I've read the previous post about rolling over a 401K into an IRA. I'm still confused. I'm very green when it comes to investing.Here's my sitituation. Right now I am a stay at home mom. I have about $55,000 in my 401K from my previous employer. I will probably begin working again next year. Should I leave my money where it is and rollover to my next employers 401K or should I look into a Roth IRA or something else? Thanks in advance for you help.
As a Trustee for a 401(k) Plan, I cannot give advise to my fellow employees, so allow me this opportunity to assist you.The big question is "Are you satisfied with your current plan?" Many employees have been in "bad" plans (poor performers over many years). At your plan value, your former employer cannot force you to leave their plan (I think - check this out because things vary from plan to plan within the law, and I do not have references in front of me now), but may require you to pay the admin costs - plans vary in this regard.If you are happy with your current plan and willing to pay the admin fees (if any), I'd stay put. Alternately, you can roll into another plan and see what is available from a new employer's plan when you go to work.All of my suggestions are *without* regard to cost, but I've always been able to rollover without cost.
About 5 years ago, I faced that decision. For me it was a no brainer. I didn't like the choices in my 401K. I wanted to select my own stocks. I rolled mine over to an IRA.Good Luck,Ken
Should I leave my money where it is and rollover to my next employers 401K or should I look into a Roth IRA or something else? 1. Become your own Financial Advisor by reading the Lessons on this site and reading the message boards as much as your children will permit.2. You have at most three choices:a. Leave the money where it is (for the time being) Often there is a maximum time limit . . it is up to the Plan your Employer has set up and published.b. If your next employer has a 401k, you can "roll" it over to your new employer.c. You can roll it over into a Conventional IRA (And perhaps do a simultaneous Roth conversion, but that would cost you taxes you would need to pay from your savings . . probably 28% of $55,000 or $15,400 in loose change. But that's a different course!)In my opinion, if you have any interest or skills in money management, OPTION C is preferred.Q. Why?A. You have virtually UNLIMITED choices for Mutual Funds or stocks if you move your 401k into a Conventional IRA in a Brokerage Account. Most on line brokers will permit investment is hundreds (or thousands) of Mutual funds or in stocks (Using Motley Fool strategies of course).Regardless of whether you leave you funds with your former employer (for as long as possible) or move to a new employer, you ARE STUCK with whatever Mutual Funds in that program. Often these are HIGH FEE mutual funds which really EAT INTO YOUR RETURNS OVER TIME! One percent additional fees a year is 20% in twenty years. And that is quite common. In effect, the cost of administering the program is shifted to the employEE because the deck is stacked with Funds with high annual expenses. (Merrill Lynch is INFAMOUS for this . . coupled with lousy performing funds "to add insult to injury.")With a "roll over" to a Conventional IRA you could, for example, take advantage of Vanguard's typically LOW COST mutual funds, and later as you develop skill and or interest, trade stocks from one of the Fool's strategies.If you roll to Vanguard or Fidelity Brokerage account you can invest in their "house" funds, or in any of hundreds of other high performing funds from other "families" with little or no cost. Just get on Morningstar or one of the other sites and look for a selection or selections which meet your risk profile.You can mix and match funds . . in what ever asset allocation mix you decide is appropriate for you.If you have ABSOLUTELY no interest in making your own choices, you can drop the whole thing in Vanguard's low cost Asset Allocation fund, or Lifestyle Growth and kick back.WHATEVER you do . . if someone says "Annuity" RUN, don't walk, for the nearest exit. Unfortunately there are $50 BILLION dollars of tax deferred dollors in annuities, INSIDE tax-deferred IRA's. Naturally you don't need to wrap a tax deferred program inside ANOTHER tax-deferred program.TOTALLY unscrupulous salesmen have made huge commissions by duping folks with more money than good sense.Remember, life is all about choices. In an IRA you simply have more choices.Best wishes . . .galley slave
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |