old job with 401k

[irmanator]

What do I do with it? Can I leave it there? It is with Mass Mutual and over 12,000. I may want to roll it over later but right now it seems like a good place to leave it as there is only $1.41 for monthly maintenance fee. I have heard about some funds or plans that charge alot so I would rather wait till I see how the new plan works out.

Ok so what would you do? Do you know what is required?

[ScrimpAndSave]

I rolled my old 403b into a Roth.

[irmanator]

do they charge a lot of fee's

[disneysteve]

Options:

1. Leave it where it is. If you like the investment options and expenses, nothing wrong with doing that.

2. Roll it into an IRA. That can give you much broader investment options and lower fees depending on the company you pick for your rollover.

3. Once it is in an IRA, you can then convert it to a Roth. That would entail paying taxes on the money, though, so you need to figure out if that is worth doing in your situation.

[Broken Arrow]

Oh my goodness.

Mass Mutual is my previous 401(k) provider as well.

They are one of those companies that charge ridiculously high front loads, and some of their funds also have high expense ratios.

Nothing in their selection is good.

They were also the ones who sent me the deceptive letter about "Look at how much money you are projected to make if you stay with us for 30 years, and look at how little money you have left if you cash out." No mention of rolling over.

The second I changed employer, I immediately rolled my money out to an IRA.

My current 401(k) is Fidelity. They are much, much better. By far. In fact, they went so far as to provide a new line of Freedom funds (called Freedom K) that has even lower expense ratios than the retail Freedom funds that they offer to everyone else. No front loads.

Even if there is little incentive to leave now, I still don't know why anyone would stay? Unless you really do like their funds, which is fine then.

[irmanator]

I have little to no experience this is my first 401k. their are no front loads on this. Maybe they improved since you had them. I only get charged $1.41 per month.

i dont know, please educate me!

[disneysteve]

I only get charged $1.41 per month.

You may not be looking at all of the expenses. That $1.41/month sounds like some kind of account maintenance fee. You also need to look at the expense ratios of the funds in which you are invested. For example, Vanguard, the leader in low-cost mutual funds, charges expense ratios that range from about 0.15% to 0.6%. Other fund companies may charge 2% or more for virtually identical funds, so you really need to consider that because over 20-30 years, that difference in expenses can mean thousands of dollars.

[irmanator]

so where would i look for this info because really after being on these boreds for this long I have been going over my statement with a fine tooth comb. I don't see anything besides that.

Also the job i left the HR dept was pretty good at negotiating for cheaper rates on health ins etc. So maybe they got cheaper rates on this....

[bheem]

Since this is your retirement account, you should always consider long term strategies. If you have ten or more years to retire your best option is to convert that into a Roth IRA.

First rollover the 401K to an IRA account. If you already have an IRA account you can move the money there or setup a new account.

Once the money is in IRA, pay the tax you owe and covert it to Roth IRA. It may sound like you are losing money with taxes. But, you are not. Roth IRA grows tax free. At retirement, the growth will be way more than the principle you paid the tax on. All the growth will be yours tax free at that time.

Bheem

[disneysteve]

so where would i look for this info because really after being on these boreds for this long I have been going over my statement with a fine tooth comb. I don't see anything besides that.

It won't appear on the statement. You need to look either at the prospectus for each fund you are invested in or go online. If you Google the ticker symbol for each fund, you'll get links to Yahoo or CNN Money or other sites where you can get a profile of each fund that will include the expense ratio.

First rollover the 401K to an IRA account. If you already have an IRA account you can move the money there or setup a new account.

Be careful here. Don't merge accounts unless they are similar. For example, just because you have an IRA doesn't mean it is okay to rollover a 401k into that same account. I have an IRA that was non-deductible so it was funded with after-tax money. Rolling a 401k into that account would create an accounting nightmare as it would then contain both pre-tax and post-tax money.

[Broken Arrow]

so where would i look for this info because really after being on these boreds for this long I have been going over my statement with a fine tooth comb. I don't see anything besides that.

Also the job i left the HR dept was pretty good at negotiating for cheaper rates on health ins etc. So maybe they got cheaper rates on this....

Can you get the tickers of the funds that you own? Or is it one of those journey portfolios where they mash everything together?

Nonetheless, the prospectus should reveal the the expense ratios, which if I remember correctly and I may not, it wasn't cheap.

The bulk of their fees though are in the front loads, so they've already made their money by the time you bought in. If that's the case, it could also explain why your monthly cost is so low, because it's likely that you are looking at the expense ratio, not the load.

I remember having a conversation with the vice-president of my old company about this. He was a real nice guy. He basically said that they take competitive bids between different 401(k) companies, but there's some kind of aspect to the business end that I don't understand that they look for.... which all I knew was that it does not translate to what works out best for we individual employees.

I still put in as much as I could back then though, not because of the cost of the funds, but because of the fact that my employer was willing to give unlimited employer match, all the way up to the IRS limit. The employer match, at 28%, greatly out-weight the cost of the funds, which was either about 5% front load or 5% expense ratio.

Hmm. I'm headed home, but if I get a chance I'll see if I can't log into my old mass mutual account and see if I can't dig up more info....

[Broken Arrow]

Ok, I'm home, and I logged in to take a look.

Again, it would help if I knew what funds you have selected, but fortunately, the prospectuses of most if not all the funds can be found here.

Let's take a look at their main large cap fund, the Select Large Cap Value (Davis) SIA-AJ (ticker: MMLAX) as an example. Under the section "Expense information", you'll see that Class A shares have a 5.75% front load and a total expense ratio of 1.26%.

Granted, this particular fund actually has several different classes, but we don't qualify for these other ones until you have at least $1 million dollars (Class L, under the section "About the Classes of Shares – Multiple Class Information").

The breakdown of the expense ratio is as follows:

* 0.65% management fees
* 0.25% Rule 12b-1 fees
* 0.36% "Other"

Hmm.... Actually, even just the 0.65% doesn't translate to $1.41 per month, but again, I don't know what funds you have. So, I'm not sure why your monthly cost is so low, but the information is all right there.

[disneysteve]

BA, you can't assume that the load exists for irmanator. She said there are not. My wife's 401k is all in funds that normally have loads but her particular plan doesn't have loads.

[creditcardfree]

The class of shares is really important, when determining your fees. Only two types of MassMutual funds charge 12b-1 fees. Per BA's link, they are Class A and N.

OP, in order to roll your 401K, you need to fill out a rollover or transfer of assets form, generally with the new mutual fund company or brokerage firm. Often you also need an application to establish your account with the new investment form. Occassionally, you may have to fill out a form with the company holding your 401K. Basically, the two companies work together to get your money where you direct it to go.

[Broken Arrow]

BA, you can't assume that the load exists for irmanator. She said there are not. My wife's 401k is all in funds that normally have loads but her particular plan doesn't have loads.

Hmm, I looked back and saw that she mentioned this. Kind of surprising since I was hit by them when I was there, but perhaps she doesn't have it. Maybe they made it exempt for her somehow, or maybe she has class N.

Either way, the expense ratios don't justify staying, especially with class N, although I am also wondering about her fund selections now since her monthly costs are so low.

Basically, the two companies work together to get your money where you direct it to go.

Ya, that's usually how it works... or how it should work. When I talked to my Mass Mutual rep, they said that all they do is cut a check for you to deposit to your new IRA. When asked why, they said that basically every company has their own procedures on how to do the transfers, and this is how they do it. Mmmkay. I got my check through the mail, which I then had to mail it back out to my IRA company. Thank you Mass Mutual.