Should I roll old 401k into new 401k?

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Topic Author
Miguelito
Posts: 283
Joined: Thu Feb 27, 2014 1:21 pm

Should I roll old 401k into new 401k?

Post by Miguelito » Tue Feb 05, 2019 4:55 pm

I took a new job a few months ago. I'm debating whether I should roll the old 401k into the new employer's 401k. Below is my old 401k and how it is invested percentage-wise. Note that this is a decent amount of money - maxed 401k for nearly 15 years. Old employer has its own funds – the breakdowns are below:

OLD 401k:

13.7% - Diversified Bond Fund – Fees: 0.21%
U.S. Bonds 55%
High Yield Bonds 15%
Foreign Fixed Income 10%
U.S. TIPS 10%
Foreign Bonds 10%
34.4% - Large Cap U.S. Stock Fund – Fees: 0.08%
S&P 500 Index Fund 100%
28.7% - Mid and Small Company U.S. Stock Fund – Fees: 0.10%
US Mid and Small Cap Blend 100%
22.3% - Diversified Foreign Stock Fund – Fees: 0.53%
International Stock fund 20%
International Index Fund 45%
Other International fund 20%
Emerging Markets 15%
1.1% - Company Stock Fund – Fees: 0.07%
A good dividend stock 100%

The new 401k (managed by Fidelity) is shown below with the breakdown on what I have it invested in now:

NEW 401k:
10.4% - FTBFX FID TOTAL BOND
44.8% - FXAIX FID 500 INDEX
14.4% - JSERX JPM SMALL CAP EQ R5
15.2% - TRBCX TRP BLUE CHIP GRTH
15.2% - VFIFX VANG TARGET RET 2050

Full list of current employer 401k Fund options and fees (excluding Vanguard Target Date Funds which are also offered):

BLKRK EQUITY DIV A (MDDVX) 0.98%
FID 500 INDEX (FXAIX) 0.02%
TRP BLUE CHIP GRTH (TRBCX) 0.70%
CRLN S MID CAP I (UMBMX) 1.03%
JPM SMALL CAP EQ R5 (JSERX) 0.86%
DODGE & COX INTL STK (DODFX) 0.63%
FID INTL INDEX (FSPSX) 0.05%
BLKRK GLOBAL ALLOC A (MDLOX) 1.16%
WF STABLE VALUE 0.77%
BLKRK INFL PROTECT A (BPRAX) 0.92%
FID TOTAL BOND (FTBFX) 0.45%
FID US BOND IDX (FXNAX) 0.03%
FID GOVT MMKT (SPAXX) 0.42%

I haven’t put too much effort into my new 401k allocation because the balance is small. Should I move my OLD 401k into my new 401k? If so, how do I invest it?

I'm still 15+ years away from retirement, so I don't mind an 80-90% stock allocation and as you can see, I am partial to putting a decent amount on an S&P 500 index fund.

Thanks!

User avatar
dunkmachine
Posts: 41
Joined: Sat Jan 06, 2018 12:48 pm

Re: Should I roll old 401k into new 401k?

Post by dunkmachine » Tue Feb 05, 2019 5:22 pm

I think other posters will be more useful than me, but my take:
  • In your new 401(k), I would not use a target date fund IN ADDITION to a quasi 3-fund portfolio that you sort of have
  • If you roll into the new 401(k) you'd lose the cheaper mid and small cap options
  • FSPSX does not have exposure to Emerging Markets
  • I would only use FXAIX, FSPSX and FXNAX as viable options in the new 401(k)
Without knowing your overall portfolio and desired asset allocation (US:International) can't really make more recommendations. I'd either leave the old 401(k) alone or roll into a tIRA which will likely open up a lot more options for you.

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hoppy08520
Posts: 2136
Joined: Sat Feb 18, 2012 11:36 am

Re: Should I roll old 401k into new 401k?

Post by hoppy08520 » Tue Feb 05, 2019 5:36 pm

My only concern with rolling the old 401(k) into the new one is that the fees might not be what they seem. I've seen a lot of 401(k) plans that have funds with extremely low expense ratios, but then they have an assets under management (AUM) fee on top of it, for example a 0.25% annual fee on your total balance. Even with the improved disclosure rules, it can be devilishly difficult to figure out what these fees are, and when you ask people in Finance, they have no idea or they give you the wrong information because they don't even understand (based on my experience). So I'd be very skeptical. Moreover, while the general trend is for 401(k) plans to get better, they can also get worse (that happened at my old company) and then your money is stuck there. Your old 401(k) probably is pretty big given that you were at your old company for 15 years, so I'd be really careful.

To me, the safest bet would be to roll the old 401(k) over to Vanguard and put it in a 3-fund portfolio similar to what you have now, or perhaps a target retirement date or LifeStrategy fund if you prefer an all-in-one fund.

A 401(k) can offer better asset protection than an IRA, which is one advantage to a 401(k). If you to roll over to an IRA, have the IRA titled "rollover IRA" and don't make ordinary contributions to it anymore, leave it titled as "rollover IRA". See "asset protection" in wiki for more.

Topic Author
Miguelito
Posts: 283
Joined: Thu Feb 27, 2014 1:21 pm

Re: Should I roll old 401k into new 401k?

Post by Miguelito » Tue Feb 05, 2019 5:51 pm

Thanks for the feedback. I am trying to avoid moving the old 401k into a rollover IRA so that I can continue to do the backdoor Roth without issues.

ExitStageLeft
Posts: 1631
Joined: Sat Jan 20, 2018 4:02 pm

Re: Should I roll old 401k into new 401k?

Post by ExitStageLeft » Tue Feb 05, 2019 8:10 pm

It would help to know what your other assets are and your desired allocation. I would probably roll it over and have just Total Bond and 500 Index in the 401k. Fill the Roth IRA with international and a completion fund. Might cut your overall expense ratio by about 0.2%

Topic Author
Miguelito
Posts: 283
Joined: Thu Feb 27, 2014 1:21 pm

Re: Should I roll old 401k into new 401k?

Post by Miguelito » Tue Feb 05, 2019 8:35 pm

ExitStageLeft wrote:
Tue Feb 05, 2019 8:10 pm
It would help to know what your other assets are and your desired allocation. I would probably roll it over and have just Total Bond and 500 Index in the 401k. Fill the Roth IRA with international and a completion fund. Might cut your overall expense ratio by about 0.2%
Good point. I do have a Roth IRA that amounts to 20% of the value of my 401k.

Currently, it, along with my wife's 401k (2/3 the size of my 401k) and her Roth IRA (same size as my Roth IRA) all have similar asset allocations.

ExitStageLeft
Posts: 1631
Joined: Sat Jan 20, 2018 4:02 pm

Re: Should I roll old 401k into new 401k?

Post by ExitStageLeft » Tue Feb 05, 2019 8:41 pm

Miguelito wrote:
Tue Feb 05, 2019 8:35 pm
ExitStageLeft wrote:
Tue Feb 05, 2019 8:10 pm
It would help to know what your other assets are and your desired allocation. I would probably roll it over and have just Total Bond and 500 Index in the 401k. Fill the Roth IRA with international and a completion fund. Might cut your overall expense ratio by about 0.2%
Good point. I do have a Roth IRA that amounts to 20% of the value of my 401k.

Currently, it, along with my wife's 401k (2/3 the size of my 401k) and her Roth IRA (same size as my Roth IRA) all have similar asset allocations.
it may be worth the effort to update this thread to get a big picture review of your portfolio. Your old 401k balance is a significant part of your assets, so it's worth taking the time to ensure you're making a good decision.

You can edit your original post using the pencil icon in the upper right corner. Add the information suggested in this thread: viewtopic.php?f=1&t=6212

I have found that just getting all that information together was eye opening for me. Looking at all your assets combined for you and your spouse allows you to really optimize for simplicity and reduced costs.

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