"Laid off, choices re 401k loan and rollover - Help Requested"

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fiverus
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"Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Sun Feb 11, 2018 6:21 pm

Hello,

My company restructured, my last day 2/28. I have severance pay of 5 months.


What should I do with my 401k (73k), I have fidelity 2025 Roth Ira and Traditional. Where should I move it?

Also, I have 401k loan owing about 6k how should I handle this; pay it off or make payments

Thank you

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welderwannabe
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by welderwannabe » Sun Feb 11, 2018 6:24 pm

Sorry to hear you lost your job. There are people smarter about 401Ks than myself on this forum, but I believe once you are separated the 401k loan comes due.

I would roll your 401k to a rollover IRA at either Vanguard or Fidelity.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

TwstdSista
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by TwstdSista » Sun Feb 11, 2018 6:30 pm

That's an unfortunate situation, so sorry you're dealing with this. Sometimes you are allowed to continue making payments to your 401k after employment has been terminated. If you are not, then you'll have to decide if you want to pay the $6000 or have it considered a distribution from your 401k which would be subject to taxes and penalties. I'm not a fan of 401k loans in general so would recommend paying it off, but that's just my personal opinion. I do believe you would need to pay the loan off prior to transferring it.

You can roll your 401k over to a traditional IRA, assuming it is a pre-tax 401k. If it's a Roth 401k, then you can roll it into a Roth IRA. If the options and fees associated with the 401k are good, you also might want to leave it there. Even just for the time being until you decide on your next step. The existence of traditional-type IRAs causes pro-rata rule issues with a Backdoor Roth IRA should you want to utilize that option in the future.

software
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by software » Sun Feb 11, 2018 6:31 pm

Not really enough information to give clear guidance.

Usually upon termination you have to immediately repay 401k loans. Check your plan docs though.

If you already have low cost options in your 401k then you should be able to just leave it where it is. Rolling it into an IRA is certainly another option, but in the future if your income is such that you want to do a backdoor Roth, then that decision could come back to bite you. You would essentially have to pay the taxes to convert to Roth before that option would be open.

Sorry to hear about the job loss. 5 months seveance is pretty generous though, good luck in the hunt.

260chrisb
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by 260chrisb » Sun Feb 11, 2018 6:39 pm

Well, you can leave the money where it is for now. I don't know if an outstanding loan has any bearing on your ability to roll it over and get it out of the plan so check that next. After that, pay off the loan and then make a direct deposit rollover to an IRA.

fiverus
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Sun Feb 11, 2018 7:38 pm

401k is a 3 fund portfolio all Vanguard.

I don't know what backdoor Roth means? With Fidelity I have Roth Ira and Traditional 2025. If I make a direct deposit to IRA which one Roth? or Traditional?

My HR department is finding out if I can make payments or If I have to pay off. If I make payments they will send me separately statements, I think

emoore
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by emoore » Sun Feb 11, 2018 8:02 pm

I think the new tax law has changed the payback period for 401k loans. You now have until the end of the year to pay it back instead of 30 or 60 days.

fiverus
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Mon Feb 12, 2018 11:26 am

Where should I transfer 401k? Roth and Traditional IRA 2025?

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Euclidian
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by Euclidian » Mon Feb 12, 2018 11:36 am

Your question isn't clear to me so here are a couple responses depending on the specific question:

If you have funds in a 401k (pre-tax, most accounts are this type) then you can roll it over to a traditional IRA. I recommend either Fidelity, Vanguard, or Schwab.

If you have funds in a Roth 401k then you can roll it over to a Roth IRA at either Fidellity, Vanguard, or Schwab.

If you already have existing IRAs then you can just roll over to the existing account.

As you stated, you should find out when the loan needs to be repaid before taking any action. Also, if you have a good 401k plan then and they let you keep the funds there then you may not need to make any moves of funds in the short term.

If you are asking what funds to choose within the IRA then the 2025 fund is just fine until you read up on asset allocation.

fiverus
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Mon Feb 12, 2018 12:23 pm

Yes, I already have Fidelity Roth or Traditional IRA's. Which account should I roll over 401k? Roth or Traditional account?

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Euclidian
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by Euclidian » Mon Feb 12, 2018 12:34 pm

Any portion of your 401k that is pre-tax (most 401k are this type) should be rolled over to a traditional IRA

Any portion of your 401k that is a Roth 401k should be rolled over to a Roth IRA

michaeljc70
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by michaeljc70 » Mon Feb 12, 2018 12:46 pm

Euclidian wrote:
Mon Feb 12, 2018 12:34 pm
Any portion of your 401k that is pre-tax (most 401k are this type) should be rolled over to a traditional IRA

Any portion of your 401k that is a Roth 401k should be rolled over to a Roth IRA
To elaborate, if you moved (converted) the pre-tax 401k to the Roth, you would have to pay taxes on it. Something you probably don't want to do when laid off.

fiverus
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Tue Feb 13, 2018 8:42 am

So, where should I roll over my 401k without paying taxes? Since I would pay taxes if rolled over to Roth IRA what is other options?

Thank you,

MotoTrojan
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by MotoTrojan » Tue Feb 13, 2018 8:48 am

fiverus wrote:
Tue Feb 13, 2018 8:42 am
So, where should I roll over my 401k without paying taxes? Since I would pay taxes if rolled over to Roth IRA what is other options?

Thank you,
Traditional IRA, which it sounds like you already have? Unless you have after tax (Roth) 401k funds, then those can get rolled to a Roth IRA. Having pre-tax IRA’s, which it sounds like you might already, can prevent a Backdoor Roth, which is a way for higher income (past the Roth limit) people to still contribute $5500/yr with tax free growth.

fiverus
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by fiverus » Tue Feb 13, 2018 9:18 am

My 401k is pre-tax so best option would be to roll over to 'Traditional IRA'. right?

wilked
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by wilked » Tue Feb 13, 2018 9:23 am

Just leave the 401k where it is unless fees are high

When you get your next job, roll the old 401k into He new

michaeljc70
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by michaeljc70 » Tue Feb 13, 2018 10:50 am

wilked wrote:
Tue Feb 13, 2018 9:23 am
Just leave the 401k where it is unless fees are high

When you get your next job, roll the old 401k into He new
Your investment options will be more limited in a company 401k (unless they have a self-directed brokerage) and chances are the fees will be higher. I'd transfer it to one of the big companies that has low expense mutual funds you can buy without fees like TDA, Vanguard or whatever if he doesn't already have a tIra.

wilked
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by wilked » Wed Feb 14, 2018 8:24 pm

michaeljc70 wrote:
Tue Feb 13, 2018 10:50 am
wilked wrote:
Tue Feb 13, 2018 9:23 am
Just leave the 401k where it is unless fees are high

When you get your next job, roll the old 401k into He new
Your investment options will be more limited in a company 401k (unless they have a self-directed brokerage) and chances are the fees will be higher. I'd transfer it to one of the big companies that has low expense mutual funds you can buy without fees like TDA, Vanguard or whatever if he doesn't already have a tIra.
This is a good idea as long as you will never want to do a backdoor Roth

fiverus
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other alternatives

Post by fiverus » Sat Jul 07, 2018 1:21 pm

Hello Everyone.

I started a new position at a company, my 401k will kick in August. My I please ask for your expertise for what funds to choose up to 100% ratio? I will be eligible for retirement 2025. Thank you in advanced!


Invesco Stable Value Trust - Class C

State Street U.S. Bond Index Securities Lending Series Fund - Class VI

Western Asset Core Bond Fund - Class I WATFX

State Street Target Retirement 2015 Non Lending Series Fund - Class D
State Street Target Retirement 2020 Non Lending Series Fund - Class D
State Street Target Retirement Income Non-Lending Series Fund - Class D
State Street Target Retirement 2025 Non-Lending Series Fund - Class D
State Street Target Retirement 2030 Non-Lending Series Fund - Class D
State Street Target Retirement 2035 Non-Lending Series Fund - Class D
State Street Target Retirement 2040 Non-Lending Series Fund - Class D
State Street Target Retirement 2045 Non-Lending Series Fund - Class D
State Street Target Retirement 2050 Non-Lending Series Fund - Class D
State Street Target Retirement 2055 Non-Lending Series Fund - Class D

American Funds Fundamental Investors Fund - Class R6 RFNGX
JPMorgan U.S. Research Enhanced Equity Fund - Class I JDESX
State Street S&P 500 Index Securities Lending Series Fund - Class VI
Principal Large Cap Growth Fund I - Class R5 PPUPX
American Century Mid Cap Value Fund - Investor Class ACMVX
Victory Sycamore Established Value Fund - Class I VEVIX
State Street S&P MidCap Index Non-Lending Series Fund - Class F
The Hartford MidCap Fund - Class R6 HFMVX

JPMorgan Small Cap Value Fund - Class R5 JSVRX
JPMorgan Small Cap Equity Fund - Class I VSEIX
State Street Russell Small Cap Index Securities Lending Series Fund - Class IV
JPMorgan Small Cap Growth Fund - Class I OGGFX
State Street International Index Securities Lending Series Fund - Class VI
American Funds EuroPacific Growth Fund - Class R6 RERGX

Best Regards,
fiverus

TwstdSista
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Re: "Laid off, choices re 401k loan and rollover - Help Requested"

Post by TwstdSista » Mon Jul 23, 2018 5:24 am

Good morning! You'll get better responses if you post the expense ratios for each of those funds. And it will be a good exercise for you to see how much they may vary.

But as a starting point -- look for funds with the word Index in them.

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