UnThreaded | Threaded | Whole Thread (14) | Ignore Thread Prev Thread | Next Thread
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Account Options Date: 6/10/2003 6:41 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Recently I have been discussing my options regarding two previous 401(k) accounts and am thinking of rolling them into my Vanguard IRA. Today I decided to take a closer look at each account and the funds that were available and the funds I was currently invested in.

I apologize in advance as I am the only one that can truly answer the question of what to do with these accounts, but I think putting it out on the board will help me think about it and may inspire a comment or two from some of you. Granted these accounts do not amount to a large sum of money so it may be less significant but nonetheless it is something I am trying to decide the best course of action longterm.

The breakdowns of my two accounts are as follows, funds are listed as Fund Name (Percentage of Portfolio):

Account 1 - Total Balance $5847.68
----------------------------------
CIGNA Lifetime 20 (26.64%)
INVESCO Dynamics (10.81%)
INVESCO Small Company Growth (12.96%)
Janus Worldwide Fund (12.35%)
Large Cap Growth/Morgan Stanley (13.45%)
S&P 500 Index Fund (23.79%)

Account 2 - Total Balance $4113.38 (Vested Balance $3979.93)
----------------------------------
ServiceMaster company stock (58%)
Putnam S&P 500 Index Fund (19%)
Putnam Investors Fund Y (15%)
Putnam Growth & Income Y (5%)
Vanguard LifeStrategy Growth (3%)

If I were to roll these accounts into my Vanguard IRA, I would invest them in the Vanguard S&P 500 Index Fund (VFINX). Originally I thought I would do both accounts. Now I am trying to decide if I should liquidate the company stock and move that into an index fund as well.

Does anyone have opinions on the funds I am currently invested in? Does anyone see any positives/negatives to rolling these funds into my Vanguard IRA and investing in VFINX?

Over the last quarter, the funds in account 1 have had pretty good performance whereas the funds in account 2 have been so-so. I was ready to pull the trigger on the rollover but now I am getting a little gun-shy and probably thinking too much.

Any thoughts, opinions, or should I just shut up and make a decision? Thanks!

dt
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36495 of 75379
Subject: Re: Account Options Date: 6/10/2003 7:25 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
dt:
I'd probably, with $10,000 break it into three areas

1) Growth, you seem to like Index funds, low fees and they'll over time grow. Vanguard Total Stock Market index is good 75%


2) International Growth.. the Janus fund you have will prove to be a good one, but you could choose one of Vanguards as well 15%


3) Pimco Total Return 10%



I would not combine with present Vanguard account. I'd move to an online broker
that doesn't charge yearly fees Example.. Scottrade.. there are others.

The funds you presently have in both accounts have funds that have higher expense ratios than you may like.

You need to lower your expense ratio to help improve your performance.

Will you ever become fully vested in the 2nd account?

You don't mention your age but the above will give good returns with average risk over the next 10 years.
Try this site to evaluate your 401k and decide for yourself

http://moneycentral.msn.com/investor/partsub/funds/401k/start.asp

Anyone else want to add his or her 2 cents?

MEG


Print the post Back To Top
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36496 of 75379
Subject: Re: Account Options Date: 6/10/2003 7:36 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
MEG wrote,

"You don't mention your age but the above will give good returns with average risk over the next 10 years.
Try this site to evaluate your 401k and decide for yourself
"

First, thanks for the feedback and suggestions! I am 27 years old and feel that I have a pretty high risk tolerance for my retirement investments.

As far as fully vesting in the 2nd account, I am not sure. I left that job roughly 3.5 years ago and don't recall if the vested amount has been increasing as the time passes. Bad of me I know.

I will look into your suggestions and the link that you passed along! Thanks again!

dt

Print the post Back To Top
Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36498 of 75379
Subject: Re: Account Options Date: 6/10/2003 7:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
dt
Contact the previous employer's HR and get your vesting question answered.

You are young and wise to keep investing for retirement.

Wait for other Fools to comment on your situation.

You'll get other slants on your 401ks
and have to weed through it all. I am a Fool, but possibly there are Fools more wise.


Take care

MEG


Print the post Back To Top
Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36499 of 75379
Subject: Re: Account Options Date: 6/10/2003 7:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Does anyone have opinions on the funds I am currently invested in?

When you invest in numerous mutual funds, you really are doing nothing more than creating a defacto index of the total market. This is why putting everything in Vanguard SP500 or Total Market makes more sense, plus the expenses are much lower.

Print the post Back To Top
Author: L2J Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36500 of 75379
Subject: Re: Account Options Date: 6/10/2003 8:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Be ever so mindful of the handling of 401k funds if you decide to withdraw.

The only way you can avoid major tax bite and potential early withdrawal penalty is to roll over into a traditional IRA and you can re-characterize later to a Roth if you desire. Going to a broker is good advice because you can designate, buy, sell within that IRA (be watchful of fees). Having a check made out to you personally requires that the account deduct 20%(?) in taxes. You would also have a time limit to activate the IRA (60 or 90 days), and you likely would need to make up the 20% to avoid penalty.
Have the check made out to your broker, IRA administrator handling your account.

If your Vanguard account is not over $10k you may want to roll over one 401k account to Vanguard to avoid / lower the maintenance fee.

Hope this helps.

HaGD, L2J

Print the post Back To Top
Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36501 of 75379
Subject: Re: Account Options Date: 6/10/2003 8:36 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I would roll all your accounts into Vanguard. You'll be happy when all your money is in a single place, and you can easily view and make adjustments online via a single interface.

>>I would invest them in the Vanguard S&P 500 Index Fund (VFINX).

You didn't give your age, so it's hard to give specific investment advice, but in general, picking a single subclass (large caps) of a single asset class (stocks) is a limiting idea. One suggestion for which Vanguard funds to invest in based on age:

http://www.esiguide.com/guide/step_2.htm

>>the funds in account 1 have had pretty good performance whereas the funds in account 2 have been so-so

Past performance will not determine future results, except for the fact that higher fee funds have lower returns.

Nick

Print the post Back To Top
Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36502 of 75379
Subject: Re: Account Options Date: 6/10/2003 9:10 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
>>The only way you can avoid major tax bite and potential early withdrawal penalty is to roll over into a traditional IRA and you can re-characterize later to a Roth if you desire

When you go from a TIRA to a Roth you're doing a "conversion". You can only "recharacterize" from a conversion Roth back to a TIRA (for example, if your income was too high to allow the initial conversion and the IRS demands you recharacterize).

Print the post Back To Top
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36503 of 75379
Subject: Re: Account Options Date: 6/10/2003 11:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
When you invest in numerous mutual funds, you really are doing nothing more than creating a defacto index of the total market. This is why putting everything in Vanguard SP500 or Total Market makes more sense, plus the expenses are much lower.

Thank you for that suggestion. When I was reviewing the asset allocations in those accounts, I was actually wondering myself why I had initially selected the number of funds I had selected versus simply going with the S&P 500 fund or something similar.

Thanks for the additional feedback!

dt

Print the post Back To Top
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36504 of 75379
Subject: Re: Account Options Date: 6/10/2003 11:23 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Have the check made out to your broker, IRA administrator handling your account.

If your Vanguard account is not over $10k you may want to roll over one 401k account to Vanguard to avoid / lower the maintenance fee.


Again, great suggestions. I spoke with a Vanguard representative a week or so ago regarding a rollover into my Traditional IRA and they informed me of the ways I can have my current plan administrators handle the funds. The recommended method was to have the current plan make a check payable to the Vanguard Fudiciary Trust Fund and then I can deposit that check into my existing account.

Yes, my current Vanguard IRA is below $10k as I just opened it last year. However, for an IRA, their low-balance fee is $5000 per fund. I will pass that with this year's contributions regardless of whether or not I add the 401(k) funds.

I am leaning towards staying with Vanguard right now because I am still learning and feel more comfortable in the index funds. From what I understand, when investing in mutual funds, it is often advantageous to invest directly with the fund family if possible.

Thanks for the feedback!

dt

Print the post Back To Top
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36505 of 75379
Subject: Re: Account Options Date: 6/10/2003 11:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I would roll all your accounts into Vanguard. You'll be happy when all your money is in a single place, and you can easily view and make adjustments online via a single interface.

This is what I am leaning towards but still investigating my options of going with a brokerage account, possibly at Scottrade.

You didn't give your age, so it's hard to give specific investment advice, but in general, picking a single subclass (large caps) of a single asset class (stocks) is a limiting idea. One suggestion for which Vanguard funds to invest in based on age:

I am 27 years old. The link indicates 25% in international stocks and 60% in US stocks. Right now, with my limited knowledge and experience, I am not sure I am ready to go with an international fund. Another item to add to my research list. Also, from my limited knowledge, isn't it better to be in short-term bonds right now given the economy and interest rates versus the suggested 10% in medium bonds? Also, I am not familiar with REITS so another area for additional research.

The other thing, right now I have been sticking with only one fund because I am charged a maintenance fee for each fund with a balance below $5000 in my IRA. Once I get to the point where I can rebalance my account without incurring fees, I think I would feel better.

Thanks for the feedback!

dt

Print the post Back To Top
Author: Cptbutton Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36507 of 75379
Subject: Re: Account Options Date: 6/11/2003 10:10 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Yes, my current Vanguard IRA is below $10k as I just opened it last year. However, for an IRA, their low-balance fee is $5000 per fund. I will pass that with this year's contributions regardless of whether or not I add the 401(k) funds.

They charge you $5000 for having a low-balance? Yikes!

8-)}

<ducking and running>

-CB


Print the post Back To Top
Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36513 of 75379
Subject: Re: Account Options Date: 6/11/2003 1:30 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
They charge you $5000 for having a low-balance? Yikes!

8-)}


I guess I should read more closely before I post late at night! They charge you a fee if your balance is below $5000 per fund. :)

At least it was good for a laugh.

dt

Print the post Back To Top
Author: L2J Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36514 of 75379
Subject: Re: Account Options Date: 6/11/2003 2:22 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Yobria - Thank-you, your right, my bad, wrong choice of words.

TIRA to a Roth you're doing a "conversion". You can only "recharacterize" from a conversion Roth back to a TIRA

HaGD, L2J

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (14) | Ignore Thread Prev Thread | Next Thread
Advertisement