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Rollover 401-k to New 401-k or Self-Directed IRA?

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WxByHart
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Rollover 401-k to New 401-k or Self-Directed IRA?  Reply with quote  

Got about 140k in my old 401-k that I now have the option to roll over into my new 401-k with Fidelity. Would I save money, however, and have more investing options if I simply roll it into a self-directed IRA through a low-fee company like Ameritrade or E-Trade? Or is it better to have both my new & old money with the same firm, which in my case would be Fidelity?
Post Sun May 19, 2013 2:57 am
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clydewolf
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Re: Rollover 401-k to New 401-k or Self-Directed IRA?  Reply with quote  

quote:
Originally posted by WxByHart
Got about 140k in my old 401-k that I now have the option to roll over into my new 401-k with Fidelity. Would I save money, however, and have more investing options if I simply roll it into a self-directed IRA through a low-fee company like Ameritrade or E-Trade? Or is it better to have both my new & old money with the same firm, which in my case would be Fidelity?

Putting your old 401k money into your new 401k would have all of your retirement money at Fidelity. That would give you one report to review. That is not bad.

What may be bad is the limited number of investment choices available in the 401k.

Moving the old 401k to an IRA may be a good option. You have many more choices for investing.
And typically in an IRA, your beneficiaries have better distribution options vs the options in a 401k plan.

Fidelity or Vanguard are good choices for an IRA.
Post Sun May 19, 2013 8:28 pm
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oldguy
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I would move it into a Rollover IRA at Fidelity. As you change jobs, retire, you can add each 401k to the IRA - that is where your retirement money will eventually be.

You don't want to leave it in a 401k after you retire, the managing company could be out of business 20 years later. Also, an IRA has more choices that a 401k, and no intermediary company to go thru.
Post Sun May 19, 2013 10:26 pm
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WxByHart
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I see what you're saying about opting for an IRA over my new 401-k. But wouldn't my options be the same (if not better) with much lower fees if I went with a company like eTrade instead of Fidelity?
Post Mon May 20, 2013 1:12 am
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oldguy
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quote:
But wouldn't my options be the same (if not better) with much lower fees if I went with a company like eTrade instead of Fidelity?


I think you'll find the opposite to be true. But check.
Post Mon May 20, 2013 1:24 am
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coaster
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The online brokers charge "transaction fees" on some mutual funds; the investment companies will often charge transaction fees on funds that are not their own; and there are other fees, like redemption fees. Most retirement accounts have a custodial fee. Be sure you research what fees are involved with the type of investment vehicles you choose to use, and the size of the account (often fees are waived for large accounts).

What caused me to raise my eyebrows was the $50 redemption fee on funds held for less than 90 days, as stated on e-Trade's fees page.

~Tim~
Post Mon May 20, 2013 4:03 am
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Anton Martin
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Rollover To ROTH IRA  Reply with quote  

I would like to tell you that rolling over to ROTH IRA can be good option for you, as it will give diversification to your investments and may boost your retirement savings.
Post Tue May 21, 2013 1:38 pm
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oldguy
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quote:
I would like to tell you that rolling over to ROTH IRA can be good option for you


Whoa!!! Adding $140k to your taxable income in a single year is NOT going to have a good outcome, the tax bill will probably be over $50,000.
Avoid the Roth, use a Trad IRA.
Post Tue May 21, 2013 2:46 pm
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clydewolf
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Re: Rollover To ROTH IRA  Reply with quote  

quote:
Originally posted by Anton Martin
I would like to tell you that rolling over to ROTH IRA can be good option for you, as it will give diversification to your investments and may boost your retirement savings.

I am with Oldguy on that, get the 401k into a Traditional IRA.
Then if a ROTH is the right way to go, making small conversion amounts will help to control the onerous tax bill.

It would be good to fill your tax bracket with ROTH conversion money. But then if your tax bracket is greater than 15%, maybe it is not a good idea to convert.
Post Wed May 22, 2013 5:58 pm
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