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Financial Planning / Foolish 401(k)s


Subject:  Re: 401K Rollover Date:  11/21/2011  5:53 PM
Author:  pauleckler Number:  24793 of 26118

Most people like the flexibility an IRA offers. You can transfer your account almost at will (provided you obey the rules) meaning you have a wide array of choices and can easily change if you have good reason.

You will want to consider costs. Some 401K funds are subsidized by the employer, and some have excellent investment choices. If you have a good one, it can be tempting to stay. But often, people are stuck with whatever their employer selects--take it or leave it. That is why the IRA is usually preferred.

If you are invested in mutual funds, you will probably find that the same company is willing to act as your custodian. Vanguard and Fidelity are excellent at it--if you find their mutual funds attractive. Others can be ok too, but some have high expenses and you will want to avoid annuities. A self directed IRA at a discount broker can also be attractive. Then you can do a combination of individual stocks, ETFs and mutual funds. Brokers often charge transaction fees for mutual fund activities, but most have a list of funds for which those fees are waived. Consider the fees for services you plan to use and investments of interest before you decide.

You will also often encounter annual mainteance fees, and some have account minimums. All of these can figure into your decision. But remember if you decide you made the wrong choice, you can easily switch to another custodian once you find one you like.
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