Old 401K

[bjl584]

I am going to be quitting my part time job to start a new part time job in about a week. I have a 401K through my part time employer. After this week, I will no longer be employed there, so I won't be able to contribute to it any longer. So, what to do with the 401K?

I have a few options:

1) Leave it alone if Wells Fargo allows me to. The current balance is $2700. I'm not sure if they have restrictions on the balance.

2) Roll it into a traditional IRA. I fully fund a ROTH, so if I do roll the 401K over I won't be eligible to make contributions to it.

3) Roll it into the 401K program at my new employer. My new part time employer has a 401K, but I don't know any of the rules yet. I may or may not be allowed to roll it into their program.

4) Something else that I haven't thought of yet.

What do you guys think?

[MooseBucks]

Do you have enough at where ever your Roth is to have free trades? I'd personally roll it over.

[creditcardfree]

I'd roll it into a Traditional and possibly convert it to a Roth and pay the minimal taxes...then let it grow. You have more choices outside a 401K and the fees are usually less on funds at Vanguard, and T Rowe Price then they are in your 401K.

[feh]

For such a small amount of money, the only consideration I would have is simplicity. I'd roll it into another 401K or IRA just to do away with the extra account.

[scfr]

You didn't list the option to cash it out, pay the taxes and penalty, and spend it on something ephemeral.

But seriously, it sounds like the various sensible options have been covered. It just comes down to where you are happiest with your investment options and fees. Have you run the old and new employers' 401k plans at the Bright Scope analyzer?

[bjl584]

You didn't list the option to cash it out, pay the taxes and penalty, and spend it on something ephemeral.

But seriously, it sounds like the various sensible options have been covered. It just comes down to where you are happiest with your investment options and fees. Have you run the old and new employers' 401k plans at the Bright Scope analyzer?

Haha. No. I'm not going to be cashing it out.

I don't have any details on the new employers 401K yet. I have orientation next Monday, so I'll have some better info then.

[scfr]

I don't have any details on the new employers 401K yet. I have orientation next Monday, so I'll have some better info then.

You still may be able to get a very general sense of how their plan stacks up by entering the company name at www.BrightScope.com

[Jluke]

I cashed mine out when I had a similar balance with wells fargo 401k...

wells fargo will probably ask you to close the account. There will be lots of fees too if you keep it there, so that amount will dwindle over time.

or roll it over...

[LivingAlmostLarge]

I'd roll it to a Rollover IRA then convert it to a Roth. What's your bracket? I'd fill to the top of your bracket and keep converting for the next few years if needed. Not sure how much is in it.

[snafu]

Suggest checking 'vesting' rules with current employer and new employer during orientation.

[parafly]

Your old 401K will likely be hammered with monthly fees since you are no longer an active employee of the company. For this reason, it's usually a no-brainer to roll it over to either a 401K at a current employer or a traditional IRA.

In terms of roll over destination, there are a few considerations.

1) 401K offers stronger protection against personal lawsuits.
2) 401K has earlier penalty-free access for retirees (55 vs. 59.5).
3) 401K gives you the ability to borrow against the funds (not recommended, but still a loss in ability).
4) Traditional IRA gives you essentially limitless investment options.
5) Traditional IRA has negative tax implications if you ever perform a backdoor Roth in the future.

EDIT: A couple of people are recommending a rollover to a traditional IRA, then a conversion to a Roth. The conversion may be a smart option for you, but it really depends on your current tax rate vs. your tax rate in retirement. I don't think it's a good blanket statement to make without knowing all the details.

[bjl584]

I've decided to roll it into my ROTH and pay the taxes. It will be minimal. I'm waiting until Jan 2017 to pull the trigger on this.