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I have been posting on the debt thread. I also have a ? pertaining to my 401K. I have about 50K left in my 401K from former employer. I am deciding whether to roll it to current employer's 401K plan (vanguard) or whether to meet with a private Financial Planner & open an IRA in my name. My CPA referred a FP. He is not fee paid--he take 1% year, so roughly $500 year. I def. want to take it out of former plan--Putnam. But $500 per year is alot! I know very little about what to invest in. That is why I do 401K. Can people here suggest/direct me on what to do with my 50K---where to invest it? I am 36, female, single. Young enough to keep taking risks. Thanks!
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Avoid the financial planner! There is no need to let someone take 1% of your money to likely provide a fraction of the knowledge and insight you could find on these boards.

I would suggest rolling the money into a Rollover IRA. Moving it into your current 401K is not a bad move at all but in a Rollover IRA you won't be tied to a small set of investment options like in a typical 401K.

There are many places you can open a Rollover IRA. I opened one a year ago through Fidelity. There are no fees to open the account and either through their website or over the phone they will walk you through the whole process - very painless. Many other brokers offer the same features and convenience.

Once you've got the money moved over you can continue the research to decide how you want to invest your money. Lots of info here at TMF - in the fool school, articles and on these boards.
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Here's what strikes me.

1. Vanguard is a good fund company but a 401(k) is always limited in the options it gives you for investment; a Rollover IRA is the most flexible. One reason people rollover into a new 401(k) is to allow them to take loans against it in the future. A 401(k) loan is a bad idea in most cases but is the only option for some people in some cases. If you foresee such a need, transfer to new 401(k), otherwise you're better off with a Rollover IRA.

2. Your second option was "to meet with a private Financial Planner & open an IRA." There's no need of a planner for setting up an IRA. I rolled over a 401(k) 3 days ago to a Fidelity brokerage account Rollover IRA over the net; was a piece of cake. Should be easy with any Fin. Inst. (The phone reps will be eager to walk you through the process as you fill in the form on the web. If you prefer the paper application to the web, be prepared to be a little intimidated, though.)

3. $30 membership to the Fool boards is far more value than what that $500 will buy you.

4. You said "I know very little about what to invest in. That is why I do 401K." which is a problem; you can't do a good job of investing in a 401(k) -- or anything else -- if you don't educate yourself about investing. It's your retirement, so the effort is worth it.

5. Your choices:

a) Keep it where it is.
b) Roll over to new employer's 401(k)
c) Roll over into an IRA.

If you go with (c) above, you need to pick one of the following:

i) Mutual Fund Account: Say with Vanguard. You'll only be able to buy Vanguard funds in such an account. Usually no annual fees, no commissions on buying the funds. Very limited choices. Here, your choice of Fin. Inst. depends on the funds you want to hold.

ii) Brokerage Account: Most flexible. Can buy and sell almost anything. Fees start at none/year for ScotTrade, Fidelity etc. Trade commisions are $7 for ScotTrade (very popular on this board), ~$11 or more for Fidelity etc. Read http://www.smartmoney.com/brokers/index.cfm?story=2004-intro and make a choice of Fin. Inst

6. Once you make the above choices, you can come back and read past posts (or ask new questions) on how to rollover. Not doing it right can have nasty tax implications.

7. After that, the whole question of what to invest in comes up. For help with that, people will want to know about your other investments/savings, your goals etc.

Welcome and good luck.
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Thank you both for your remarks! I have also been posting on the credit card debt thread--I am in debt 17K & am digging my way out. This 401K is not as pressing, but I want to make sure I put it in the most appropriate place for now.

I need to do the simpliest thing for now, & re-evaluate in a few months when I feel more stable regarding my debt issues. I think I'll roll it to new co's 401K, which is w/Vanguard. If I do chose to do that, can I roll it later to my own IRA?

Thanks!
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I need to do the simpliest thing for now, & re-evaluate in a few months ...

The simplest option might be to do nothing, if you are sure to re-visit the issue soon.

...I think I'll roll it to new co's 401K, which is w/Vanguard. If I do chose to do that, can I roll it later to my own IRA?

Most 401K plans don't allow that until you leave employment; your plan administrator in the HR department should know for sure.
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> The simplest option might be to do nothing, if you are sure to re-visit the issue soon.

It's with Putnam & has been sitting there in that account for 5 months. I think I just want to roll it to current employer's VG plan. HOw do I chose which funds to place it in?
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It's with Putnam & has been sitting there in that account for 5 months.

There's nothing inherently wrong with that except that the way you express it makes me think it is in a Money Market Fund or something earning a dollar or so a year.

HOw do I chose which funds to place it in?

Your plan administrator will have a Rollover form (for old 401K into new 401K) which will list the funds available in your new 401K and the percentages you want to allocate to them.

As for which funds to place the $50K in, that'll depend normally on the distribution of your other investments and the options available to you in your new 401K. Wish you access to VGENX :-)
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HOw do I chose which funds to place it in?

I would suggest visiting the Vanguard site http://www.vanguard.com, click on the "Go to Personal Investors site ..." link | "Planning and Education" tab and start reading through the pages on "Investor Education" and "Retirement Planning".

Yes, I have some ideas, and I have posted my holdings in various messages, but what I do and what you do may be different things. What is important is that you understand what you are invested in and why. It is necessary to take prudent risks, but what you call "prudent" and what I call "prudent" may be different, and you may find that a 1-fund portfolio (such as the Vanguard Target Retirement 2035 Fund) is a better fit for you whereas I may find that a 4-fund portfolio is better for me because I have taxable investments to consider, along with trying to minimize tax drag on taxable investments, so I find asset placement a valid concern for my accounts.

But if I tell you that you should invest in A and B and have an Asset Allocation plan, but Chin comes along and suggests A and C with a variant Asset Allocation plan with a rebalancing scheme, and then someone else comes along and recommends market timing techniques and conveniently ignores that "index funds" are far more than just the S&P 500 index fund, if you don't already have a reasonable plan for yourself, you may find yourself swayed by the various messages that approach investing from somewhat different angles and with somewhat different needs and assumptions.

The best defense is to get some education under your belt, and I think Vanguard presents some useful information, at least from the prospective of being invested in both stocks and bonds and having an Asset Allocation plan with some form of rebalancing. And even if you decide to go with another company, at least you can see what one of the approaches is.
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> 5. Your choices:
> a) Keep it where it is.
> b) Roll over to new employer's 401(k)
> c) Roll over into an IRA.

I was thinking of the same questions. Incidently, my new company's 401K plan is also with Vanguard. I already rolled over to the new 401K plan. Now I'm having second thoughts because their brokerage option is $150/year + commission fees of $25 or 0.25/share (whichever is more!). My company has a provision where I can effectively "rollout" the rolled-in money! Check if you can do that. I haven't yet rolled over into IRA because one of my other considerations is whether 401K and IRA are equivalent from legal point of view. I mean the 401K is untouchable by creditors and anyone who might sue you for whatever. IRA's, from what I understand, don't enjoy the same status - at least not in all states. I heard Suze O. mention that IRA in CA does indeed have the same status but she said it depends on the state. Does anyone have any thoughts on this aspect?

thanks,
MG
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