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The company I work for recently changed owners and I now have an option to move my former 401K funds to the new 401K plan. Would I be better off moving these funds to a self directed IRA with Vanguard Index 500 or just staying with the 401k account that offers an index 500 fund. Any advice will be greatly appreciated, I'm a new fool.
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LAM2MMM writes:

The company I work for recently changed owners and I now have an option to move my former 401K funds to the new 401K plan. Would I be better off moving these funds to a self directed IRA with Vanguard Index 500 or just staying with the 401k account that offers an index 500 fund. Any advice will be greatly appreciated, I'm a new fool.

I reply:

I can't think of any options rolling from one 401(k) to another would give you that you could not also execute within a self-directed conduit IRA. On the other hand, I can think of at least one option the IRA would give you (conversion to Roth) that is not available if you stay within the plan. In addition, in an IRA, you can purchase (almost) any investment vehicle you choose, including those offered through your 401(k) plan. In short, unless I'm missing something (loads that are waived within the 401(k)?), moving to a self-directed IRA seems like a no-lose proposition. --Bob
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Greetings, LAM2MMM, and welcome. You ask:

The company I work for recently changed owners and I now have an option to move my former 401K funds to the new 401K plan. Would I be better off moving these funds to a self directed IRA with Vanguard Index 500 or just staying with the 401k account that offers an index 500 fund. Any advice will be greatly appreciated, I'm a new fool.

As Bob78164 points out, with the IRA you will have far greater flexibility in your investment options than you will within a 401k plan. IMHO, that makes the IRA a more attractive option. Whether that's better for you, though, only you can decide.

Regards….Pixy

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LAM2MMM wrote:
<<The company I work for recently changed owners and I now have an option to move my former 401K funds to the new 401K plan.>>

I would (and have) roll the funds over into a rollover IRA - and keep that account distinct from your other IRA accounts. At some future time, if you find a good reason to roll it into your new 401(k), you can do so, so long as you didn't mix other IRA funds with the rollover.

Meanwhile, you most likely benefit from a greater selection of investments and lower fees.

scott
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