Forced into Market Timing...

[micron]

I recently transferred (rolled) my $3M Fidelity 401k into my Fidelity IRA.
It settled in two days, but unexpectedly (by me), it was converted to cash.
I thought all my 401k investment positions (index funds) would transfer directly.
So now I have this large chunk of funds sitting in the FDZXX MM fund.
Coincidentally, the recent stock market drop occurred right after that.
So in some aspects, it was serendipitous, as I dodged a 7% drop in the market.
But I now have the task of needing to decide when to buy back in...
The cash is currently earning an APR of 4.2% with a 0.36% ER.
-> Should I just go ahead and jump back in now, regardless of current events?
Or should I maybe sit it out for a few more weeks to see what settles out?
(I think there are better MM funds I could transfer it into during the interim).
I'm interested to hear what other folks would do if they were in my situation.
Please share any opinions, advice, or suggestions...  Thanks!
.

[rkhusky]

401k’s typically transfer as cash. Unless you have had a significant life event, put it right back into your previous asset allocation. How would you feel if the market jumps up 10% next week?

[simplesimon]

I recently transferred (rolled) my $3M Fidelity 401k into my Fidelity IRA.
It settled in two days, but unexpectedly (by me), it was converted to cash.
I thought all my 401k investment positions (index funds) would transfer directly.
So now I have this large chunk of funds sitting in the FDZXX MM fund.
Coincidentally, the recent stock market drop occurred right after that.
So in some aspects, it was serendipitous, as I dodged a 7% drop in the market.
But I now have the task of needing to decide when to buy back in...
The cash is currently earning an APR of 4.2% with a 0.36% ER.
-> Should I just go ahead and jump back in now, regardless of current events?
Or should I maybe sit it out for a few more weeks to see what settles out?
(I think there are better MM funds I could transfer it into during the interim).
I'm interested to hear what other folks would do if they were in my situation.
Please share any opinions, advice, or suggestions...  Thanks!
.

Buy it all back. Then you won't be market timing.

With 401K rollovers you win some you lose some. In this case you got a free lunch.

[Johm221122]

Immediately investing into my chosen asset allocation is what I would do. Maybe have a good dinner to celebrate the timing the market luck. Could have easily gone the other way

[Doom&Gloom]

I'd chunk it all back in ASAP and congratulate myself on my extraordinary insight allowing me to make 7% in two days!

If I felt an overwhelming urge to gamble, I'd toss half of it in now and see if I could pick a lucky day to get back in with the other half but set an arbitrary deadline for doing so right now.

[retiredjg]

Should I just go ahead and jump back in now, regardless of current events?

Yes. Do it tomorrow if you can't do it today.

Or should I maybe sit it out for a few more weeks to see what settles out?

Only if you'd be happy paying more for the same stuff if the market goes back up.

You've already gotten a free and serendipitous 7% benefit. Don't gamble for more - you may get it or you may lose the benefit you already have.

[Rocinante Rider]

If you were happy with the asset allocation before the rollover, you should just reinvest the same way immediately. If you wait, that would be marketing timing. You're fortunate that everything liquidated before the drop. Jump right back in.

[ccompounder]

I'd chunk it all back in ASAP and congratulate myself on my extraordinary insight allowing me to make 7% in two days!

If I felt an overwhelming urge to gamble, I'd toss half of it in now and see if I could pick a lucky day to get back in with the other half but set an arbitrary deadline for doing so right now.

Exactly this. OP, you just made 7%. Congrats. Re-invest everything ASAP.

[quantAndHold]

You're not market timing, you got caught up in random chance when you moved some money.

If you hold off on reinvesting it though, *then* you will be market timing.

Congrats on the 7% windfall, though.

[goodenyou]

When I rolled my 401k to an IRA, it also went to cash before it was transferred. It was all in bonds. That was in early 2022. It has been in a MM fund at 5%+ and now close to 4% for a few years. I have just started to deploy it slowly back into bonds.

I understand what you mean. I was hard to give up the (temporary) guaranteed $100k/year of interest.

[Ace300]

-> Should I just go ahead and jump back in now, regardless of current events?

95%+ of people on this site will tell you to jump in now, do not give it a second thought...anything else would be market timing (and thus forbidden ). They wouldn't necessarily be wrong, but at the same time it is your money, not theirs...they don't need to live with the consequences, you do.

So do what gives you piece of mind, just be aware of the risks.

I've encountered this situation myself. One thing I've done is commit to 50% purchase/investment immediately, and then the other 50% can be done either at a designated point in the future (i.e...2 weeks, 1 months, 3 months, etc..) OR you could DCA the other 50% over a period of time...I've used 6 months. Is this market timing? Probably... Will it make you sleep better at night? That is for you to determine and the only thing that matters. Just be aware that there is a lot of empirical evidence that says putting it all in once asap is the better choice...of course I don't know how that evidence would look if it was conducted after a 2 yr bull market run when the market just dropped 7% either.

[Hebell]

I am so thankful my DH's Fidelity 401K could roll in kind to a Fidelity IRA. We had already bought TIPS in it, and it would have been a horrible hit had we not been able to retain those securities.

[enad]

You could go all in, stay in cash or dollar cost average your way into your final position (you won't get the highest price and you won't get the lowest). If you invest a fixed amount (just like your 401K contributions), you'll be buying less when the market goes up and more when it declines.

You need to decide what works for you, not what others, including myself, are urging or suggesting you do (it's your money). Do what makes you sleep well at night.

[coachd50]

Remember - when people advise against “market timing” they are saying is that you should not think that you know better than the market. Whatever your desired asset allocation was without respect to market events, but rather based off of your personal situation is what you should try to get back to as quickly as possible.

[dogagility]

But I now have the task of needing to decide when to buy back in...
...
-> Should I just go ahead and jump back in now, regardless of current events?

Nobody forced you into market timing... you're bringing this decision on market timing on yourself.

You should buy today, regardless of the news.

Count yourself lucky with the way it turned out.

[retiredjg]

Forced into Market Timing...

Not really. If you reinvest immediately in a way similar to what you had, it is not market timing. It's just moving money from here to there.

If you do something else, that would be market timing.

[barnaclebob]

Put it back in. A free 7% advantage on the market with that much money is one in a lifetime.

[gavinsiu]

I recently transferred (rolled) my $3M Fidelity 401k into my Fidelity IRA.
It settled in two days, but unexpectedly (by me), it was converted to cash.
I thought all my 401k investment positions (index funds) would transfer directly.
So now I have this large chunk of funds sitting in the FDZXX MM fund.
Coincidentally, the recent stock market drop occurred right after that.
So in some aspects, it was serendipitous, as I dodged a 7% drop in the market.
But I now have the task of needing to decide when to buy back in...
The cash is currently earning an APR of 4.2% with a 0.36% ER.
-> Should I just go ahead and jump back in now, regardless of current events?
Or should I maybe sit it out for a few more weeks to see what settles out?
(I think there are better MM funds I could transfer it into during the interim).
I'm interested to hear what other folks would do if they were in my situation.
Please share any opinions, advice, or suggestions...  Thanks!
.

That happened to me when I transfer my 401K, too. I was told that it was transfer in kind, but instead got liquidated because it couldn't be done. Personally, I would jump right back in. Long term-wise it wouldn't make that much of a difference. If you are retirement, you may want to reflect on what allocation you might want to be in before jumping back in.

[MoonOrb]

I would not be overthinking this and I'd just re-invest it back to my original asset allocation as soon as is practicable.

[lazynovice]

If you are willing to risk some of your gain, put some of it back in and then set a price that you will put the rest of it back in- somewhere below what it was when you sold. Then you are locking in a gain below 7% but possibly increasing the gain above the 7%.

This won’t work well if you cannot watch the market and buy mid-day with ETFs.

[unnamed]

Also... are you taking clients?

[ResearchMed]

You're not market timing, you got caught up in random chance when you moved some money.

If you hold off on reinvesting it though, *then* you will be market timing.

Congrats on the 7% windfall, though.

This ^^ is exactly how I would phrase it.

Now: You wanted to have the money transfer in kind, right?
So *now*, just put the money right back, invested the way it was.
There is NO market timing involved this way, but juat a bit of market fluctuation, which happens all the time.

As others have mentioned, you may have gotten a blip up, but in the long run, that won't be a big factor, nor will any immediate drop had that been the outcome.

Then relax... you've got your same investments in approximately the same amounts, at the new financial firm.

RM

[CookieDough]

I'd just buy back in at your old AA, which I presume you had for a reason.

I know the ups and downs seem really dramatic right now, but in 10-20 years, it likely won't matter much whether you bought today, yesterday, tomorrow, or next month.

None of us has a crystal ball.

So buy and be done with it.

[Wiggums]

Forced into Market Timing...

Not really. If you reinvest immediately in a way similar to what you had, it is not market timing. It's just moving money from here to there.

If you do something else, that would be market timing.

I agree.

Yes, you got a nice drop in the market. However, the money was in the market and should reinvested tomorrow.

[asset_chaos]

Sometimes you get lucky; good for you. If it were me, I'd restore my carefully thought out, long term investing plan as soon as practicle.

[rockstar]

You know for sure today the discount you’re buying back in. You can lock that in now.

What you don’t know is what the market will do a month from now. You could end up buying in even cheaper, or it could cost you more.

It’s really a bird in the hand sort of decision.

[MotoTrojan]

If you don't buy back in as soon as humanly possible you are setting yourself up for either a massive amount of regret, or a lifetime of thinking you outsmarted the market and that you can market time in the future (which will eventually result in the former).

Enjoy the extra $210K and be glad it didn't rip +7% while you waited!

In-kind 401k transfer isn't usually a thing so in future remember it will probably be the same situation.

[yzy]

Let it sit in MMF. Since you just rolled over you must have recently retired. Congratulate yourself for an excellent accumulation part of your life. You saved 3M!
Now you’re switching to the next phase. But why be in a huge hurry. Start enjoying the low stress part of your life. Ignore the news and turbulence. Take the summer off, get into the new lifestyle and earn 4%. Come back in the fall and reassess. You will be a little bit wealthier, less stressed and happy.
I went to MMF in November and will reassess in the fall. Have a great summer.

[Mando19]

Agreed, Let is sit in the MMF for 6 months. Good yield, low risk.

[Carol88888]

Ask yourself this: What would you regret more, staying out and watching the market move up 10% rapidly or going back in just in time to get hit with a 10% drawdown?

For most people the pain of losing money is greater than the pleasure of making money. You may be different.

[anoop]

I am so thankful my DH's Fidelity 401K could roll in kind to a Fidelity IRA. We had already bought TIPS in it, and it would have been a horrible hit had we not been able to retain those securities.

Your 401k sounds like it had BrokerageLink. So then that would make sense that they could be transferred in kind. Most 401k plans at Fidelity use funds that are similar but not identical to the ones available to the public.

[RCL]

Consider...if you buy the same assets now, you will now be able to buy more shares than you previously had. To me, more shares is more important than the $$ value.

[NMBob]

If you are willing to risk some of your gain, put some of it back in and then set a price that you will put the rest of it back in- somewhere below what it was when you sold. Then you are locking in a gain below 7% but possibly increasing the gain above the 7%.

This won’t work well if you cannot watch the market and buy mid-day with ETFs.

If you are holding half and will invest it immediately if the market drops say an additional 3 percent, then that is a basic limit order you can set.

If you are holding half and will invest it if the market rises say 3 percent, then that is a "buy stop " order you can set.

[lazynovice]

If you are willing to risk some of your gain, put some of it back in and then set a price that you will put the rest of it back in- somewhere below what it was when you sold. Then you are locking in a gain below 7% but possibly increasing the gain above the 7%.

This won’t work well if you cannot watch the market and buy mid-day with ETFs.

If you are holding half and will invest it immediately if the market drops say an additional 3 percent, then that is a basic limit order you can set.

If you are holding half and will invest it if the market rises say 3 percent, then that is a "buy stop " order you can set.

No mutual fund orders can process mid-day though. So if the market goes up 3 percent in the morning and another 2% in the afternoon, you are buying higher than you wanted. Very unlikely I’ll admit. But point taken on setting the order in advance.

[Wannaretireearly]

Reinvest. Great time to overbalance into US and global equities
Nice timing.

[micron]

.
Wow. Thank you for all the responses..!
.
I really appreciate all the excellent advice.
.

[Hebell]

I am so thankful my DH's Fidelity 401K could roll in kind to a Fidelity IRA. We had already bought TIPS in it, and it would have been a horrible hit had we not been able to retain those securities.

Your 401k sounds like it had BrokerageLink. So then that would make sense that they could be transferred in kind. Most 401k plans at Fidelity use funds that are similar but not identical to the ones available to the public.

Yes, it did. After having bought longer duration TIPS I would have been horrified if I had not been able to roll them in kind. Got lucky.

[Retired@58]

.
Anyone transferring an account that is forced into cash prays for your situation.

Sell, Transfer(market down 7% while money is in transit), Buy .

What are you waiting for, buy!

What is the alternative? Wait for the market value to go higher than when you were forced to cash, then buy back in and miss the gain.

I would get arrested for doing laps naked around the house for a change in value of over +200k for being lucky.

Best,

Retired@58

[ER_LatePlanner]

FWIW, here's a little tip for maintaining AA during "slow" rollovers from 401(k) to IRA:

From the day I initiate a partial rollover, I think of the rollover $ as "cash". It's taken proportionally from all my 401(k) holdings. So I think of it as changing my AA to be overweight on cash, underweight on stocks and bonds. So then I go into my IRA and do a reversal, using the same amount of "excess" cash to buy stocks and bonds and get back to my overall desired AA.

A couple weeks later when I receive and deposit the check, I immediately use it to buy stocks/bonds to match my AA.

I came up with this because my 401(k) provider will only issue paper checks sent to my address (payable to IRA provider FBO me). But they don't issue them very quickly. Last time around the funds being rolled were out of market for almost 3 weeks. The little procedure above helps me maintain AA even during a multi-week rollover process.

[Fallible]

Not really. If you reinvest immediately in a way similar to what you had, it is not market timing. It's just moving money from here to there.

If you do something else, that would be market timing.

I agree.

Yes, you got a nice drop in the market. However, the money was in the market and should reinvested tomorrow.

Agree with all here to just reinvest, which would not be market timing, which is generally predicting both when to invest and when to get out.

[johnegonpdx]

exact same situation as you. I'm DCA'ing back into the market with % drop (below rollover value) triggers to accelerate the reinvestment opportunistically. The DCA plan mimics how I built up my 401k originally over the past couple of decades. The opportunistic triggers mimics how I used to increase savings to invest more into downturn / crisis markets during the same time period.

[quantAndHold]

Let it sit in MMF. Since you just rolled over you must have recently retired.

Not necessarily. There are plenty of people who roll into their old 401k an IRA when they change jobs. I would assume, since OP is asking the question, they were not planning on changing their AA, or if they were planning on changing, not by this much. So I wouldn’t suggest they change it now just because a random thing happened in the market. That is the exact definition of market timing.

[Harmanic]

Congratulations! That's awesome!

[micron]

...I would assume, since OP is asking the question, they were not planning on changing their AA, or if they were planning on changing, not by this much.

.
^^^ That is exactly correct. I am 67 and retired now for a few years.
We have been planning a change to our AA, but not nearly by this much.
We've been on borrowed time with our (both mine & wife's) overly high equity allocations.
So along with consolidating effort, we're also reallocating toward a more conservative ratio.
Only a portion of my recently rolled over $3.2M tIRA is going back into equity index funds.
My Roth IRA account has $600k invested 100% in equity index funds.
Wife has similar accounts, with similar investments, but with much lower balances.
We got a late start on Roth conversions, but we're aggressively doing those now.
.

[deltaneutral83]

I have reacted and now experienced this phenomenon in our system where 401k's can't move over in kind and the problem this creates. The good news is that the market moves up like an escalator and down like an elevator for this purpose. The problem is when the institutions take 2-3 weeks to go from soup to nuts and the market can easily gap up 2-4% in 2-3 weeks, but it can go quite a bit further in the other direction (to one's benefit if they have at least half in equities or so I'd say?). I dealt with this at the beginning of Jan (because of an orphaned 401k with high fees as a non employee and no pro rata issue) and was out of the market for 6 trading days (which is very respectable by the sending firm) until it settled at the receiving firm and I bought back according to my AA per my written investment policy statement at 9:30a.m. and I had been checking two days prior as I was told it should take a week.

At no point in my IPS does it say anything about trying to "game" the system in a 401k rollover if the market goes down in transition. I buy back the second I am able and I'd probably pop the champagne because if you were all equities and your AA calls for that then the Wall Street universe just gave you an extra $210k give or take. If one assumes this is the majority of your nest egg then 7% is nearly (if not) two years of retirement. I can't imagine the amount of cold sweats I'd have broken out in over the past few weeks begging for that check to clear so I can jump back in as the market falls. I'm always assuming the market will go on a rally the day I do a 401k rollover.

Conceptually, think about the fact that you weren't even aware the 401k wasn't rolled over in kind and how lucky it is that the biggest selloff in any 1-2 week span probably in the last few years has taken place at the exact perfect time with you with what I presume is the majority of the nest egg. You wold be equally as upset if the market pivoted a week ago and went up well past your sell price.

[Wannaretireearly]

OP, I’ve thought about the 401k to IRA (and likely working to not working) transition as a big deal. I would do a full portfolio review in the recommended format. May as well go big and get the advice before investing back in imo.