Thoughts on rolling over past 401ks

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noco-hawkeye
Posts: 207
Joined: Sat Aug 16, 2014 8:20 am

Thoughts on rolling over past 401ks

Post by noco-hawkeye » Tue Oct 03, 2017 8:12 pm

I have taken a new job, and now am looking at my new 401k options - in addition to my (2) old 401ks from previous employers.

My new 401k has vanguard target date funds as the default, and then also
Vanguard Small Cap Index Fund Admiral
Vanguard Mid Cap Index Fund Admiral
Vanguard 500 Index Fund Admiral
Vanguard Total Intl Stock Index Admiral
PIMCO Total Return Instl PTTRX
Pioneer Strategic Income K STRKX
Templeton Global Bond R6 FBNRX
(it has other funds too, but they are higher expense stuff I'm not going to waste time with) . The vanguard funds above tend to be less than 0.10% for ER.

My old 401ks have pretty much a variation of a 3 fund portfolio, and all of their expense rations are less than 0.10% (maybe the bond funds are a touch higher). I am hesitant to roll into any type of vehicle that will prevent me from doing a backdoor Roth, which we have been doing for a few years now.

So I am wondering a few things:

1) . Should I roll over everything into the new 401k? I don't thing expense ratios are that much different, and the main benefit here would be simplification. The total amount would be around 500k and the expense ratios would be no more than 0.05% different. I have some money in a Roth 401k that I might roll into my Roth IRA as well - to keep it simple for my own mental accounting.

2) I wonder at what point people switch from a target date fund to ala carte and create your own. I know this is somewhat a personal preference, but I could imagine leaving everything where it is and just going with a target date fund in my new 401k until I hit 100k and then worry about balancing things into separate funds. What proportions produce the total market index from the funds above?

Background info - I value simplicity over perfection.
Last edited by noco-hawkeye on Wed Oct 04, 2017 8:35 pm, edited 1 time in total.

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FiveK
Posts: 2880
Joined: Sun Mar 16, 2014 2:43 pm

Re: Thoughts on rolling over past 401ks

Post by FiveK » Wed Oct 04, 2017 1:38 am

noco-hawkeye wrote:
Tue Oct 03, 2017 8:12 pm
1) . Should I roll over everything into the new 401k? I don't thing expense ratios are that much different, and the main benefit here would be simplification. The total amount would be around 500k and the expense ratios would be no more than 0.05% different. I have some money in a Roth 401k that I might roll into my Roth IRA as well - to keep it simple for my own mental accounting.

2) I wonder at what point people switch from a target date fund to ala carte and create your own. I know this is somewhat a personal preference, but I could imagine leaving everything where it is and just going with a target date fund in my new 401k until I hit 100k and then worry about balancing things into separate funds. What proportions produce the total market index from the funds above?

Background info - I value simplicity over perfection.
1. Yes, because $250/yr - assuming the rebalancing cost of your time is $0 - seems worthwhile to pay for simplicity.

2. Maybe $1MM? Saving $1000/yr (assuming a 0.1% difference) might be worth it - but then again it might not.

See Approximating total stock market - Bogleheads for your last question.

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ruralavalon
Posts: 11281
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Thoughts on rolling over past 401ks

Post by ruralavalon » Wed Oct 04, 2017 9:20 am

noco-hawkeye wrote:
Tue Oct 03, 2017 8:12 pm
I have taken a new job, and now am looking at my new 401k options - in addition to my (2) old 401ks from previous employers.

My new 401k has vanguard target date funds as the default, and then also
Vanguard Small Cap Index Fund Admiral
Vanguard Mid Cap Index Fund Admiral
Vanguard 500 Index Fund Admiral
Vanguard Total Intl Stock Index Admiral
PIMCO Total Return Instl PTTRX
Pioneer Strategic Income K STRKX
Templeton Global Bond R6 FBNRX
(it has other funds too, but they are higher expense stuff I'm not going to waste time with)

My old 401ks have pretty much a variation of a 3 fund portfolio, and all of their expense rations are less than 0.10% (maybe the bond funds are a touch higher). I am hesitant to roll into any type of vehicle that will prevent me from doing a backdoor Roth, which we have been doing for a few years now.

So I am wondering a few things:

1) . Should I roll over everything into the new 401k? I don't thing expense ratios are that much different, and the main benefit here would be simplification. The total amount would be around 500k and the expense ratios would be no more than 0.05% different. I have some money in a Roth 401k that I might roll into my Roth IRA as well - to keep it simple for my own mental accounting.
I think this makes sense.

What are the expense ratios of the funds in the new 401k? You can simply add this to your original post using the edit button.

noco-hawkeye wrote:2) I wonder at what point people switch from a target date fund to ala carte and create your own. I know this is somewhat a personal preference, but I could imagine leaving everything where it is and just going with a target date fund in my new 401k until I hit 100k and then worry about balancing things into separate funds. What proportions produce the total market index from the funds above?

Background info - I value simplicity over perfection.
Switching to separate index funds is mostly personal preference, such as because of an investor's desire to set a personal asset allocation that differs from that of the target date fund.

82/18 500/small-cap.

Vanguard 500 Index Fund is suitable by itself for the domestic stock component of a three-fund portfolio.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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