| What to do with this $50K in an old 401k @ 25 years old |
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Corporate85
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| What to do with this $50K in an old 401k @ 25 years old |
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Aright ladies and gents,
Here's my situation:
25 years old.
New job.
401k from old Job has 50K sitting in it.
The $50k dollar quesiton is... do I:
a.) let it sit where it is, in a very well-managed low fee account with a good amount of investment options (JPMC)
b.) Bring it on over to my new 401k (managed through Fidelity..not as good amount of options but I'd have all my money in one manageable place)
c.) roth it out to an IRA (I'm going to get hit with a 25-28% tax hit... but expect to be in a much higher tax bracket when it comes time to withdraw... (also, when it's 2045 I assume tax rates will be much higher in general given our current ecoonomic situation) and I can invest in a larger array of options and make money on my gains tax-free).
So. I'm 92% leaning toward option C. I'll have a 401k in my new job that will attribute (with matching) 14% of my income (currently 90K)... so the Roth wouldn't be my only source for retirement.
The 8% of my doubt is attributed to the fact that I'd need to pay $15K+ in taxes next year... which I assume (which we all know what happens when people do that) I can use the 50K to do,
Thoughts?
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Fri Jun 10, 2011 6:23 pm |
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Saver
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Location: new york
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take risk i will go with option c
Savings
Savings bonds
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Fri Jun 10, 2011 10:59 pm |
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oldguy
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Location: arizona
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d.) Roll it to a Rollover IRA at a no-load company such as Vanguard or Fidelity.
I would use option d, no need to create a tgaxable event (such as option C).
Avoid A. You'll barely remember the name of your current employer 40 yrs from now, they may not even be in business then, so don't be dependant on them for your retirement.
Avoid B. Why constrain yourself to a company's plan when you can use any allocation that you coulld ever want?
Avoid C. No need to prepay 28% in taxes (your max marginal rate), when you are age 59 1/2 you can remove a bit of money each year and keep the tax rate at a lower effective rate (even tho your marginal rate may be higher), As forhigher brackets in 40 yrs - you can't estimate tax code. In fact, we could be on a Fed Sales Tax system by then so you would end up paying tax on your Roth yet AGAIN. (I was in 40% & 50% brackets 40 yrs ago, now the MAX is 35%).
With D, you will have the Rollover IRA that you will use for life - each time you change jobs your 401k will be rolled to the IRA - and when you retire you will roll your last 401k there - so all of your 401k retirement funds will eventually go there.
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Sat Jun 11, 2011 2:20 am |
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ElizabethC
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Have you heard this news about increasing rate of people who are taking 401k loans. A lot of us have personal reasons why we are getting this kind of loan. In the news, they mentioned that a record high volume of people are getting loans out of their 401(k) account. An increasing volume of people are using their retirement as a source of extra cash every year. Several financial experts wouldn't consider it a prudent move. Congress is in the midst of considering a bill that would cap borrowing from retirement money. I found this here: Number of people taking 401(k) loans hitting record high, personalmoneystore.com/moneyblog
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Tue Jun 14, 2011 6:37 am |
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coaster
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| Re: What to do with this $50K in an old 401k @ 25 years old |
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quote:
Originally posted by Corporate85
b.) Bring it on over to my new 401k (managed through Fidelity..not as good amount of options but I'd have all my money in one manageable place)
What do you see as less manageable about having your assets in more than one place?
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Wed Jun 15, 2011 6:18 am |
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moneyclass
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Location: Cleveland, Ohio
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do a rollover IRA but put it in a Traditional IRA. Wont get hit with the taxes and you have all investment options you want.
www.moneyclass.com
Your Class to Financial Success!
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Sat Jun 18, 2011 2:23 pm |
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