Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

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mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Sat Aug 04, 2018 2:49 pm

Hello Bogleheads'!

I have a question as to what to do with an old 401K. I have read all of the available posts regarding old 401K's on this forum, but none seemed to specifically address my question.

The 401 in question is from my 1st job after college. I am currently 28 and am now on my 3rd job post-college (millennials I know). The old 401K is with Vanguard and the 401K I have with my new company is with Vanguard as well. Available funds in both are basically the same (see breakdown below if interested).
The balance of my old 401K is $28K and the balance of my new 401K is $3K (haven't been with this employer long and recently upped my contribution %, but a lot). Another thing to consider is that there is a chance that I may return to work for the company with whom I have my old 401K as it is one of the couple companies I am considering working for when my girlfriend and I decide to return to our home state (not sure if this would matter or not).

So my question is should I roll the old 401K over into my new one? Is there some other type of investment I should roll this into? Insight is greatly appreciated!

Side note: I had a 401K for the company I worked at in between these two, but I was only there for just over a year and the balance was small, so I deposited this into my emergency savings (I realize there may be small tax implications for this). In addition to my 401K I am also maxing out a Roth IRA (also with Vanguard)

Fund Breakdown

As I mentioned, they both have basically the same available funds with the exception of a few. It may not let me invest funds in my new 401K in funds already invested in with the old 401K (the fund shows up as available in the new 401K, but the button next to the fund name is unclickable). I was just assuming that it meant the fund was unavailable. Those funds are Jennison Large Cap Growth Portfolio, Vanguard Small-Cap Index Fund Institutional Plus Shares, and Stryker Corporation Stock Fund.

Eligible funds in current company Vanguard 401K

Domestic Stock Funds
-T. Rowe Price Institutional Mid-Cap Equity Growth Fund
-Vanguard Extended Market Index Fund Institutional Plus Shares
-Vanguard Institutional Index Fund Institutional Plus Shares

Balanced Funds (Stocks and Bonds)
-Target Retirement Income Trust Plus
-Target Retirement 2015 Trust Plus
-Target Retirement 2020 Trust Plus
-Target Retirement 2025 Trust Plus
-Target Retirement 2030 Trust Plus
-Target Retirement 2035 Trust Plus
-Target Retirement 2040 Trust Plus
-Target Retirement 2045 Trust Plus
-Target Retirement 2050 Trust Plus
-Target Retirement 2055 Trust Plus
-Target Retirement 2060 Trust Plus
-Target Retirement 2065 Trust Plus
-Vanguard Balanced Index Fund Institutional Shares

International Stock Funds
-Vanguard Developed Markets Index Fund Institutional Plus Shares
-Vanguard Emerging Markets Stock Index Fund Institutional Shares

Bond Funds
-Vanguard High-Yield Corporate Fund Admiral Shares
-Vanguard Inflation-Protected Securities Fund Institutional Shares
-Vanguard Total Bond Market Index Fund Institutional Plus Shares

Short-Term Reserves
-Vanguard Retirement Savings Trust II


Eligible funds in old company Vanguard 401K

International Stock Funds
-Artisan International Growth Trust
-Harbor International Fund Retirement Class

Domestic Stock Funds
-Fidelity Contrafund Commingled Pool Class 1
-FMI Large Cap Portfolio ]
-Vanguard Institutional Index Fund Institutional Plus Shares
-Vanguard Mid-Cap Index Fund Institutional Shares

Bond Funds
-PIMCO Real Return Fund Institutional Class
-Vanguard Short-Term Investment-Grade Fund Institutional Shares
-Vanguard Total Bond Market Index Fund Institutional Plus Shares

Client-Specific Funds
-Stryker Corporation Stock Fund

Balanced Funds (Stocks and Bonds)
-Target Retirement Income Trust I
-Target Retirement 2015 Trust I
-Target Retirement 2020 Trust I
-Target Retirement 2025 Trust I
-Target Retirement 2030 Trust I
-Target Retirement 2035 Trust I
-Target Retirement 2040 Trust I
-Target Retirement 2045 Trust I
-Target Retirement 2050 Trust I
-Target Retirement 2055 Trust I
-Target Retirement 2060 Trust I
-Target Retirement 2065 Trust I
-Vanguard Balanced Index Fund Institutional Shares

Short-Term Reserves
-Vanguard Prime Money Market Fund Admiral Shares


Thank you all!

ExitStageLeft
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Joined: Sat Jan 20, 2018 4:02 pm

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by ExitStageLeft » Sat Aug 04, 2018 3:16 pm

I would roll it in just to simplify. I would not roll it over if there is a separate fee structure and its cheaper to keep it where its at. You could of course roll it into a traditional IRA but that is not advised. You would lose ERISA protection and it could have possible other asset protection implications in your state. Plus keeping it in a 401k keeps your backdoor Roth path open for when you start earning the big bucks! :mrgreen:

At your age you should consider having 10% bonds in your 401k, but you could also go 100% equities and not worry about bonds for a few more years. Assuming the usual Vanguard expense ratios, I would go with something like

85% Vanguard Institutional Index Fund Institutional Plus Shares
15% Vanguard Extended Market Index Fund Institutional Plus Shares

or

78% Vanguard Institutional Index Fund Institutional Plus Shares
12% Vanguard Extended Market Index Fund Institutional Plus Shares
10% Vanguard Total Bond Market Index Fund Institutional Plus Shares

And get your international equities exposure in your Roth IRA. Or go with a target date institutional fund and not worry about re-balancing. You could have 2055 funds in 401k and Roth and have as diverse a portfolio as is feasibly practical.

mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Sat Aug 04, 2018 3:21 pm

Thank you! I appreciate the quick and insightful response! I am definitely leaning toward rolling it over to simplify things.

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vineviz
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Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by vineviz » Sat Aug 04, 2018 4:05 pm

+1 for rolling to new 401k
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

lifeisinmirrors
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Joined: Fri Jul 06, 2018 6:15 pm

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by lifeisinmirrors » Sat Aug 04, 2018 4:32 pm

Even if the funds are in both plans, are the expense ratios the same in both plans?

mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Sun Aug 05, 2018 12:58 pm

lifeisinmirrors wrote:
Sat Aug 04, 2018 4:32 pm
Even if the funds are in both plans, are the expense ratios the same in both plans?
How would I go about finding this out? I looked around on Vanguard but didn't see anything that would tell me/

harmoniousmonk
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Joined: Sat Jun 09, 2018 1:35 pm

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by harmoniousmonk » Sun Aug 05, 2018 6:30 pm

Check with your HR.

ExitStageLeft
Posts: 723
Joined: Sat Jan 20, 2018 4:02 pm

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by ExitStageLeft » Mon Aug 06, 2018 11:57 am

mitchconner wrote:
Sun Aug 05, 2018 12:58 pm
lifeisinmirrors wrote:
Sat Aug 04, 2018 4:32 pm
Even if the funds are in both plans, are the expense ratios the same in both plans?
How would I go about finding this out? I looked around on Vanguard but didn't see anything that would tell me/
Each 401k plan has it spelled out. Some plans have a company adminsitering the plan that charges a record-keeping fee. In small companies that can be pretty substantial. In large companies that fee is spread out among so many employees that it is a trivial amount. Also an employer may opt to pay the administrative fee so that the employee only has to worry about each fund's expense ratio.

My wife's 457b has some Vanguard funds and also charges a 0.2% admin fee. Vanguard can't tell me what the admin fee is, one has to go to the official documents for the individual plan.

mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Mon Aug 06, 2018 12:25 pm

I called the HR departments of both company's and they both referred me to Vanguard and said all fees would go through them. After speaking with Vanguard here are the fees for both.

Old plan:
$44 annual fee (if balance is greater than $500)
Total: $44

Active plan:
$48 annual fee (if balance is $10K or greater, no fee if under)
$19.80 (admin services)
Total: $67.80

It seems like I should go ahead with the rollover to save myself having to pay the $44 even if it's a negligible amount.

mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Thu Aug 09, 2018 9:29 am

ExitStageLeft wrote:
Sat Aug 04, 2018 3:16 pm
At your age you should consider having 10% bonds in your 401k, but you could also go 100% equities and not worry about bonds for a few more years. Assuming the usual Vanguard expense ratios, I would go with something like

85% Vanguard Institutional Index Fund Institutional Plus Shares
15% Vanguard Extended Market Index Fund Institutional Plus Shares

or

78% Vanguard Institutional Index Fund Institutional Plus Shares
12% Vanguard Extended Market Index Fund Institutional Plus Shares
10% Vanguard Total Bond Market Index Fund Institutional Plus Shares

And get your international equities exposure in your Roth IRA. Or go with a target date institutional fund and not worry about re-balancing. You could have 2055 funds in 401k and Roth and have as diverse a portfolio as is feasibly practical.
Exitstageleft - I have been doing some research into the asset allocation you recommended in your post and I noticed that the Vanguard Institutional Index Fund Institutional Plus Shares (VEMPX) is made up primarily of small to mid-cap stocks while the Vanguard Extended Market Index Fund Institutional Plus Shares (VIIIX) is more of like the Vanguard 500 and made up of large cap stocks to track the S&P 500.

I am just curious why you would recommend I put 85% in small/mid caps and 15% in large cap? Not that I think you are wrong by any means (I am still learning) I just usually hear it recommended the other way around.

ExitStageLeft
Posts: 723
Joined: Sat Jan 20, 2018 4:02 pm

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by ExitStageLeft » Thu Aug 09, 2018 2:03 pm

mitchconner wrote:
Thu Aug 09, 2018 9:29 am
ExitStageLeft wrote:
Sat Aug 04, 2018 3:16 pm
At your age you should consider having 10% bonds in your 401k, but you could also go 100% equities and not worry about bonds for a few more years. Assuming the usual Vanguard expense ratios, I would go with something like

85% Vanguard Institutional Index Fund Institutional Plus Shares
15% Vanguard Extended Market Index Fund Institutional Plus Shares

or

78% Vanguard Institutional Index Fund Institutional Plus Shares
12% Vanguard Extended Market Index Fund Institutional Plus Shares
10% Vanguard Total Bond Market Index Fund Institutional Plus Shares

And get your international equities exposure in your Roth IRA. Or go with a target date institutional fund and not worry about re-balancing. You could have 2055 funds in 401k and Roth and have as diverse a portfolio as is feasibly practical.
Exitstageleft - I have been doing some research into the asset allocation you recommended in your post and I noticed that the Vanguard Institutional Index Fund Institutional Plus Shares (VEMPX) is made up primarily of small to mid-cap stocks while the Vanguard Extended Market Index Fund Institutional Plus Shares (VIIIX) is more of like the Vanguard 500 and made up of large cap stocks to track the S&P 500.

I am just curious why you would recommend I put 85% in small/mid caps and 15% in large cap? Not that I think you are wrong by any means (I am still learning) I just usually hear it recommended the other way around.
It looks like you've got the tickers mixed up. Assuming the funds available to you are the same ones as Vanguard has on their web site, I would recommend:

85% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
15% (VEMPX) Vanguard Extended Market Index Fund Institutional Plus Shares (0.05%)

mitchconner
Posts: 14
Joined: Wed Aug 01, 2018 12:12 pm
Location: Music City

Re: Old 401K with Vanguard...New 401K with Vanguard...To rollover or not?

Post by mitchconner » Thu Aug 09, 2018 2:05 pm

Looks like I did! :oops:

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