401K situation

[m3racer]

I need some input from you guys. My wife has a 401K that she maxes out but will be leaving her company in a 1-2 years. Since the market has been down should she reallocate her portfolio to a MM fund? I don't think she can keep her $$$ with the company's 401k plan once she leaves. She would probably have to rollover her money into an IRA account. Since there will be different mutual funds in a new IRA, I don't think she has the time to recover from her losses in her current 401k plan? What do you guys think?

[jIM_Ohio]

I would keep same asset allocation now that you do when you leave in 2-3 years. This is the time to buy, not sell.

[srblanco7]

Since she's already incurred the "loss" in her 401k, there's no point in selling at the lower NAV and rolling the $$ into a MM. Furthermore, if she rolls the 401k in a few years into an IRA with a similar asset allocation, she should be buying the shares in the new funds at a similar discount.

[disneysteve]

Since the market has been down should she reallocate her portfolio to a MM fund?

That would be the "buy high - sell low" theory. not a very good one in my opinion. Keep what she's got. Continue contributing to take advantage of picking up more shares at a lower cost and then roll the money over when that becomes necessary.

[m3racer]

I always thought that conservative allocation (ie. bonds or money market funds) were wise choices if you only had 1 to 2 years in a down market.

[humandraydel]

You are acting like only the funds in her 401k are going down. EVERYTHING is going down. So, stay the course and in 2 years, roll the 401k into an IRA and allocate the assets appropriately. In 15-20 years, it'll be a blink in history.

[jIM_Ohio]

conservative assets make sense if you want to preserve money. If you want to grow money, other investments should be considered.

[disneysteve]

I always thought that conservative allocation (ie. bonds or money market funds) were wise choices if you only had 1 to 2 years in a down market.

If she were retiring and needed to draw on this money in 1-2 years, that would be one thing. If, however, she won't be retiring for many years and will just be moving this money from one retirement account to another, that's different.

[Merch]

Steve hit the nail on the head. If your time horizon for retirement is long you should leave it in more aggressive assets.

As for your wife being forced to move her 401 (k), it depends on the amount in the account. If she maxes it out (15.5 k), she probably won't be forced to move it. It's usually if it's below 5k that you need to move it.