Best 401k options before rollover???

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Topic Author
ThriftyisFun
Posts: 25
Joined: Wed Feb 21, 2018 12:20 pm

Best 401k options before rollover???

Post by ThriftyisFun »

Hi.  I am relatively new to the forum....and am so glad to have found it! :happy

I need input on 401k choices before I roll part or all of a 401k to IRAs in less than 2 years.  I understand I can only do one rollover per rolling 365 period, so I need to plan this right. 

I welcome the input of the wise people here!

GOALS:
a) Minimize volatility in 401k prior to move

b) Move 401k funds in following order
- Roth 401k to Roth IRA - 120k
- After tax 401k to Roth IRA - 35k
- Pretax 401K to Traditional IRA - 530k

c) Possibly do sone conversions of pretax 401k to Roth 401k over time. I cannot do that until about 1 year from now.

Reasons for move from 401k to IRA
1) streamline investments
2) increase investment options
3) negate need to take RMD from Roth IRA where required in 401k
4) reduce potential 401k risks such as (a) future management changes, (b) fund choice changes, (c) firm financial risks and (d) transparency issues

While creditor protection is reason to keep 401k, I feel it is less important.  Plus the state I live in maintains certain creditor protections for IRA holders.

So, what funds do I put the 401k in to minimize volatility?

Current 401k holdings are below. I have listed the expense ratios and 2018 returns:

- Target date 2025 fund - 548k - Exp 0 .06%, had loss of 5.2% for 2018
- Core Bond Fund - 60k - Exp 0.0%, had gain of 0.70% 2018
- Short term fixed income fund - 41k - Exp 0.0%, had gain of 2.12% 2018
- Stable Value Fund - 36k - Exp 0.19%, had gain of 2.28% 2018

I need to increase my bond holdings to 75% of my 401k as most equities are held outside my 401k.

So, what is best to select of bonds in 401k in light of what I shared above?: Core Bonds, Short term fixed income or Stable Value fund? Or a mix of the three? ..and what mix?

If I do any Roth conversions in my 401k, do you have any tips or thoughts on that? Do prorata rules matter in 401k?

Important note:  I already have a Roth IRA at VG that includes Roth conversions from a traditional IRA. Everything has been converted to Roth IRA there.

Thanks in advance for your input!


Also, if there is something you think I am overlooking, please let me know! :happy
Last edited by ThriftyisFun on Thu Jan 17, 2019 6:19 pm, edited 1 time in total.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Best 401k options before rollover

Post by retiredjg »

ThriftyisFun wrote: Thu Jan 17, 2019 4:25 pm I understand I can only do one rollover per rolling 365 period, so I need to plan this right. 
This rule does not apply to 401k to IRA distributions. :happy
Topic Author
ThriftyisFun
Posts: 25
Joined: Wed Feb 21, 2018 12:20 pm

Re: Best 401k options before rollover

Post by ThriftyisFun »

Hhhmmm, a Vanguard rep told me something different.

The rep said any rollovers from a 401k to IRA are subject to this 365 limitation. If it was from IRA to IRA that would not be the case.
mark1623
Posts: 93
Joined: Mon Jan 14, 2019 1:33 pm

Re: Best 401k options before rollover

Post by mark1623 »

ThriftyisFun wrote: Thu Jan 17, 2019 6:18 pm Hhhmmm, a Vanguard rep told me something different.

The rep said any rollovers from a 401k to IRA are subject to this 365 limitation. If it was from IRA to IRA that would not be the case.
A direct rollover to an IRA from a 401k, meaning the check is made payable to Vanguard FBO [your name], isn't going to cause a problem.

IRA to IRA rollovers are subject to the once-per-12-months rule. IRA to IRA transfers, where the money is moved electronically without you ever touching it, can be done as often as you'd like.
Topic Author
ThriftyisFun
Posts: 25
Joined: Wed Feb 21, 2018 12:20 pm

Re: Best 401k options before rollover???

Post by ThriftyisFun »

Thanks! Any suggestions on what bond funds I should use in my 401k as per my initial post?
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Best 401k options before rollover???

Post by retiredjg »

We don't know what you asked and we don't know they told you and we don't know whether what they said is the same or different from what you understood.

But...here are the regs from the IRS.

https://www.irs.gov/retirement-plans/pl ... tributions

If the discussion was about IRS requirements, something is amiss. If the discussion was about requirements of the 401k plan, things could be different.


I think you will get better help from people here if you post what you have and what you want to move to in the format we use to help people with their portfolios. See the link at the bottom of this message. The closer you follow the link, the easier it is to help you.
Topic Author
ThriftyisFun
Posts: 25
Joined: Wed Feb 21, 2018 12:20 pm

Re: Best 401k options before rollover???

Post by ThriftyisFun »

Thanks, Retiredjg.
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