Wife changing jobs 401k options

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kgressler
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Location: St Louis MO

Wife changing jobs 401k options

Post by kgressler » Tue Aug 14, 2018 9:22 am

So after 11 years the wife has accepted a position with another hospital. Her old hospital was a 401k with Vanguard this new job will be a 403b. Not sure who is withat the point she wont have her orientation till the beginning of September.
I am sure I am putting the cart before the horse since I dont have all the details yet but can you transfer 401k money to a 403b?

And if I cant would transferring it to an IRA be the move or can we just leave it? The main reason for leaving it as is is because they offer institutional shares for Vanguard so the fees are better than even the admiral shares. So i would guess and IRA wouldnt offer low fees like this.
She also has a pension she's vested in. I haven't looked at it but I am guessing they will offer her a lump sum?

ANy input would be helpful

TIA

ExitStageLeft
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Re: Wife changing jobs 401k options

Post by ExitStageLeft » Tue Aug 14, 2018 2:46 pm

Generally one can transfer from one qualified retirement plan to another. The specific plan may have self-imposed limitations. Here's the IRS summary: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

If the funds and fees are optimal at the old 401k there is nothing wrong with keeping it there. She could roll it into a traditional IRA, but that might lose her some asset protection. It would also impede ability to do backdoor Roth contributions.

mega317
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Re: Wife changing jobs 401k options

Post by mega317 » Tue Aug 14, 2018 3:39 pm

With Vanguard institutional shares I'd leave the money there until RMD time. Beware the rollover IRA until you learn about the back door Roth as ExitStageLeft said.

kgressler
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Re: Wife changing jobs 401k options

Post by kgressler » Tue Aug 14, 2018 3:50 pm

ExitStageLeft wrote:
Tue Aug 14, 2018 2:46 pm
Generally one can transfer from one qualified retirement plan to another. The specific plan may have self-imposed limitations. Here's the IRS summary: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

If the funds and fees are optimal at the old 401k there is nothing wrong with keeping it there. She could roll it into a traditional IRA, but that might lose her some asset protection. It would also impede ability to do backdoor Roth contributions.
Gotcha, so I guess the best plan would be to see of the new company offers the institutional shares and if i can transfer them and if they don't then i would be better off leaving them with the old companies plan until retirement?

Chuck5781
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Re: Wife changing jobs 401k options

Post by Chuck5781 » Tue Aug 14, 2018 3:58 pm

One consideration may be administrative fees assessed within the plan by the new employer.

In many plans, the participants are charged fees that pay for the overall administration of the plan, in addition to fees incurred within any selected investment (mutual fund). In one plan I’m very familiar with, these fees are allocated among the participants based on the balance of the account - larger accounts bear a larger burden and incur larger fees.

Moving funds to a rollover account would allow you to avoid those fees.
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ExitStageLeft
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Re: Wife changing jobs 401k options

Post by ExitStageLeft » Wed Aug 15, 2018 9:51 am

kgressler wrote:
Tue Aug 14, 2018 3:50 pm
...
Gotcha, so I guess the best plan would be to see of the new company offers the institutional shares and if i can transfer them and if they don't then i would be better off leaving them with the old companies plan until retirement?
If that's where the fees end up being lowest then yes, that's a very sound idea. As noted by Chuck5781, there may be administrative fees on top of the fund expenses. Some plans charge an additional fee for former employees that are no longer contributing.

kgressler
Posts: 86
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Location: St Louis MO

Re: Wife changing jobs 401k options

Post by kgressler » Wed Aug 15, 2018 10:43 am

ExitStageLeft wrote:
Wed Aug 15, 2018 9:51 am
kgressler wrote:
Tue Aug 14, 2018 3:50 pm
...
Gotcha, so I guess the best plan would be to see of the new company offers the institutional shares and if i can transfer them and if they don't then i would be better off leaving them with the old companies plan until retirement?
If that's where the fees end up being lowest then yes, that's a very sound idea. As noted by Chuck5781, there may be administrative fees on top of the fund expenses. Some plans charge an additional fee for former employees that are no longer contributing.
Oh, I didnt think about hat. Thank you so much everyone.
Once she starts and we get a better idea of her plan options I will follow up.

kgressler
Posts: 86
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Location: St Louis MO

Re: Wife changing jobs 401k options

Post by kgressler » Fri Sep 14, 2018 9:40 am

Update,

So it appears we are going to just leave my wifes old 401k with her old employer. Much better options and institutional shares are making it an easy choice.
The hospital she is now working for has a 403b with very limited options. A ton of high priced funds.

The only low cost fund they offer that are under .50%

State Street Equity Adm 500
Vanguard 500 Adm
Vanguard Mid Cap Adm
Vanguard small cap value Adm

All their Bond funds are .75% or higher in fees.

So my obvious choice is to do the Vanguard 500. Then fill in with the Mid cap and small cap? I was leaning towards 15-20% for both mid and small.
Last edited by kgressler on Fri Sep 14, 2018 10:05 am, edited 1 time in total.

TwstdSista
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Re: Wife changing jobs 401k options

Post by TwstdSista » Fri Sep 14, 2018 9:43 am

To keep it simple, I'd probably just do 80/20 on the 500 fund and the small cap fund. Just a thought.

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ruralavalon
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Re: Wife changing jobs 401k options

Post by ruralavalon » Fri Sep 14, 2018 10:13 am

kgressler wrote:
Tue Aug 14, 2018 3:50 pm
ExitStageLeft wrote:
Tue Aug 14, 2018 2:46 pm
Generally one can transfer from one qualified retirement plan to another. The specific plan may have self-imposed limitations. Here's the IRS summary: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

If the funds and fees are optimal at the old 401k there is nothing wrong with keeping it there. She could roll it into a traditional IRA, but that might lose her some asset protection. It would also impede ability to do backdoor Roth contributions.
Gotcha, so I guess the best plan would be to see of the new company offers the institutional shares and if i can transfer them and if they don't then i would be better off leaving them with the old companies plan until retirement?
Yes, it depends almost entirely on the funds offered and expenses in her new 403b plan.
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