chemeng wrote: ↑Wed Sep 12, 2018 5:50 pm
Now that I've joined a new company, my slice and dice portfolio has gotten quite hectic with all of the various options I'm currently contributed to:
Some of these options within each 401k are excellent, which is why I've currently not rolled over from Company 1 to Company 2. But as I look to rebalance every year (or so), it's become more tricky to do so. I'm considering rolling over and consolidating. The total balance of these accounts is approx $300k.
What is everyone's strategy for rollovers and consolidations? I imagine I will be changing jobs occasionally in the future, which will further add to the complexity of managing all of these funds. Any suggestions?
OP, I think you could move old 401k to new, or leave as is. The options in both plans look really good.
As far as my strategy for consolidation? I've done a total 180 on the conventional Boglehead advice that one should generally always roll over 401ks into IRAs. Rollover IRAs are such a pain to have around if/when a person hits the Roth limit, so if one has money sitting in an old 401k that is workable and has decent options, I say keep it around. If you move to a company that has an outstanding 401k, that's the time to roll everything over to that new awesome 401k.
I never expected I would hit the Roth limit, so I never planned around needing to deal with it. Now I really wish I hadn't followed the oft repeated advice on Bogleheads that one should roll to IRA to simplify. Once I did, later I had a huge logistical headache and ultimately had to move money
out of Vanguard into my currently pretty mediocre 401k plan so I could continue to fund my Roth (I know, first world problems...). The worst part about it was the plan I originally rolled over had stellar options. Yes, it was more complicated, but the options were better than what I have now. Even though I was nowhere close to the Roth income limits at the time, I think it was dumb to rollover purely for
simplicity and I wish I hadn't done it. You know what's not simple? Trying to do a backdoor roth with rollover IRA money sitting around.
So I think default advice should be that one
never roll a 401k into a rollover IRA unless there's a compelling and circumstantially specific reason to do so. For instance,
egregiously high expense ratios (though different people will have different opinions on what is egregiously high), but even that may not be enough for some situations. I don't even think one's expectation that they'll never hit the Roth income limit is a good reason to roll over because incomes can go up, and income limits and one's circumstances can change. No one can know the future. Simplicity can be achieved in other ways besides the Rollover IRA. OP, like your situation, many 401ks allow rollovers from previous 401k plans. If the typical person moves jobs half a dozen times in their careers, then they'll have ample opportunity to pick and choose which 401k plan to consolidate everything. Once you find that great 401k, put all past 401ks into it. When you leave that job. Leave the money there, unless the new plan is even better.
OP, FWIW you're in a pretty enviable situation given those options in the two 401k plans.
Best,
Peter
To the extent that a fool knows his foolishness, |
He may be deemed wise |
A fool who considers himself wise |
Is indeed a fool. |
|
Buddha