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Move 401(k) from previous job?

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  • Move 401(k) from previous job?

    I'm single, 27, and was laid off late last year but was lucky enough to find a new job in March. I have retirement accounts scattered about in various places, which will only get worse once I am elligible for my new employeers 401(K) plan after 90 days here. I know I can leave the 401(k) as is, but I'm considering moving it over to the Vanguard IRA. Simplicity in tracking/managing investments, fewer forms at tax time, as well as the outstanding service I have had with Vanguard are the driving factors.

    I do most of my checking/savings with ING, which is the firm that my new employer uses to manage 401(K) accounts. I could also move the old 401(k) there, for most of the same reasons listed above. My only reservation is that I have heard that their selection of funds is low, and carry high fees.

    So . . . what would you do? Leave everything as-is? Consolidate . . . into which account?

    • Vanguard Roth IRA: ~$6,000 (activley contributing)
    • Vanguard Traditional IRA: ~$50 (not activley contributing, from a previous roll over)
    • JP Morgan 401(K): ~$25,000 (previous employer)
    • ING 401(K): $0 (cannot contribute until the end of June)
    Last edited by red92s; 05-19-2010, 09:54 AM.

  • #2
    I'd roll the 401k into your VG IRA, no doubt. You will have more control over it, there.

    It rarely makes sense to roll money into a new 401k.

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    • #3
      Originally posted by MonkeyMama View Post
      I'd roll the 401k into your VG IRA, no doubt. You will have more control over it, there.

      It rarely makes sense to roll money into a new 401k.
      Agreed.

      To the Vanguard Traditional IRA, not the new 401k.

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      • #4
        Originally posted by MonkeyMama View Post
        I'd roll the 401k into your VG IRA, no doubt. You will have more control over it, there.

        It rarely makes sense to roll money into a new 401k.
        I hadn't even considered rolling it into the ING 401(K) I will have access to. I was just considering rolling it into an IRA there.

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        • #5
          I don't know that I agree with moving it to the Traditional IRA - I'd srongly consider the Roth IRA instead. You didn't say whether the existing 401k balance was in a Roth or Traditional (but based on the limited availability of Roth 401k's, it seems safe to assume it's Traditional). If the existing 401k is a Traditional 401k, you'll lose some of the balance to pay taxes when rolling it over into a Roth, but that would still probably be less than if you put it in a Traditional IRA and paid the taxes in retirement.

          PS - I missed the post where you got another job. I know it's late, but congrats! Is it in/near ATL? IIRC, you were eyeing some real estate down in Kirkwood. Might be time to revisit that option once your balance sheet recovers from the unemployment period.

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          • #6
            Originally posted by red92s View Post
            I hadn't even considered rolling it into the ING 401(K) I will have access to. I was just considering rolling it into an IRA there.
            I've got to read more carefully!

            I still think VG would be better than ING - since you mentioned less choices and more fees, with ING.

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            • #7
              Originally posted by am_vanquish View Post
              I don't know that I agree with moving it to the Traditional IRA - I'd srongly consider the Roth IRA instead.
              My assumption for the Traditional recommendation was because the OP lost their job, and only started work 3 months ago - I figured they don't have an extra $5,000 laying around to pay the taxes right now. Rolling to a traditional let's the OP transfer with no cash outlay.

              Must-Know Rules For Converting A 401(k) To A Roth


              As far as why Vanguard > ING... you expressed concerns about the selection and fees at ING. Vanguard should have more options than you could ever want, high fee and no-load options. Virtually any mutual fund in the world. And since you already have an IRA there, there's no real need to open an additional one at ING.

              The ING funds all look like in-house funds. Tickers Symbols & CUSIPs

              Vanguard has its in-house funds, and also allows selection from all of these: https://personal.vanguard.com/us/funds/other


              I personally use Fidelity, so I don't know what service is like at either.

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              • #8
                Originally posted by am_vanquish View Post
                PS - I missed the post where you got another job. I know it's late, but congrats! Is it in/near ATL? IIRC, you were eyeing some real estate down in Kirkwood. Might be time to revisit that option once your balance sheet recovers from the unemployment period.
                See below regarding the roth/traditional roll-over issue. I actually came out of unemployment with $7k more in savings than I entered with. Combination of being laid off in MA with great UI benefits, and having family willing to take me in down in GA. I actually paid $1k to move and $1k in insurance deductibles from a deer strike on the way, so it could have been almost $10k pocketed in unemployment. The new job lines up well with my existing skills and future career goals. Mainly I am very, very glad to be back down south around friends and family.

                I still peek and poke at buying, but honestly . . . it'd wipe me out. I'm closing in on $20k in emergency savings, and not willing to hand over most/all of that on a down payment. Unemployment has made me a lot more cautious about emergency savings. I'll get there, eventually, but home ownership is still a ways down the road.

                Originally posted by jpg7n16 View Post
                My assumption for the Traditional recommendation was because the OP lost their job, and only started work 3 months ago - I figured they don't have an extra $5,000 laying around to pay the taxes right now. Rolling to a traditional let's the OP transfer with no cash outlay.
                Bingo. I'm not exactly hurting for cash, but fronting a couple grand right now is a tough pill to handle. I probably could do it, but having recently having faced the uncertainty and stress associated with unemployment, I'm unwilling to raid my emergency fund to facilitate the roll-over. I did roll a traditional IRA into the roth early last year, but it was small ($900) and the market was way down so it was a good time to do it.

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                • #9
                  Transfer to Vanguard. Convert to Roth when you feel fiscally stable.

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                  • #10
                    I've done this several times- you may have to start a separate Rollover IRA account. The reason is, a 401k with an employer is what's called a "Qualified Plan". I don't think you can take a distribution from that kind of account and put it in a Roth or Traditional IRA. Check with Vanguard. At the very least you can take advantage of wider choices, lower costs, and householding your accounts.

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                    • #11
                      Originally posted by EEinNJ View Post
                      I've done this several times- you may have to start a separate Rollover IRA account. The reason is, a 401k with an employer is what's called a "Qualified Plan". I don't think you can take a distribution from that kind of account and put it in a Roth or Traditional IRA. Check with Vanguard. At the very least you can take advantage of wider choices, lower costs, and householding your accounts.
                      Yes, you can transfer from a qualified plan to either a ROTH or Traditional IRA.

                      See IRS publication 575: http://www.irs.gov/pub/irs-pdf/p575.pdf ; pages 26 (Rollovers) and 27 (Direct Rollover Option)

                      So that shouldn't be an issue. I'd recommended the Direct Rollover Option (aka Trustee to Trustee)

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                      • #12
                        Welp, shuffling stuff over to Vanguard is in the works. Distribution check from the 401(K) was mailed out yesterday. Which, conveniently, means I dodged today's "correction" in the markets!

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                        • #13
                          This time you made out which is great. I've had that happen a couple times too. Even if it didn't, you had good reason to move from JP Morgan. If you had gone with any of the low cost providers, your guaranteed yourself more money in retirement even if the market went down a bit since you will be paying less in fees for years to come.

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