Target Date/Life Path Funds?

[Ralph]

One of my IRA providers is discontinuing several Vanguard and Fidelity mutual funds I have and pushing toward a Life Path fund provided by State Farm. The amount in question is maybe 1/5 to 1/6th or so of my total retirement money. So while it's not the majority, I felt much better having it with Fidelity and Vanguard than State Farm. The fund has only been in existence since 2008 so there's certainly not much of a track record. Also, the info on the State Farm website shows it is a loaded fund, but the info in my 401k shows just the usual small .10% expense ratio. I guess I need to read more fine print, but I would assume that within a 401k it is not going to be a loaded fund.

So any advice? I think there may be other options that I am researching now.

[JoshuaHeckathorn]

Personally, I'm not a fan of LifePath/Target funds, especially ones peddled by insurance companies like State Farm. If at all possible, I would stick to the Vanguard and Fidelity funds. You could always move your IRA too. I have accounts with both Vanguard and Fidelity and have always been a happy customer.

[jIM_Ohio]

your company changed 401k providers, and whoever "sold" the 401k to your company is going to get compensated. If loaded funds are in the 401k, that compensation will be one of 3 things

1) the load on the fund
2) 12b1 trailer fees on the fund
3) a percent of assets inside the 401k

any smart salesman takes #3, meaning the loads get waived.

The funds you pick matter less than the allocation you hold, so focus on stocks and bonds and the % of each, a .1% expense ratio is not bad.

[Seeker]

Is there a possibility of your current choices remaining where they are at and any future contributions (and matches) going with the new?

Or do you "have to" transfer current vestings as well?

Oops? 2008? You may not be vested yet! Does that change the rules?

[Ralph]

Is there a possibility of your current choices remaining where they are at and any future contributions (and matches) going with the new?

Or do you "have to" transfer current vestings as well?

Oops? 2008? You may not be vested yet! Does that change the rules?

This is for a former employer, so it's just the existing balances - there are no new contributions.

2008 is just when the Life Path Fund was created. The plan itself has been around for a long time.

[disneysteve]

The fund has only been in existence since 2008 so there's certainly not much of a track record.

This isn't necessarily true. Most of the target date funds are really a fund of funds, meaning they batch together multiple funds into one umbrella fund. Even though the target fund might be new, the component funds that make it up have probably been around a lot longer.

[Seeker]

This is for a former employer, so it's just the existing balances - there are no new contributions.

2008 is just when the Life Path Fund was created. The plan itself has been around for a long time.

Well then, why can't you just go directly to Fidelity & Vanguard and get those monies transfered from your previous employer account (and plan) directly to a newly setup plan for you under yourself?

You'd retain total control without having to worry about what a previous employer decides to do with their plan fund options every few years.

Am I out of line? Do most of you people move monies into similar accounts with the big 3 when you leave a 401k with a past employer? 457's, 401k's and other types are not mixable (combinable), but generally you can move them into the big three similar plan without any penalty.

[jIM_Ohio]

If money is in a 401k or similar plan (403b) you can access the money at 55 without penalty
If money is rolled over into an IRA you can access money at age 59.5 without penalty.
If you read up on rule 72t you can access IRA money before age 59.5 without penalty with certain conditions.