I've started a new job and want to rollover my past employer's 401k accounts. There are lots of options...1 - roll them over into my new employers plan which is the Fed Gov TSP2 - leave them where they are3 - roll them over into an IRA (im 39 and make over $100k so I don't think I can do the Roth roll over)If I roll them over into an IRA should I put them in mutual funds or stocks?Any suggestions?Thanks!!
Welcome RavenManiac. We're glad you could join us.At age 39, you are presumably more than 10 years from retirement. Therefore, Fools would suggest you invest 100% in equities until you get closer to retirement. Then as you get within 10 years, check out the various "allocation" discussions for details, but gradually increase your bond position.The equities can be either stocks or mutual funds and the right answer for you depends on you, your risk tolerance, your experience/comfort level with investments, and what is offered in the plans. Most Fools use an S&P 500 Index Fund or a total market fund when they first start out. As you gain experience, you can branch out into other things including growth funds, high performing sector funds, international funds, REITS, blue chips stocks, or other high performing stocks. Most would maintain about half in the index funds and then limit each of the others to 20 to 30% of your assets.If you are an experienced stock picker, a portfolio of stocks is certainly fine, but they take more time to manage. Hence, most beginners find index funds a convenient place to begin. They are professionally managed and usually if you check your statement once a quarter or so, that is enough. Stocks take more time, but can be well worth it if you enjoy it.As to where to move your 401K, Fools usually prefer the IRA rollover because it gives you freedom to invest in whatever you want. Usually a mutual fund company or a discount broker is the best custodian. Mutual fund company might be least costly especially if you do only mutual funds. 401K might be least costly if you have a good plan with low costs and good performing funds. Leaving at your previous employer can be OK if its a good plan and if the company is large enough to easily keep an eye on and likely to survive long term. If it doubt, move your funds.Ask away if any of this requires explaining.Good luck.
I've started a new job and want to rollover my past employer's 401k accounts. There are lots of options...1 - roll them over into my new employers plan which is the Fed Gov TSP2 - leave them where they are3 - roll them over into an IRA (im 39 and make over $100k so I don't think I can do the Roth roll over)If you decide to roll the rollover money into index mutual funds, rather than individual stocks, you should strongly consider rolling into the TSP. The TSP plan has extremely low expenses, even lower than Vanguard.AJ
I think I read something where, for example, if you were to get sued that your 401k funds could not be touched but your IRA funds could. Then I thought I read recently an article where Congress changed that so if you were to get sued, your IRA funds are now safe.Someone more knowledgable than myself would have to confirm this. You might want to know the law before you decide. I wouldn't want my entire retirement funds subject to being stolen as a result of a lawsuit which may or may not be valid.
I've started a new job and want to rollover my past employer's 401k accounts. There are lots of options...1 - roll them over into my new employers plan which is the Fed Gov TSP2 - leave them where they are3 - roll them over into an IRA (im 39 and make over $100k so I don't think I can do the Roth roll over)If I roll them over into an IRA should I put them in mutual funds or stocks?Any suggestions?Thanks!! The TSP has extremely low fees, but a very limited selectiona. An S&P fund,b. A small cap index fund, c. A fixed income fund, d. A bond fund, e. An international fund plus Lifecycle funds (essentially the previously mentioned 5 funds in different allocation models)If you want to add REITs or a REIT fund, not possible with TSP.If you have some good funds, or good funds closed to new money, with your existing plans, you might want to stick with them.Just a couple of thoughts to think about.Hohum
Unless your current plan has super low expenses, plan eithier to move it to the new TSP plan or your own IRA at Vanguard .....Often, once you have left the plan there are fewer options....even if you leave it there....plus they may start charging you annual fees for it since your employer no longer pays that......But there is no hurry to move it to VAnguard..Your new employer may only give you a short window to roll things over.It might be you roll it over to Vanguard, and start participating in the new plan.....In the future, you might want to convert some or all to a Roth...and the TSP option would likely not give you that option....t.
Broad based index funds. Diversify well.buzman
The TSP is great because the expenses are so low. If you are going to buy low cost index funds anyway, you might as well do it there. You can do well by diversifying among the C, S, I, and G Funds (Large cap, small cap, foreign, and bond).As noted though, you can't further diversify into REITS or emerging markets or sectors, if you want to do that. However, I do that in my taxable account, so overall my portfolio is allocated how I want it. If that option is there for you, I'd say go with TSP for the 401(k) money. You can always roll it to an IRA when you retire if you want more flexibility then.Karen
Good thought, InvestMechanic. But for anyone planning to retire on investment income, liability to lawsuits is potentially a big deal. Most of us deal with that risk by carrying adequate insurance. Protectiong assets is a very good use of insurance. And especially if you are in an occupation like medicine which tends to attract law suits.But when you come right down to it, few of us are truely safe from lawsuits. It is best to behave and try to avoid them.
Good thought, InvestMechanic. But for anyone planning to retire on investment income, liability to lawsuits is potentially a big deal. ------------------------------------------------------------------------In many states, IRAs are creditor proof.Plus a better option is personal liability insurance. It's cheap.buzman
"In many states, IRAs are creditor proof.Plus a better option is personal liability insurance. It's cheap."A million dollar blanket liability insurance policy is about $200/yr extra in Texas...but you also have to carry $250,000/$500,000 car insurance (another $60/yr) and have both car/house insured with same provider.t.
This stuff is good to know.
Lots of good advice. Despite the limited number of choice TSP is awfully good. I think S&P ,Small Cap index, International and fixed income pretty much covers all of the investment needs for most people. I believe the expense ratio of the lifecycle fund is .03% this is roughly 1/10 cost of most lifecycle funds. If you want to have more control but still invest in mutual funds than Vanguard is excellent. Finally if you want to invest in some individual stocks, ETFs, as well as mutual funds rolling over to Fidelity or Schwab would be a choice.But if you don't have a lot of interest in making active management decisions about your retirement plans, TSP is the way to go, IMO.
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