k into the new 401k, I understand I can roll it into a traditional IRA. But do I have to roll it all into just 1 IRA? In othe words, if I look at some of the funds on the Champion Fund section of the site and have my eye on more than one, can I invest about half of my money in TAVFX and the other half in something like DODFX, or will I need to choose a single fund to invest in with my old 401k?

You can invest in as many different things as you like, excluding prohibited transactions, which is all sorts of esoteric stuff, not what we call investments around here.

The scenario you describe should require just one transfer, from the 401(k) to your IRA custodian, assuming that custodian has access to the funds you want. You then tell the custodian how you want the money invested. If that custodian can't accommodate your wishes you move what you need to another custodian.

The vital thing to remember at this time is that you need to do a direct transfer from the 401(k) to the IRA. If you take possession of the money the 401(k) must withhold 20% of the gross for taxes.

Your starting point is your intended IRA custodian. They'll guide you through the paperwork.

Phil
Print the post Back To Top
No. of Recommendations: 1
I recently switched jobs and need to take the money from my previous 401k out of that plan and put it somewhere by mid-January. I was earning approximately 15% average return with my previous plan, which was great. My total balance is around 30k.

Why the rush? As long as you have over $5k in the account, your former employer must allow you to keep the 401(k) in place. If you are earning 15% returns in it, they are continuing with the same plan choices and administrator, and they aren't charging you any extra fees because you are now a 'former' employee, you may want to consider leaving it there, especially if some of the money is in funds that are closed to new investors or have high initial balance requirements.

If I don't want to roll the old 401k into the new 401k, I understand I can roll it into a traditional IRA. But do I have to roll it all into just 1 IRA? In othe words, if I look at some of the funds on the Champion Fund section of the site and have my eye on more than one, can I invest about half of my money in TAVFX and the other half in something like DODFX, or will I need to choose a single fund to invest in with my old 401k?

It will depend on the choices the IRA provider(s) you choose has/have available, and the minimum balance requirements to invest in those funds. If you wanted to choose two providers, you could send part of your money to Third Avenue and part to Dodge & Cox, and split it that way. Either Third Avenue or Dodge & Cox may allow you to buy the other's mutual funds, too, but it may cost extra - you would have to check with them. Or you could open an account with a broker like Scottrade and probably buy those funds through them, but again, you may have to pay a commission. If there are particular funds you wish to purchase, you should ask the IRA providers you are considering how much it would cost to purchase those funds in an IRA with them, and use that information as part of your decision-making.

AJ
Print the post Back To Top
Advertisement