rollover or transfer from Fidelity 401k?

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unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

rollover or transfer from Fidelity 401k?

Post by unknownENG » Fri Oct 12, 2018 12:58 pm

So here's some questions.
I've got $176k sitting in two different 401k accounts both inside Fidelity, from former employers. Are these able to be transferred to Vanguard so all my stuff is one place? I'm trying to consolidate and streamline all my accounts as best as I can.

Can this type of account be transferred (custodian) to Vanguard? Or maybe it'd be better to do a IRA conversion?

Should I try to convert more into ROTH status and pay the tax bill on it now?


Account1:
$114k
68% in ROTH assets
28% in pre-tax assets
4% in company match

Account2:
$62k
4% in ROTH assetts
80% in pre-tax assetts
16% in company match

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GerryL
Posts: 1908
Joined: Fri Sep 20, 2013 11:40 pm

Re: rollover or transfer from Fidelity 401k?

Post by GerryL » Fri Oct 12, 2018 1:08 pm

In response to your question about rolling over/transferring from Fidelity to Vanguard. I did this 3 times (401k in 2 parts and a profit-sharing plan).

Moved my money from the two employer-sponsored plans at Fidelity to a tradtional IRA at Vanguard. In my experience, Fidelity would not do a custodian-to-custodian move. They cut a check made out to the IRA at Vanguard and mailed it to me. I then had to send it to Vanguard. (VG sent me a FedEx envelope to make it quicker.) That does mean that your money is out of the market and floating around in the mail system for several days. Start the discussion with Vanguard, who is motivated because they are the ones getting your money.

viz
Posts: 135
Joined: Fri May 04, 2018 11:22 pm

Re: rollover or transfer from Fidelity 401k?

Post by viz » Fri Oct 12, 2018 2:49 pm

unknownENG wrote:
Fri Oct 12, 2018 12:58 pm
So here's some questions.
I've got $176k sitting in two different 401k accounts both inside Fidelity, from former employers. Are these able to be transferred to Vanguard so all my stuff is one place? I'm trying to consolidate and streamline all my accounts as best as I can.

Can this type of account be transferred (custodian) to Vanguard? Or maybe it'd be better to do a IRA conversion?

Should I try to convert more into ROTH status and pay the tax bill on it now?


Account1:
$114k
68% in ROTH assets
28% in pre-tax assets
4% in company match

Account2:
$62k
4% in ROTH assetts
80% in pre-tax assetts
16% in company match
Just call vanguard. They will send you the right forms and take care of this. You would not need to speak to fidelity. Fidelity will liquidate your assets and send a check. I don't know if it will be to you or vanguard.
Thanks

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Earl Lemongrab
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Joined: Tue Jun 10, 2014 1:14 am

Re: rollover or transfer from Fidelity 401k?

Post by Earl Lemongrab » Fri Oct 12, 2018 3:06 pm

If you have an active 401(k) at Vanguard, you might be able to roll these into it. Unless it's a solo plan.

Otherwise you can roll them (not convert) to a traditional IRA in a tax-free manner.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

RetiredAL
Posts: 157
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: rollover or transfer from Fidelity 401k?

Post by RetiredAL » Fri Oct 12, 2018 7:37 pm

OP,

Before you move anything, talk with Fidelity about rolling those over to Roth's and tIRA's as "rollovers" within Fido as the first step. They (Fido) can cleanly split the post-tax $ from the pre-tax $. Doing that from within Fidelity minimizes nasty conversion errors when 2 dissimilar systems attempt to do a complex breakout. Too many people seem to have gotten bit when doing these complex rollovers when two companies are involved.

Then after these are rolled over within Fido, if you really want VG over Fido, then rolling over the the individual Roth's and tIRA's to VG from those Fido accounts is a pretty straight forward process that VG can initiate.

If you choose keep the pre-tax and post-tax co-mingled when doing the roll overs, make sure to get and keep the cost basis data forever, otherwise you'll end up paying tax again on the already taxed contributions whenever you withdraw, and that will likely years and years later.

When I retired 2+ years ago, Fido split my 401K proceeds into separate Roth and tIRA, at Fido, based on the tax status of those $.

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Earl Lemongrab
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Re: rollover or transfer from Fidelity 401k?

Post by Earl Lemongrab » Fri Oct 12, 2018 7:50 pm

You certainly want to split any after-tax (non-Roth) out to a Roth IRA if the plans allow. It makes things much easier to just roll those straight into a Roth IRA.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

Re: rollover or transfer from Fidelity 401k?

Post by unknownENG » Wed Oct 17, 2018 12:18 pm

Very good points here.
So I opened both regular and ROTH IRA's at Fidelity and plan to transition these 401k's into the IRA's first, before moving to Vanguard.

One thing I'm curious to get your opinion on: the Fidelity rep said that many of the sponsored plans' funds will no longer be available if I leave the company plan.

I pulled the fund options and it seems like I wouldn't be missing out much. See link below. What do you think? Jump ship and move to Vanguard IRA?

Any big negative tax consequences of moving 401k to IRA (trad to trad, roth to roth)?
Should I try to convert trad 401k to ROTH IRA? or wait until its in trad IRA then convert to ROTH IRA?

https://docs.google.com/spreadsheets/d/ ... sp=sharing

unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

Re: rollover or transfer from Fidelity 401k?

Post by unknownENG » Wed Oct 17, 2018 1:24 pm

Is this something that would be better as a solo 401k or move to a IRA (vanguard or self directed)

brcarls
Posts: 13
Joined: Tue Nov 22, 2016 9:04 am

Re: rollover or transfer from Fidelity 401k?

Post by brcarls » Wed Oct 17, 2018 1:56 pm

If you roll over to a traditional IRA, it makes backdoor Roth conversions painful.

Also, you should read up on the pros and cons of 401k vs IRA. 401k accounts have some advantages such as sometimes more protection if you are sued.

unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

Re: rollover or transfer from Fidelity 401k?

Post by unknownENG » Thu Oct 18, 2018 2:31 pm

good tips. do you have any recommended articles or site for that?
I'm trying to understand the difference between a solo401k vs a self-directed IRA.

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ruralavalon
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Location: Illinois

Re: rollover or transfer from Fidelity 401k?

Post by ruralavalon » Thu Oct 18, 2018 2:47 pm

There may be some confusion in terminology here.
unknownENG wrote:
Wed Oct 17, 2018 1:24 pm
Is this something that would be better as a solo 401k or move to a IRA (vanguard or self directed)
Does your current employer offer a 401k plan?

Are you self-employed?

You can use an individual (solo) 401k plan only if you are self-employed.

You can use an IRA (Individual Retirement Arrangement) whether or not you are self-employed.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

Re: rollover or transfer from Fidelity 401k?

Post by unknownENG » Thu Oct 18, 2018 4:15 pm

I'm W2 employed and have a employer sponsored plan.
I have 2 other 401k accounts sitting in Fidelity from previous work.
I have a well funded IRA and ROTH IRA already at Vanguard.

OK, so solo401k is off the table unless I can figure out how to get some 1099 income.

so then the next big questions would be:
- benefits of rolling old 401k to IRA (trad and ROTH) plans
- benefits of transferring old 401k to current 401k plan
- benefits of keeping the old 401k where it is.

I think the old 401k plans have decent options, but I'm not sure. Here's my options in Fidelity:
https://docs.google.com/spreadsheets/d/ ... sp=sharing

leaving $$ in 401k:
- earlier access to $ (age 55, vs 59.5 for IRA)
- employer plan sponsored advisors
- lawsuit liability protection
- borrow against (50%, $50k max) (IRA's not allowed?)

moving $$ to an IRA:
- consolidate, simplify accounts
- split ROTH and traditional funds?
- can you borrow against an IRA?
- self directed for more investment options

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ruralavalon
Posts: 14097
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: rollover or transfer from Fidelity 401k?

Post by ruralavalon » Thu Oct 18, 2018 4:54 pm

unknownENG wrote:
Fri Oct 12, 2018 12:58 pm
So here's some questions.
I've got $176k sitting in two different 401k accounts both inside Fidelity, from former employers. Are these able to be transferred to Vanguard so all my stuff is one place? I'm trying to consolidate and streamline all my accounts as best as I can.

Can this type of account be transferred (custodian) to Vanguard? Or maybe it'd be better to do a IRA conversion?

Should I try to convert more into ROTH status and pay the tax bill on it now?


Account1:
$114k
68% in ROTH assets
28% in pre-tax assets
4% in company match

Account2:
$62k
4% in ROTH assetts
80% in pre-tax assetts
16% in company match
unknownENG wrote:
Thu Oct 18, 2018 4:15 pm
I'm W2 employed and have a employer sponsored plan.
I have 2 other 401k accounts sitting in Fidelity from previous work.
I have a well funded IRA and ROTH IRA already at Vanguard.

OK, so solo401k is off the table unless I can figure out how to get some 1099 income.

so then the next big questions would be:
- benefits of rolling old 401k to IRA (trad and ROTH) plans
- benefits of transferring old 401k to current 401k plan
- benefits of keeping the old 401k where it is.

I think the old 401k plans have decent options, but I'm not sure. Here's my options in Fidelity:
https://docs.google.com/spreadsheets/d/ ... sp=sharing
I agree. The fund choices offered in the old 401ks are decent, but are not exceptional and many do not have low expense ratios. Therefore I believe the old 401ks should be rolled over.

What funds are offered in the new employer's plan? Please give fund names, tickers and expense ratios.

What is your tax bracket, both federal and state?


The answer to your basic question (keep as is, rollover to new plan, or rollover to an IRA) depends almost entirely on expenses and funds offered. There are three basic choices.

1) If the funds offered in the old 401ks are good with low expense ratios, and there is no account maintenance fee charged for keeping the account there or only a small fee, then it may be best to leave the old 401ks where they are. (I do not suggest this for you, the funds in the old 401ks are decent, but are not that good and many do not have low expense ratios.)

2) If the new employer's plan offers better funds with lower expense ratios, and will accept a rollover from the old 401ks, then it may be best to roll the old 401ks over into the new employer's plan.

3) If neither the old 401ks nor the current employer's plan offers good funds with low expense ratios then it may be best to roll the old 401ks over to an IRA at a low cost provider like Vanguard.

Wiki article, 401k, ”Rollover to IRA".

Additional considerations include:

1) the convenience of having one fewer account to keep track and manage, if you move the old 401k into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA for higher income individuals, and

4) a 401k allows distributions penalty free starting at age 55 if no longer employed, and has other provisions for withdrawals earlier than age 59.5. Wiki article, 401k, "Move to new 401k".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

RetiredAL
Posts: 157
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: rollover or transfer from Fidelity 401k?

Post by RetiredAL » Thu Oct 18, 2018 8:56 pm

unknownENG wrote:
Wed Oct 17, 2018 12:18 pm
Very good points here.
So I opened both regular and ROTH IRA's at Fidelity and plan to transition these 401k's into the IRA's first, before moving to Vanguard.

One thing I'm curious to get your opinion on: the Fidelity rep said that many of the sponsored plans' funds will no longer be available if I leave the company plan. True. When I converted my 401K to Roll-over tIRA, I took everything to cash a 1 day before, as most of the fund selections would no longer be available to me.

I pulled the fund options and it seems like I wouldn't be missing out much. See link below. What do you think? Jump ship and move to Vanguard IRA?

Any big negative tax consequences of moving 401k to IRA (trad to trad, roth to roth)? No, Fido can clearly identify Roth, Pre-tax, and Post-tax buckets to get them into the right accounts during the move.

Should I try to convert trad 401k to ROTH IRA? or wait until its in trad IRA then convert to ROTH IRA? I'd wait to do the conversions until the funds are in their final location at Vanguard. The conversions could be spread across this year and next.

https://docs.google.com/spreadsheets/d/ ... sp=sharing

unknownENG
Posts: 9
Joined: Tue Jan 30, 2018 9:59 pm

Re: rollover or transfer from Fidelity 401k?

Post by unknownENG » Tue Oct 30, 2018 1:21 pm

ruralavalon wrote:
Thu Oct 18, 2018 4:54 pm
unknownENG wrote:
Fri Oct 12, 2018 12:58 pm
I think the old 401k plans have decent options, but I'm not sure. Here's my options in Fidelity:
https://docs.google.com/spreadsheets/d/ ... sp=sharing
I agree. The fund choices offered in the old 401ks are decent, but are not exceptional and many do not have low expense ratios. Therefore I believe the old 401ks should be rolled over.
What do you consider low expense ratio? Here's the remaining funds (<0.5%) i'll have access to.
see the link
ruralavalon wrote:
Thu Oct 18, 2018 4:54 pm
What funds are offered in the new employer's plan? Please give fund names, tickers and expense ratios.
see link here
https://docs.google.com/spreadsheets/d/ ... sp=sharing

ruralavalon wrote:
Thu Oct 18, 2018 4:54 pm
What is your tax bracket, both federal and state?
I'm in the 24% federal tax bracket.
I live in TX, so no state income tax and excellent lawsuit protection.
ruralavalon wrote:
Thu Oct 18, 2018 4:54 pm
1) If the funds offered in the old 401ks are good with low expense ratios, and there is no account maintenance fee charged for keeping the account there or only a small fee, then it may be best to leave the old 401ks where they are. (I do not suggest this for you, the funds in the old 401ks are decent, but are not that good and many do not have low expense ratios.)
it seems there's no maintenance charge or fees, as it still is tied into previous employer's overhead.
See link for what funds I have access to. There's a handful of funds w/ OER <0.5%
ruralavalon wrote:
Thu Oct 18, 2018 4:54 pm
2) If the new employer's plan offers better funds with lower expense ratios, and will accept a rollover from the old 401ks, then it may be best to roll the old 401ks over into the new employer's plan.
My new employer does not have good fund selection.
Both employers have self-directed brokerage accounts though.

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