help with personal finance and alternatives

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fiverus
Posts: 96
Joined: Wed Jan 04, 2017 11:56 am

help with personal finance and alternatives

Post by fiverus » Mon Oct 15, 2018 8:27 am

Hello Everyone,

Last February I was laid off from my job of 12 years. I did not take me long to find another position 2 months later. I started a new position in April but pretty much new after 2 months it wasn't a good fit. Recently, I resigned and my last day will be Oct 24th and I am starting a new position Nov 5th.


My question is My 401k from my position of 12 years has been sitting because my plan was to roll it over when I started my new job back in April but because I new I wasn't going to last there I left it alone just sitting. What should I do with my 401k of 12 years where I was working? I have Fidelity Roth and Traditional IRA. Do I roll it over to Roth or Traditional? (if so, which one) or do I wait until my newest position kicks in to contribute 6 months from now and roll it over then?

Looking forward to suggestions

fiverus

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BL
Posts: 8456
Joined: Sun Mar 01, 2009 2:28 pm

Re: help with personal finance and alternatives

Post by BL » Mon Oct 15, 2018 8:42 am

fiverus wrote:
Mon Oct 15, 2018 8:27 am
Hello Everyone,

Last February I was laid off from my job of 12 years. I did not take me long to find another position 2 months later. I started a new position in April but pretty much new after 2 months it wasn't a good fit. Recently, I resigned and my last day will be Oct 24th and I am starting a new position Nov 5th.


My question is My 401k from my position of 12 years has been sitting because my plan was to roll it over when I started my new job back in April but because I new I wasn't going to last there I left it alone just sitting. What should I do with my 401k of 12 years where I was working? I have Fidelity Roth and Traditional IRA. Do I roll it over to Roth or Traditional? (if so, which one) or do I wait until my newest position kicks in to contribute 6 months from now and roll it over then?

Looking forward to suggestions

fiverus
There is not enough info here to get the best advice. You probably have enough in your 12 year 401k that you can leave it if they offer good low-ER index funds or target funds. So that may be one option. Some feel a 401k offers more protection of your money.

Converting to Roth IRA means paying taxes on it at your current rate (and never paying tax on it in retirement!)

Converting it to a trad. IRA with low-ER funds such as in Vanguard would be fine.

retiredjg
Posts: 34418
Joined: Thu Jan 10, 2008 12:56 pm

Re: help with personal finance and alternatives

Post by retiredjg » Mon Oct 15, 2018 8:45 am

If the choices in the old 401k are not good, you will want to roll it somewhere eventually. If you know the new 401k will be a good one, wait and do that. If you don't know, wait anyway.

You do not want to roll to Roth IRA because the entire amount would be taxable.

Rolling to an IRA with low cost funds is a very good idea unless you see a future need to use the back door to contribute to Roth IRA.

Freefallin
Posts: 27
Joined: Thu Oct 04, 2018 1:12 pm

Re: help with personal finance and alternatives

Post by Freefallin » Mon Oct 15, 2018 8:50 am

Would be best to do a direct rollover to your traditional IRA "custodian to custodian" many previous 401k's have high administration costs and you will have more investment options in an IRA. Moving to a Roth would hit you with taxes. Contact Fidelity and your 401k to initiate the rollover, they can give you direction from there.
"Pain is the touchstone of all growth." - Bill W.

JW-Retired
Posts: 7000
Joined: Sun Dec 16, 2007 12:25 pm

Re: help with personal finance and alternatives

Post by JW-Retired » Mon Oct 15, 2018 9:27 am

fiverus wrote:
Mon Oct 15, 2018 8:27 am
I have Fidelity Roth and Traditional IRA. Do I roll it over to Roth or Traditional? (if so, which one) or do I wait until my newest position kicks in to contribute 6 months from now and roll it over then?
Did you mean what you said? :shock: As others have noted, it would be a ghastly disaster to roll all your 401k assets to your Roth IRA. It would make the all the deferred tax on the whole 12 years of 401k contributions and earnings due on your 2018 taxes.

Rolling to your tIRA would be OK if you are reasonably certain you will always have a low enough income to make direct Roth contributions. If not you could leave it where it is or roll it into the new 401k. Choose which one based on whichever has the lowest expense drag for funds you want to invest in. You will need to look in each 401k's information for their various fund expenses. It's usually different & often a lot higher than the individual retail fund expense ratios you can find by Googling.

Lastly, if you are or will be highly paid at some time, the other consideration is 401k's have better Federal "ERISA" protection from lawsuit judgment's, versus IRAs that under 50 widely varying state laws.
JW
Retired at Last

RickBoglehead
Posts: 1279
Joined: Wed Feb 14, 2018 9:10 am

Re: help with personal finance and alternatives

Post by RickBoglehead » Mon Oct 15, 2018 9:31 am

A couple of points.

First, you could have acted on this when you left that company.

Second, if you had the opportunity to participate in the 401k of the new company that you knew you were going to leave, you should have done that.

If you roll it over to an IRA, they will put it in a Rollover IRA, not your existing IRA account. Why? Because then you have the funds separate from your traditional IRA, and you COULD roll them over to the 401k of your new company once they let you.

It is likely that a company like Vanguard or Fidelity would have lower costs as an IRA than leaving your funds at your old company. In addition, there would be more fund choices.

Lastly, check to see if your new company offers a ROTH 401k option. If they do, you may want to do that instead of a taxable 401k, dependent on your current tax bracket.

Momus
Posts: 538
Joined: Tue Feb 21, 2012 9:23 pm

Re: help with personal finance and alternatives

Post by Momus » Mon Oct 15, 2018 9:40 am

I wouldn't wanna roll over to ira, you can't do backdoor Roth without paying some tax if you roll it over to ira. I'll just wait til you get a new job, and roll it over to new employer 401k 6 months later. Fees probably minimal.

fiverus
Posts: 96
Joined: Wed Jan 04, 2017 11:56 am

Re: help with personal finance and alternatives

Post by fiverus » Mon Oct 15, 2018 10:19 am

Thank you everyone. I definitely will not roll over to Roth IRA. I most likely will wait and roll over to new 401k plan in 6 months.

I appreciate everyone's input as well.

fiverus

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