I left my current employer with ~$200,000 in my 401k plan. I am 49 years old. My new employer has a 401k plan which I plan to contribute to its maximum. Here are my questions:
1) Should I rollover my 401k into my new employer 401k? or
2) Should I rollover into an IRA , I'm thinking Vanguard mutual fund?
3) If I choose to rollover into an IRA, can I move these funds to a new IRA if I am not happy with the current IRA without penalty?
4) At what age can I withdraw funds from an IRA vs. 401k without penalty?
5) Besides expenses how should I compare IRA vs. 401k to make the best decision?
6) What are disadvantages/advantages of IRA vs. 401k?
well, vanguard has good choices, but why limit yourself? You can choose a broker that would give you a wider choice
Check with the custodian, some have a $25-50 "goodbye" fee
The standard IRA answer is 59-1/2, but if you take equal distributions over at least 5 years or age 59-1/2 whichever is later, you can avoid penalty. 401(k) is 55 but only if you retire from that employer. i.e. that option isn't available to you.
In my January article
formatting link
I discuss 401(k) fees, of course that's only one aspect of it, though. The choices make a difference, too. If the new employer offers a selection that offer you diversification, and the total costs are low, it may be a good choice.
Well, this was my 'maybe'. Do you currently have any IRA money? You see, IRA offers a choice to move money into a Roth IRA which essentially accelerates the tax hit, but then allows further growth untaxed right till and after you die. If you have IRA money that's post tax, you can move it to a Roth regardless of your income in 2010, only the gains in the account are taxed. If you roll the 401(k) to an IRA, you then have all that money and it will be prorated. This is a convoluted situation which, as we approach 2010 (or if you are below the cutoff now) deserves attention. IRAs also tend to be easier on your heirs, if that makes a difference. Although the law changed so heirs (non-spouse too) may roll a 401(k) to an IRA and stretch withdrawals.
I rolled my prior employer 401k into a Rollover IRA at the discount broker with whom I had an existing relationship.
I did so for all the flexibility and investment options (some employers like to dumb down and limit their investment options and try to parent their employees to minimize risk, or sometimes just to limit their own administration costs of the plan), and for being free of having to roll things over again if I changed employers.
I'd be hesitant to roll all that money into a single mutual fund company's account.
I'm curious about your other questions too, as I didn't consider them when I made my choice. I was _that _motivated to be free of an employer's restrictions on investment choices and have an account with the discount brokerage of my choosing. :-)
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.