401k to IRA roll over question

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FamilyOfFour
Posts: 12
Joined: Mon Jan 15, 2018 11:10 am

401k to IRA roll over question

Post by FamilyOfFour » Tue Jan 16, 2018 10:17 pm

Hello,
I have few questions on rolling over 401k to IRA.

Q1 - I switched my job in 2015 and moved that employee managed 401k in to the new employer. (it was around 72K)
Can I roll over that 72K in to an IRA now( in 2018)? My 401k is on TRRDX TRF plan (Trowe Target retirement 2040/Exp ratio - 0.74%_

Q2 - What are the pros and cons of rolling over 401k to IRA?
*** I can understand the benefits of using IRA and investing your own with index funds have low expense ratio.

Thanks

gostars
Posts: 173
Joined: Mon Oct 09, 2017 7:53 pm

Re: 401k to IRA roll over question

Post by gostars » Tue Jan 16, 2018 10:48 pm

Generally you cannot take money out of an employer plan while you are still employed, except for certain specific purposes like financial hardship due to unforeseen medical expenses. You can't roll money out just because you don't like the plan. You may want to check the plan to see if you have any good low-ER funds available. Many plans that are otherwise full of junk have at least one or two decent options, like a low-ER S&P 500 index fund or maybe a decent bond fund.

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Earl Lemongrab
Posts: 4369
Joined: Tue Jun 10, 2014 1:14 am

Re: 401k to IRA roll over question

Post by Earl Lemongrab » Wed Jan 17, 2018 1:36 pm

FamilyOfFour wrote:
Tue Jan 16, 2018 10:17 pm
Hello,
I have few questions on rolling over 401k to IRA.

Q1 - I switched my job in 2015 and moved that employee managed 401k in to the new employer. (it was around 72K)
Can I roll over that 72K in to an IRA now( in 2018)? My 401k is on TRRDX TRF plan (Trowe Target retirement 2040/Exp ratio - 0.74%_

Q2 - What are the pros and cons of rolling over 401k to IRA?
*** I can understand the benefits of using IRA and investing your own with index funds have low expense ratio.

Thanks
There is no "general" answer. Money that was rolled into a 401(k) is available for distribution at the discretion of the plan. This means that you can roll it to an IRA if the plan allows. This is different than your deferrals or Roth contributions, which are prohibited by law from rollover in most cases.

Megacorp allows distribution of rollover contributions. You will need to check with your plan as to their specific rules.

The cons of the issue are potentially lower legal protection (depends on state) and interference with backdoor Roth.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

FamilyOfFour
Posts: 12
Joined: Mon Jan 15, 2018 11:10 am

Re: 401k to IRA roll over question

Post by FamilyOfFour » Wed Jan 17, 2018 2:31 pm

Thanks for the responses.

I spoke to Trowe price and they said I am allowed to move the 401k money (and the gains) I carried over from my previous employer. So, now I am going to see where I will moved that in to. I have Vanguard account and will most likely move it there in to an IRA account.

Thanks,
Janaka

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Earl Lemongrab
Posts: 4369
Joined: Tue Jun 10, 2014 1:14 am

Re: 401k to IRA roll over question

Post by Earl Lemongrab » Wed Jan 17, 2018 3:54 pm

FamilyOfFour wrote:
Wed Jan 17, 2018 2:31 pm
Thanks for the responses.

I spoke to Trowe price and they said I am allowed to move the 401k money (and the gains) I carried over from my previous employer. So, now I am going to see where I will moved that in to. I have Vanguard account and will most likely move it there in to an IRA account.
You might want to consider rolling to a custodian that would give you a cash bonus.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

FamilyOfFour
Posts: 12
Joined: Mon Jan 15, 2018 11:10 am

Re: 401k to IRA roll over question

Post by FamilyOfFour » Wed Jan 17, 2018 9:13 pm

Hi Earl,
Sorry I am not families with what you referred to as "consider rolling to a custodian'. Could you please clarify?

FamilyOfFour
Posts: 12
Joined: Mon Jan 15, 2018 11:10 am

Re: 401k to IRA roll over question

Post by FamilyOfFour » Wed Jan 17, 2018 9:29 pm

Hi Earl,
Sorry I am not families with what you referred to as "consider rolling to a custodian'. Could you please clarify?

gostars
Posts: 173
Joined: Mon Oct 09, 2017 7:53 pm

Re: 401k to IRA roll over question

Post by gostars » Wed Jan 17, 2018 11:39 pm

Different brokerages will give you different bonuses for moving money over.
Check through The Final, Definitive Thread on Brokerage Transfer Bonuses for information. Schwab will give you $300 for $50k or $500 and 500 free trades for $100k or more, which is the best offer right now. Vanguard doesn't do bonuses.

FamilyOfFour
Posts: 12
Joined: Mon Jan 15, 2018 11:10 am

Re: 401k to IRA roll over question

Post by FamilyOfFour » Sat Jan 20, 2018 9:28 am

Thank you very much.

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