New job, new 401k

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Topic Author
horadricCube
Posts: 30
Joined: Sun Jan 23, 2022 4:48 pm

New job, new 401k

Post by horadricCube »

Hello, I recently started a new job and wanted to get some thoughts on how to handle my new & previous 401k accounts.I will explain what I plan to do, and then ask some questions I have. Mostly just a sanity check.

My plan:
Previous 401k
Keep my previous employer's 401k as is. The plan has fidelity brokerage link which let me get VTSAX and VTIAX. It will cost me $70/yr to continue having this account. I am happy with the account and other than the $70 fee, see no real reason to rollover or do anything with it.
New 401k
My plan offers Schwab PCRA which will cost me $50/yr. I will not invest 70% VTSAX / 30% VTIAX due to the fees. As I understand it, SWTSX, SCHF, and SCHE can all be purchased without fee in the PCRA. As I understand it, 70% SWTSX / 21% SCHF, 9% SCHE would be a similar approximation to my 70% VTSAX / 30% VTIAX desired allocation. SCHF and SCHE are ETFs which I have never dealt with before. As I understand it, for a boglehead buy-and-holder like myself, the difference between ETFs and mutual funds are negligible.

Questions:
1. Have I missed anything when considering my plan (ie, my understanding of something was incorrect)? Are SWTSX/SCHF/SCHE good boglehead funds? Are the differences between mutual funds and ETFs negligible for the "average" boglehead like myself?
2. Can I rollover my old 401k at any point in the future without any kind of fee/tax/issue, should I choose to do so, or is this something I would have to do NOW since I just terminated employment/started the new job? I read I could do it anytime if I choose to.
3. Is there any compelling reason to roll over my old 401k if I have been happy with it? The only thing I see is the extra $70 fee, and the hassle of having yet another account to deal with. I know how to navigate the account and do not know how much hassle the new account will be, so I am hesitant to roll it all over into my new 401k. I'd also prefer to keep the vanguard funds since I am already familiar with them.

I also have some tax related questions on 401k roth vs traditional, but I will make a seperate forum thread in the personal finance forum. I got some good advice the last time I broached the subject over there.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
raveon
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Re: New job, new 401k

Post by raveon »

1. I would rollover the existing 401K to an rollover IRA with Vanguard or Fidelity. It is easy to do. Then, you won't have the $70/year fee. You can buy index funds there.

2. The Schwab funds look OK.
Topic Author
horadricCube
Posts: 30
Joined: Sun Jan 23, 2022 4:48 pm

Re: New job, new 401k

Post by horadricCube »

raveon wrote: Fri Aug 05, 2022 3:26 pm 1. I would rollover the existing 401K to an rollover IRA with Vanguard or Fidelity. It is easy to do. Then, you won't have the $70/year fee. You can buy index funds there.
I believe if I did that it would interfere with performing backdoor roth IRA contributions. My 401k contributions are roth but I believe employer matches would be pre-tax and cause an issue. Regardless, thank you for the suggestion and reply.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
exodusNH
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Re: New job, new 401k

Post by exodusNH »

horadricCube wrote: Fri Aug 05, 2022 4:03 pm
raveon wrote: Fri Aug 05, 2022 3:26 pm 1. I would rollover the existing 401K to an rollover IRA with Vanguard or Fidelity. It is easy to do. Then, you won't have the $70/year fee. You can buy index funds there.
I believe if I did that it would interfere with performing backdoor roth IRA contributions. My 401k contributions are roth but I believe employer matches would be pre-tax and cause an issue. Regardless, thank you for the suggestion and reply.
Having a tIRA would interfere with this.

Are you sure Roth 401k is the right choice for you? What's your marginal income tax rate?
exodusNH
Posts: 4792
Joined: Wed Jan 06, 2021 8:21 pm

Re: New job, new 401k

Post by exodusNH »

horadricCube wrote: Fri Aug 05, 2022 2:24 pm Hello, I recently started a new job and wanted to get some thoughts on how to handle my new & previous 401k accounts.I will explain what I plan to do, and then ask some questions I have. Mostly just a sanity check.

My plan:
Previous 401k
Keep my previous employer's 401k as is. The plan has fidelity brokerage link which let me get VTSAX and VTIAX. It will cost me $70/yr to continue having this account. I am happy with the account and other than the $70 fee, see no real reason to rollover or do anything with it.
New 401k
My plan offers Schwab PCRA which will cost me $50/yr. I will not invest 70% VTSAX / 30% VTIAX due to the fees. As I understand it, SWTSX, SCHF, and SCHE can all be purchased without fee in the PCRA. As I understand it, 70% SWTSX / 21% SCHF, 9% SCHE would be a similar approximation to my 70% VTSAX / 30% VTIAX desired allocation. SCHF and SCHE are ETFs which I have never dealt with before. As I understand it, for a boglehead buy-and-holder like myself, the difference between ETFs and mutual funds are negligible.

Questions:
1. Have I missed anything when considering my plan (ie, my understanding of something was incorrect)? Are SWTSX/SCHF/SCHE good boglehead funds? Are the differences between mutual funds and ETFs negligible for the "average" boglehead like myself?
2. Can I rollover my old 401k at any point in the future without any kind of fee/tax/issue, should I choose to do so, or is this something I would have to do NOW since I just terminated employment/started the new job? I read I could do it anytime if I choose to.
3. Is there any compelling reason to roll over my old 401k if I have been happy with it? The only thing I see is the extra $70 fee, and the hassle of having yet another account to deal with. I know how to navigate the account and do not know how much hassle the new account will be, so I am hesitant to roll it all over into my new 401k. I'd also prefer to keep the vanguard funds since I am already familiar with them.

I also have some tax related questions on 401k roth vs traditional, but I will make a seperate forum thread in the personal finance forum. I got some good advice the last time I broached the subject over there.
If you can buy any ETF at Schwab, why not just VTI and VXUS?
the_wiki
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Joined: Thu Jul 28, 2022 11:14 am

Re: New job, new 401k

Post by the_wiki »

1. Those are good vanguard-like low cost index funds options, yes. ETF vs Mutual fund will have no appreciable difference for a long-term investor in a 401k. Often times they are the same fund, just offered in two different ways. You'll want SCHF and SCHE together, prob 75/25 split to get close to the VTIAX you have in your other account. I don't think Schwab has a "Total international" fund, so you need a combo. Or if they have iShares options, you can just do IXUS Total International Stock which is pretty much an exact match for VTIAX (or VXUS).
2. You should check with the new 401k admin to see if they have any restrictions on this, but worst case you can roll it out to your own managed IRA at any time.
3. Seems like you've thought about it and know the pros and cons, so do whatever makes you most comfortable.
Topic Author
horadricCube
Posts: 30
Joined: Sun Jan 23, 2022 4:48 pm

Re: New job, new 401k

Post by horadricCube »

exodusNH wrote: Fri Aug 05, 2022 4:10 pm Are you sure Roth 401k is the right choice for you? What's your marginal income tax rate?
No, I am not. These would be the tax questions I need to ask about on the personal finance forum. I made a previous thread and was strongly convinced that I need to begin moving to traditional contributions. At the time of the previous thread I was still actively job-searching, so it was hard to do a real analysis. Now its time to make another thread with some real numbers and figure out how far to go in the traditional direction. I am leaning towards 100% traditional contributions right now, as the advice in my previous thread was to build up a base of traditional money.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
Topic Author
horadricCube
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Joined: Sun Jan 23, 2022 4:48 pm

Re: New job, new 401k

Post by horadricCube »

exodusNH wrote: Fri Aug 05, 2022 4:11 pm If you can buy any ETF at Schwab, why not just VTI and VXUS?
Completly slipped my mind because I always prefer mutual funds for whatever reason. VTI and VXUS are not on the "ETF select" list but I will call them and find out if there is any kind of fee.

EDIT: called them and there is no fee other than SEC fee and expense ratio. I will just go VTI and VXUS. Thanks!
Last edited by horadricCube on Fri Aug 05, 2022 4:39 pm, edited 1 time in total.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
the_wiki
Posts: 94
Joined: Thu Jul 28, 2022 11:14 am

Re: New job, new 401k

Post by the_wiki »

That is a good point made above, if you can buy ETF without fee:

VTI = VTSAX

VXUS = VTIAX

They are the exact same holdings but the ETF actually have lower fees, so problem solved.

Or if not, the near identical iShares versions are ITOT and IXUS


Roth vs Traditional is really just a matter of if you think your tax rate will be higher or lower in the future and when you want to pay your taxes.
exodusNH
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Re: New job, new 401k

Post by exodusNH »

horadricCube wrote: Fri Aug 05, 2022 4:25 pm
exodusNH wrote: Fri Aug 05, 2022 4:11 pm If you can buy any ETF at Schwab, why not just VTI and VXUS?
Completly slipped my mind because I always prefer mutual funds for whatever reason. VTI and VXUS are not on the "ETF select" list but I will call them and find out if there is any kind of fee.
And if you can, I'd consider moving your old 401k to a rollover IRA at Vanguard, then calling them and have them convert your mutual funds to the ETF equivalent, and then, finally rolling that over into your new 401k.

As long as your tIRA balance is $0 by Dec 31, you can do the backdoor Roth process.
the_wiki
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Joined: Thu Jul 28, 2022 11:14 am

Re: New job, new 401k

Post by the_wiki »

Since this is a retirement account, wouldn’t rolling over cash and rebuying be easier?
Topic Author
horadricCube
Posts: 30
Joined: Sun Jan 23, 2022 4:48 pm

Re: New job, new 401k

Post by horadricCube »

exodusNH wrote: Fri Aug 05, 2022 4:40 pm
And if you can, I'd consider moving your old 401k to a rollover IRA at Vanguard, then calling them and have them convert your mutual funds to the ETF equivalent, and then, finally rolling that over into your new 401k.

As long as your tIRA balance is $0 by Dec 31, you can do the backdoor Roth process.
I just set up my new 401k, apparently the PCRA cannot be contributed to automatically. It has to go to my 401k fund (i picked a stable value fund) and then each time a contribution is deducted from my paycheck I have to go in and manually transfer the money into the PCRA. So I am not sure that converting the funds to ETF will actually be necessary, but maybe since it will be a rollover it is different? Also I already did the backdoor this year but I suppose that does not matter as long as I keep my tIRA balance at $0 by the end of the year as you mentioned.
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exodusNH
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Re: New job, new 401k

Post by exodusNH »

horadricCube wrote: Fri Aug 05, 2022 5:22 pm
exodusNH wrote: Fri Aug 05, 2022 4:40 pm
And if you can, I'd consider moving your old 401k to a rollover IRA at Vanguard, then calling them and have them convert your mutual funds to the ETF equivalent, and then, finally rolling that over into your new 401k.

As long as your tIRA balance is $0 by Dec 31, you can do the backdoor Roth process.
I just set up my new 401k, apparently the PCRA cannot be contributed to automatically. It has to go to my 401k fund (i picked a stable value fund) and then each time a contribution is deducted from my paycheck I have to go in and manually transfer the money into the PCRA. So I am not sure that converting the funds to ETF will actually be necessary, but maybe since it will be a rollover it is different? Also I already did the backdoor this year but I suppose that does not matter as long as I keep my tIRA balance at $0 by the end of the year as you mentioned.
Based on what I've seen here, that two step is common.

You might want to check what the transfer would look like, then. Would it make sense to go from 401k to 401k or detour though a. IRA. I don't know those answers since I've only had the one employer since college.
Topic Author
horadricCube
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Re: New job, new 401k

Post by horadricCube »

exodusNH wrote: Fri Aug 05, 2022 5:38 pm You might want to check what the transfer would look like, then. Would it make sense to go from 401k to 401k or detour though a. IRA. I don't know those answers since I've only had the one employer since college.
What are we trying to gain or avoid by going through the detour? I know nothing when it comes to rollovers.

I will call the 401k monday and ask about the rollover process, see what they recommend, etc. Any advice on what to look out for, potential pitfalls, etc. would be great if anyone has any. All I remember from a forced rollover a few years ago was I need to make sure the check from old 401k gets to the new 401k within the timeframe :D
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exodusNH
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Re: New job, new 401k

Post by exodusNH »

horadricCube wrote: Fri Aug 05, 2022 5:40 pm
exodusNH wrote: Fri Aug 05, 2022 5:38 pm You might want to check what the transfer would look like, then. Would it make sense to go from 401k to 401k or detour though a. IRA. I don't know those answers since I've only had the one employer since college.
What are we trying to gain or avoid by going through the detour? I know nothing when it comes to rollovers.

I will call the 401k monday and ask about the rollover process, see what they recommend, etc. Any advice on what to look out for, potential pitfalls, etc. would be great if anyone has any. All I remember from a forced rollover a few years ago was I need to make sure the check from old 401k gets to the new 401k within the timeframe :D
Detouring through the IRA adds time. The only real benefit is that if you have it bounce through Vanguard, they can convert your VTSAX to VTI without you selling. That might make it easier to bring it into your new 401k.

But, like I said, I have never done this as I've been in the same 401k since 1998 or 1999.
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ruralavalon
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Re: New job, new 401k

Post by ruralavalon »

horadricCube wrote: Fri Aug 05, 2022 2:24 pm Hello, I recently started a new job and wanted to get some thoughts on how to handle my new & previous 401k accounts.I will explain what I plan to do, and then ask some questions I have. Mostly just a sanity check.

My plan:
Previous 401k
Keep my previous employer's 401k as is. The plan has fidelity brokerage link which let me get VTSAX and VTIAX. It will cost me $70/yr to continue having this account. I am happy with the account and other than the $70 fee, see no real reason to rollover or do anything with it.
New 401k
My plan offers Schwab PCRA which will cost me $50/yr. I will not invest 70% VTSAX / 30% VTIAX due to the fees. As I understand it, SWTSX, SCHF, and SCHE can all be purchased without fee in the PCRA. As I understand it, 70% SWTSX / 21% SCHF, 9% SCHE would be a similar approximation to my 70% VTSAX / 30% VTIAX desired allocation. SCHF and SCHE are ETFs which I have never dealt with before. As I understand it, for a boglehead buy-and-holder like myself, the difference between ETFs and mutual funds are negligible.

Questions:
1. Have I missed anything when considering my plan (ie, my understanding of something was incorrect)? Are SWTSX/SCHF/SCHE good boglehead funds? Are the differences between mutual funds and ETFs negligible for the "average" boglehead like myself?
2. Can I rollover my old 401k at any point in the future without any kind of fee/tax/issue, should I choose to do so, or is this something I would have to do NOW since I just terminated employment/started the new job? I read I could do it anytime if I choose to.
3. Is there any compelling reason to roll over my old 401k if I have been happy with it? The only thing I see is the extra $70 fee, and the hassle of having yet another account to deal with. I know how to navigate the account and do not know how much hassle the new account will be, so I am hesitant to roll it all over into my new 401k. I'd also prefer to keep the vanguard funds since I am already familiar with them.

I also have some tax related questions on 401k roth vs traditional, but I will make a seperate forum thread in the personal finance forum. I got some good advice the last time I broached the subject over there.
Before considering either the Fidelity BrokerageLink or the Schwab Personal Choice Retirement Account (PCRA) I would look at the funds offered in each 401k plan. If good funds wIth low expense ratios are offered I would use them instead of using any brokerage feature.

In my opinion the difference in impact of a $50 annual fee versus a $70 annual fee is almost certainly trivial. Also all of the funds/ETFs you mentioned are good choices, I see no meaningful difference there.

You can do a rollover later if you wish, it doesn't have to be right now.

When the plans are basically equal I suggest doing a rollover of the old account into the new plan, for simplicity to have fewer accounts to keep track of and manage.

The median employee tenure with an employer has long been about 4-5 years. Employee Benefits Research Institute, The Good Old Days. The average worker has had about 12 employers in a working lifetime. U.S. Bureau of Labor Statistics, FAQ. So without rollovers an employee could wind up with a dozen small 401k accounts.
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Gaston
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Re: New job, new 401k

Post by Gaston »

raveon wrote: Fri Aug 05, 2022 3:26 pm I would rollover the existing 401K to an rollover IRA with Vanguard or Fidelity. It is easy to do. Then, you won't have the $70/year fee. You can buy index funds there.
I agree with this. If the OP changes jobs with any frequency, they will leave a scattering of 401k money at different providers. Over time, the plan administrators might change, fee structures might change, records might be lost, etc. I suggest it's much better to set up a rollover IRA at Vanguard, Fidelity or Schwab, and then roll the 401k assets into the IRA after each job change, keeping everything in one place.

There is one counter-argument to the above: I have read that 401k plans offer better protection of your assets against potential lawsuits. Perhaps someone with legal knowledge can comment on this.
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ruralavalon
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Re: New job, new 401k

Post by ruralavalon »

Gaston wrote: Sun Aug 07, 2022 10:51 am
raveon wrote: Fri Aug 05, 2022 3:26 pm I would rollover the existing 401K to an rollover IRA with Vanguard or Fidelity. It is easy to do. Then, you won't have the $70/year fee. You can buy index funds there.
I agree with this. If the OP changes jobs with any frequency, they will leave a scattering of 401k money at different providers. Over time, the plan administrators might change, fee structures might change, records might be lost, etc. I suggest it's much better to set up a rollover IRA at Vanguard, Fidelity or Schwab, and then roll the 401k assets into the IRA after each job change, keeping everything in one place.

There is one counter-argument to the above: I have read that 401k plans offer better protection of your assets against potential lawsuits. Perhaps someone with legal knowledge can comment on this.
Wiki article Prioritizing investment. "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA."

A 401k is funded via automatic deductions from payroll each pay period, which helps maintain savings discipline. A 401k which offers Collective Investment Trusts with extremely low expense ratios may offer better investments than an IRA. A 401k may offer better protection from creditors depending on the laws of your state. A 401k permits penalty free withdrawal at an earlier age (age 55 versus age 59.5 for an IRA). A 401k account permits withdrawal via Substantially equal periodic payments for an early retirement.

A $70 annual fee is inconsequential in my opinion.
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mcraepat9
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Re: New job, new 401k

Post by mcraepat9 »

What are the funds offered in your new 401k (with expense ratios) that you can invest in without the $50 PCRA fee?

Depending on the funds and expense ratios, i am guessing there are suitable substitutes for VTI, VXUS with auto investing and without paying a few. Investigate this first.
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ruralavalon
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Re: New job, new 401k

Post by ruralavalon »

mcraepat9 wrote: Mon Aug 08, 2022 12:48 pm What are the funds offered in your new 401k (with expense ratios) that you can invest in without the $50 PCRA fee?

Depending on the funds and expense ratios, i am guessing there are suitable substitutes for VTI, VXUS with auto investing and without paying a few. Investigate this first.
+1.

Please give fund names, tickers and expense ratios.

Before considering either the Fidelity BrokerageLink or the Schwab Personal Choice Retirement Account (PCRA) I would look at the funds offered in each 401k plan. If good funds wIth low expense ratios are offered I would use them instead of using any brokerage feature.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
horadricCube
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Re: New job, new 401k

Post by horadricCube »

ruralavalon wrote: Mon Aug 08, 2022 3:18 pm
mcraepat9 wrote: Mon Aug 08, 2022 12:48 pm What are the funds offered in your new 401k (with expense ratios) that you can invest in without the $50 PCRA fee?

Depending on the funds and expense ratios, i am guessing there are suitable substitutes for VTI, VXUS with auto investing and without paying a few. Investigate this first.
+1.

Please give fund names, tickers and expense ratios.

Before considering either the Fidelity BrokerageLink or the Schwab Personal Choice Retirement Account (PCRA) I would look at the funds offered in each 401k plan. If good funds wIth low expense ratios are offered I would use them instead of using any brokerage feature.
Sorry for the late response, I have been busy (just found out I overcontributed to my HSA this year, among other issues that popped up..... :( )

I looked into the funds offered due to your earlier recommendation and found that two of them, unfamiliar to me at the time, actually do look decent. I believe they are what you would call Collective Investment Trusts, offered by Blackrock. I am not sure, I could not find a ticker. One is a Russel 3000 index (not ideal to me, but seems close enough to the more ideal VTSAX). ER on this one is .02 if memory serves. I believe the turnover was 7% vs VTSAX turnover of 4% though I believe that is comparing Russel 3000 in 2021 to the VTSAX in 2019, I do not understand why vanguard is still reporting 2019 numbers. The next was a Blackrock ex-US. I forget how it was called, but it was meant to follow the MSCI ACWI ex-U.S. IMI Index. After researching, since this is the IMI index it seems an acceptable replacement for VTIAX. The ER on this one was .06 I believe. As far as I could tell there was good agreement between past returns and the indexes they were meant to follow. I think I will just be going with these two funds.

One thing I do not like is not having an easy way to track the performance (no ticker). But I would rather deal with that than having to manually transfer money into the PCRA each month. I am also thinking now of just doing the 401k rollover at this point. Again, I do not like how doing so would "erase" the past history of trades/performance/etc. but that might be the lesser problem to have vs having an additional account to keep track of and the $70 fee.

Last edit: I did not actually call my plan and confirm there is no fee for investing in these two, but I can't imagine there would be. I guess I'd better do so before I go all-in here. I will put it on my seemingly always growing list of things I need to do.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
Topic Author
horadricCube
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Re: New job, new 401k

Post by horadricCube »

exodusNH wrote: Fri Aug 05, 2022 4:10 pm Are you sure Roth 401k is the right choice for you? What's your marginal income tax rate?
Might as well add, my marginal tax rate will be around 31%. Not sure exactly what it will end up being for this year, but around 31% when including state tax should be right for future years if nothing substantial changes. I will be going full traditional in the 401k. Previously I was only around 22-24% marginal tax rate due to no state tax and was making full roth contributions.

In earlier threads this year I was convinced that I would need to switch to traditional contributions for tax diversification purposes. I think it is likely I retire early and doubt I would end up retiring in a state with income tax.
If you come across challenges and questions to which you seek knowledge, seek me out and I will tell you what I can.
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ruralavalon
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Re: New job, new 401k

Post by ruralavalon »

horadricCube wrote: Tue Aug 09, 2022 4:57 pm I looked into the funds offered due to your earlier recommendation and found that two of them, unfamiliar to me at the time, actually do look decent. I believe they are what you would call Collective Investment Trusts, offered by Blackrock. I am not sure, I could not find a ticker. One is a Russel 3000 index (not ideal to me, but seems close enough to the more ideal VTSAX). ER on this one is .02 if memory serves. I believe the turnover was 7% vs VTSAX turnover of 4% though I believe that is comparing Russel 3000 in 2021 to the VTSAX in 2019, I do not understand why vanguard is still reporting 2019 numbers. The next was a Blackrock ex-US. I forget how it was called, but it was meant to follow the MSCI ACWI ex-U.S. IMI Index. After researching, since this is the IMI index it seems an acceptable replacement for VTIAX. The ER on this one was .06 I believe. As far as I could tell there was good agreement between past returns and the indexes they were meant to follow. I think I will just be going with these two funds.

One thing I do not like is not having an easy way to track the performance (no ticker). But I would rather deal with that than having to manually transfer money into the PCRA each month. I am also thinking now of just doing the 401k rollover at this point. Again, I do not like how doing so would "erase" the past history of trades/performance/etc. but that might be the lesser problem to have vs having an additional account to keep track of and the $70 fee.

Last edit: I did not actually call my plan and confirm there is no fee for investing in these two, but I can't imagine there would be. I guess I'd better do so before I go all-in here. I will put it on my seemingly always growing list of things I need to do.
Collective investment trusts will not have a ticker symbols.

BlackRock (iShares) is an excellent, very knowledgeable and experienced fund company, the largest asset manager in the entire world. ADVRatings, World's Top Asset Management Firms.

You can track your investments using a proxy such as Vanguard Russell 3000 Index Fund (VRTTX).

The Russell 3000 Index is a total U.S. stock market index, and should be very equivalent to the MSCI US Broad Market Index used by Vanguard Total Stock Market Index Fund (VTSAX). The performance of the two index funds has been almost identical. Portfolio Visualizer, 2011-2022.

Likewise the MSCI ACWI-ex U.S. IMI index is a total international stock index covering both developed and emerging markets including stocks of small-cap companies. It should be very equivalent to the FTSE Global All Cap ex US Index used by Vanguard Total International Stock Index Fund (VTIAX).

A collective investment trust is not a mutual fund, does not have the same reporting requirements as a mutual fund, and so has lower expenses that they need to recover in the expense ratio. This is is why in rare cases they can have a 0.00% expense ratio, especially if they engage in securities lending which also reduces the expenses they need to recover in the expense ratio.

I suggest using those collective investment trusts rather than using the brokerage feature.

I suggest rollover of your old 401k account into your current employer's 401k plan, rather than into an IRA.


horadricCube wrote: Wed Aug 10, 2022 5:38 am
exodusNH wrote: Fri Aug 05, 2022 4:10 pm Are you sure Roth 401k is the right choice for you? What's your marginal income tax rate?
Might as well add, my marginal tax rate will be around 31%. Not sure exactly what it will end up being for this year, but around 31% when including state tax should be right for future years if nothing substantial changes. I will be going full traditional in the 401k. Previously I was only around 22-24% marginal tax rate due to no state tax and was making full roth contributions.

In earlier threads this year I was convinced that I would need to switch to traditional contributions for tax diversification purposes. I think it is likely I retire early and doubt I would end up retiring in a state with income tax.
In my opinion you will likely be better off with traditional 401k contributions rather than Roth contributions.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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