401k Rollover Timing

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Topic Author
BostonButterfly
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401k Rollover Timing

Post by BostonButterfly » Fri Jan 11, 2019 1:28 pm

The company I work for was recently bought out. I have since received notice that my old company is switching their 401K plan from Fidelity to Empowerment Retirement. There will be a three week blackout period starting 1/31/19.
This notification makes me feel like I should roll this into an IRA asap to completely eliminate what will hopefully be temporary Empowerment involvement. But I’m also hesitant, and don’t know what I don’t know. Wondering if it’s in my best interest to roll this over now, or just hold on. Here’s the pertinent info:

1. New employer does have a 401K, but it’s a really bad plan with high fees.
2. I am contributing to the new employer 401K, which is managed by John Hancock. Sigh
3. I have an existing rollover IRA.
4. My spouse and I earn too much money to contribute to Roths. My intention in 2018 was to move the IRA into the company 401K to clear the slate for backdoor Roth, but then I learned of the company sale. I was fearful of things getting too messy in 2018, so I left everything alone and did not make a backdoor Roth contribution.
5. Empowerment plan will be automatically invested in “Key Guaranteed Portfolio”, which appears to be a mutual fund type investment. I’m currently invested about 50/50 S&P and International.
6. I am actively looking for a new job. I hope to be out of here, for many reasons, ASAP.
7. When I find a new job, by hope is to roll my existing IRA into new employer 401K so I can begin backdoor roth contributions.
I think my choices are:

1. Let the Empowerment transfer happen, then when employed at future company, roll Empowerment, as well as the IRA into future company 401K.
2. Pre-empt the Empowerment transfer by rolling the old 401K into my IRA before Jan 31st. Then move that to future company 401K when allowed to.

Should I just hold off? I’m kind of frustrated that my retirement money is changing from entirely Fidelity, to Fidelity and John Hancock upon company sale, to now Fidelity, John Hancock AND Empowerment come January 31st……..

Alan S.
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Re: 401k Rollover Timing

Post by Alan S. » Fri Jan 11, 2019 1:57 pm

It depends on how driven and optimistic you are about finding a new job with an employer with a decent 401k plan that also accepts rollovers from other plans. Of course, there are several other considerations than just their 401k that you must consider before terminating. Most plans that accept rollovers do so from either an IRA (but sometimes only from a rollover IRA) or an employer plan. The larger the employer the more likely they are to have a good plan that also accepts rollovers. If you are optimistic about the search being successful, it is easier to wait. Otherwise, roll the present plan to an IRA.

If you roll to an IRA, you will eventually have 3 direct rollovers. One for the current balance to an IRA, another for deferrals you make to the current employer after the IRA rollover, and another to roll the IRA to your new employer plan.

Topic Author
BostonButterfly
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Re: 401k Rollover Timing

Post by BostonButterfly » Fri Jan 11, 2019 2:30 pm

Thanks Alan. I was thinking that I could roll into my existing rollover IRA, but it sounds like from what you've said if I roll now, it will be to a separate additional IRA. That seems like I would be creating more headaches for myself.

Is there anything I should watch out for regarding the transfer of the 401K to Empowerment? It seems like I have no say in what happens. They will cash out my investments, I will be out of the market for three weeks, and then they'll place me in a money market like fund until I make my elections. There's nothing I can do but just sit and watch, correct?

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BL
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Re: 401k Rollover Timing

Post by BL » Fri Jan 11, 2019 2:37 pm

Do you have the right to transfer out of your 401k while working?

Topic Author
BostonButterfly
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Re: 401k Rollover Timing

Post by BostonButterfly » Fri Jan 11, 2019 2:47 pm

I'm now considered not employed with the company of the 401K in question. The company was sold, and I'm now employed by the acquiring company.

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Earl Lemongrab
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Re: 401k Rollover Timing

Post by Earl Lemongrab » Fri Jan 11, 2019 3:10 pm

BostonButterfly wrote:
Fri Jan 11, 2019 2:47 pm
I'm now considered not employed with the company of the 401K in question. The company was sold, and I'm now employed by the acquiring company.
That wasn't the question. Have they confirmed that you can take distribution of the 401(k) funds?

Topic Author
BostonButterfly
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Location: Boston

Re: 401k Rollover Timing

Post by BostonButterfly » Fri Jan 11, 2019 3:14 pm

Earl Lemongrab wrote:
Fri Jan 11, 2019 3:10 pm
BostonButterfly wrote:
Fri Jan 11, 2019 2:47 pm
I'm now considered not employed with the company of the 401K in question. The company was sold, and I'm now employed by the acquiring company.
That wasn't the question. Have they confirmed that you can take distribution of the 401(k) funds?
I haven't asked specifically. Maybe I assumed incorrectly, but if I'm no longer employed by the company that holds that 401K, don't I have the right to roll it over to and IRA?

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Earl Lemongrab
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Re: 401k Rollover Timing

Post by Earl Lemongrab » Fri Jan 11, 2019 7:45 pm

BostonButterfly wrote:
Fri Jan 11, 2019 3:14 pm
I haven't asked specifically. Maybe I assumed incorrectly, but if I'm no longer employed by the company that holds that 401K, don't I have the right to roll it over to and IRA?
I think it depends to a degree on the terms of the acquisition.

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