What to do with old 401K

[meadowrue]

I started a new job this month. Both my previous employer and current employer have Charles Schwab as their 401K provider. Can anyone explain the pros/cons to rolling my old 401K into my new 401K (consolidate) vs opening up a new IRA? I don’t want to leave my old 401K as is because the investment options aren’t great. I like the new 401K plan but Schwab is giving me the option to open an IRA if I choose.

If it makes a difference, I will be receiving a lump sum pension payout of around $50K at the end of this year (old employer ended their pension plan). I will need to put it somewhere, tax-deferred.

I’m leaning towards just moving old 401K into new 401K but I want to make sure I’m not missing anything important. Thanks for the help.

[noraz123]

... Can anyone explain the pros/cons to rolling my old 401K into my new 401K (consolidate) vs opening up a new IRA? I don’t want to leave my old 401K as is because the investment options aren’t great. I like the new 401K plan but Schwab is giving me the option to open an IRA if I choose.

As a general rule, rolling over your old 401k to the new 401k is better than opening an IRA as it keeps your option open for backdoor Roth IRA contributions. I believe there may be better legal protection if you are ever sued as well, but will let others confirm this.

However, an IRA has benefit of being able to choose from any etf, mutual fund, stock, etc to invest in vs limited choices your employer's 401k offers.

If you like your new employer's fund choices, I would rollover your old 401k to the new one and skip the IRA.

[Jack FFR1846]

I always eye this on the down side first.

Say you roll the old 401k into your new employer's 401k. While it's a nice Schwab managed account, you are now trapped in that 401k until you quit. Now let's say that the Hartford's account manager buys the CEO enough alcohol encrusted steak dinners and convinces him to move from Schwab to the Hartford. And let's say that in the process, the manager shows the CEO how instead of the company paying all administrative costs how these costs can be either directly charged as quarterly administrative fees to employees or that funds be restricted to over 1% ER funds. So now you're stuck with a garbage, high cost plan. I talk about this scenario because I worked for a company where something like this happened and I was stuck with the garbage plan. But in my case, it was only the small amount I had put into this company's 401k as I rolled the previous employer's plan into an IRA.

Second example from direct experience. DW had a great 401k with Fidelity in a former employer account. Since we calculate family AA, her single investment there was a Vanguard bond fund at a rate lower than Vanguard charges peons. I watched the account like a hawk and for 10 years, the company covered all administration fees. Then the turn of the new year and BAM. On the summary page was an administration fee of 0.5%. Well, compared to the 0.02% she was paying for the bond fund, this was unacceptable. She immediately transferred the account to her IRA. If she was still working at the place, she'd now be saddled with that administration fee. Being in the IRA, she's not.

Say you move your old 401k to Schwab or Fidelity in an IRA. Say the company (Schwab or Fidelity) goes whacky and imposes a 2% account maintenance fee. You can immediately transfer it out. You can't do that with the 401k.

[meadowrue]

Thanks for the replies. Clearly, there are good arguments on both sides!

[ruralavalon]

I started a new job this month. Both my previous employer and current employer have Charles Schwab as their 401K provider. Can anyone explain the pros/cons to rolling my old 401K into my new 401K (consolidate) vs opening up a new IRA? I don’t want to leave my old 401K as is because the investment options aren’t great. I like the new 401K plan but Schwab is giving me the option to open an IRA if I choose.

If it makes a difference, I will be receiving a lump sum pension payout of around $50K at the end of this year (old employer ended their pension plan). I will need to put it somewhere, tax-deferred.

I’m leaning towards just moving old 401K into new 401K but I want to make sure I’m not missing anything important. Thanks for the help.

The rollover decision depends almost entirely on the funds offered and expenses charged, information you have not yet provided. What funds are offered in the current employer's plan? Please give fund names, tickers and expense ratios. Are any additional fees charged to plan participants, and if so what are they?

You seem to imply that the new 401k plan offers better funds with lower expense ratios, so it's probably best to do a rollover of the old 401k account into the current employer's plan.

In some states an ERISA plan like a 401k offers better protection from creditors than does an IRA.

You can have penalty-free withdrawals from a 401k at an earlier age than from an IRA (age 55 versus 59.5), which is nice if early retirement is hoped for.

Sometimes a 401k offers a good Stable Value Fund or Guaranteed Income Fund, which makes it useful to stay with a 401k rather than an IRA.

Rollover to an IRA can prevent use of a Backdoor Roth IRA, which is useful for investors who have high income or who want more tax-advantaged accounts.

I suggest making the rollover decision based on actual current fscts, rather than on guesses about future changes.

[Goal33]

,
You are now trapped in that 401k until you quit

Not true (at least in many cases). In both my account and my wife’s account, the rollover portions have always been available to withdraw/rollover again.

[meadowrue]

Thanks for all the helpful replies. I will look up fund names so I can give more details. But essentially, I don’t want to have anything affiliated with previous employer. I don’t trust how they run their business and don’t know if my 401K is safe with them. Though perhaps it’s insured somehow?

[lakpr]

,
You are now trapped in that 401k until you quit

Not true (at least in many cases). In both my account and my wife’s account, the rollover portions have always been available to withdraw/rollover again.

I was going to make this point too. The amount I rolled over from my previous employer plan is specially designated as "Rollover Account" within the plan, and is available for roll-out to an IRA if I am ever inclined to do so, including growth. I rolled over $102k, right now the value of that investment is about $157k (was as high as $181k before it took a hit). I can roll over entire $157k and not just $102k.

That said, I do believe this is indeed extremely plan specific. My plan also lets me convert employer match funds (also tracked separately within the plan) to Roth, should I so choose. While these funds cannot move out of the plan, a Roth conversion option is available, so I can do some tax optimization. The employEE contributions will retain their contribution type: Roth or Traditional, until retirement or separation from employment.

[ Edited to add: The technical terms that my MegaCorp plan uses are: "In-Plan Roth Rollover of Distributable Amounts" and "In-Plan Roth Rollover of Non-Distributable Amounts". The rollover funds, and the Mega Backdoor -- aftertax funds to be rolled to Roth -- are the first variety. The employer match funds are the latter variety ]

Then also again, Jack's point is very much relevant. OP (@meadowrue) would have to definitely read through the Summary Plan Description document of the new 401(k), and ask questions about what flexibility does the plan provide for rolled-over funds.

[lakpr]

Thanks for all the helpful replies. I will look up fund names so I can give more details. But essentially, I don’t want to have anything affiliated with previous employer. I don’t trust how they run their business and don’t know if my 401K is safe with them. Though perhaps it’s insured somehow?

401(k) funds by ERISA law are required to be segregated from employer business activities. Anything less than full compliance with the law, the employer faces stiff sanctions and the plan would get shut down immediately.

I would not be worried about the funds in the plan themselves, only about the fees. Employer can choose to not cover administrative costs for participants who are no longer with the employer; that is allowed and compliant with the law. Employer can also choose to change the investment options, but that would affect every participant.

If you are otherwise happy with the plan, no need to let your distaste for your former employer cloud your judgment about the 401(k) plan that they offered.

[meadowrue]

Thanks for all the helpful replies. I will look up fund names so I can give more details. But essentially, I don’t want to have anything affiliated with previous employer. I don’t trust how they run their business and don’t know if my 401K is safe with them. Though perhaps it’s insured somehow?

401(k) funds by ERISA law are required to be segregated from employer business activities. Anything less than full compliance with the law, the employer faces stiff sanctions and the plan would get shut down immediately.

I would not be worried about the funds in the plan themselves, only about the fees. Employer can choose to not cover administrative costs for participants who are no longer with the employer; that is allowed and compliant with the law. Employer can also choose to change the investment options, but that would affect every participant.

If you are otherwise happy with the plan, no need to let your distaste for your former employer cloud your judgment about the 401(k) plan that they offered.

This is helpful, thanks. Re other posters, I will inquire about rollover options with new employer’s plan. I vaguely recall previous employer’s plan allows for “Roth conversions” but I need to check. Might be an advantage? I’m not in a tax bracket to need a Roth right now. Still trying to max tax-advantaged accounts but I know down the road, it might be important.

[lakpr]

This is helpful, thanks. Re other posters, I will inquire about rollover options with new employer’s plan. I vaguely recall previous employer’s plan allows for “Roth conversions” but I need to check. Might be an advantage? I’m not in a tax bracket to need a Roth right now. Still trying to max tax-advantaged accounts but I know down the road, it might be important.

If it's the case that the previous employer's plan allows Roth conversions and the current plan does not, then if I were you, I would definitely keep the money in the old plan for this flexibility; why give it up? UNLESS, I find an irritant such as being charged additional administrative fees than what I would have paid as an employee.

Note that I do something along the similar lines. My MegaCorp 401(k) plan has only one bond fund, Metropolitan West Total Return Fund, at an expense ratio of 0.38%. My previous (another one, not that employer whose funds I said I rolled into the current plan) employer has an option of VBTIX, the institutional version of the total bond market index fund at 0.04%. So I buy all my fixed income in the old employer plan, and invest 100% into S&P 500 index fund at my current employer plan, while maintaining a 70:30 asset allocation. With the amount of money left in the old employer plan, I need to contribute at least 12 more years maximizing the 401(k) plan limit before I would run out of stocks to sell and buy bonds in the old 401k plan. By which time, I expect to retire ..

[meadowrue]

I have some more details! Not including every option but both plans have all the same Target Date funds, and I’m ignoring the really high expense ratios across the board. Both allow for Roth conversions.

Old employer 401K
VINIX (Vanguard Inst. Index)- 0.035%
VIEIX (Vanguard Extended Market) - 0.05%
TRLGX (T. Rowe Price Large Cap Core Growth) - 0.55%
FOCSX (Fidelity Small Cap Growth) - 0.6%
VTSNX (Total Int) - 0.08%
MGRDX (MFS Int. Growth) - 0.7%
VBTIX ((Total Bond) - 0.035%
Reliance MetLife (stable value) - 0.61%

New employer 401K
VINIX - 0.035%
VMCIX (Vanguard Mid Cap) - 0.04%
VSCIX (Vanguard Small Cap) - 0.04%
TPLGX (T. Rowe Price Inst. Large Cap Growth) - 0.56%
VTSNX (Vanguard Total Int) - 0.08%
RERGX (American Funds Europacific Growth) - 0.46%
VBTIX (Vanguard Total Bond) - 0.035%
VAIPC (Vanguard Inflation Protected Admiral Shares) - 0.1%
Invesco Stable Value - 0.18%

Still leaning towards rolling old plan into new plan. Thinking of the following AA:
50% VINIX
15% VMCIX
10% VSCIX
15% VTSNX
10% VBTIX

My current (old employer) AA is:
46% VINIX
26% VIEIX
18% VTSNX
10% VBTIX

Appreciate any thoughts or suggestions!

[ruralavalon]

I have some more details! Not including every option but both plans have all the same Target Date funds, and I’m ignoring the really high expense ratios across the board. Both allow for Roth conversions.

Old employer 401K
VINIX (Vanguard Inst. Index)- 0.035%
VIEIX (Vanguard Extended Market) - 0.05%
TRLGX (T. Rowe Price Large Cap Core Growth) - 0.55%
FOCSX (Fidelity Small Cap Growth) - 0.6%
VTSNX (Total Int) - 0.08%
MGRDX (MFS Int. Growth) - 0.7%
VBTIX ((Total Bond) - 0.035%
Reliance MetLife (stable value) - 0.61%

New employer 401K
VINIX - 0.035%
VMCIX (Vanguard Mid Cap) - 0.04%
VSCIX (Vanguard Small Cap) - 0.04%
TPLGX (T. Rowe Price Inst. Large Cap Growth) - 0.56%
VTSNX (Vanguard Total Int) - 0.08%
RERGX (American Funds Europacific Growth) - 0.46%
VBTIX (Vanguard Total Bond) - 0.035%
VAIPC (Vanguard Inflation Protected Admiral Shares) - 0.1%
Invesco Stable Value - 0.18%

Still leaning towards rolling old plan into new plan. Thinking of the following AA:
50% VINIX
15% VMCIX
10% VSCIX
15% VTSNX
10% VBTIX

My current (old employer) AA is:
46% VINIX
26% VIEIX
18% VTSNX
10% VBTIX

Appreciate any thoughts or suggestions!

Both plans offer good, diversified, index funds with very low expense ratios, you fortunate. It's great that both plans permit Roth conversions.

I suggest rollover of the old account into the new plan.

I suggest simply using just Vanguard Institutional Index I (a S&P 500 index fund, covers 80% of the U.S. stock market) (VINIX) by itself for investing in in U.S. stocks. I don't see a need to add an extended market fund or small-cap and mid-cap funds.

The U.S./ex-US asset allocation is within the range of what is reasonable in my opinion.

I can't comment on the stock/bond asset allocation without knowing more about you and your personal ability, willingness and need to take risk. What is your age? About how long until expected retirement? Do you have have debt? Do you have dependents? Will you be eligible for both a substantial pension and Social Security benefits? Do you you have other accounts? Do you have a very large emergency fund?

How have you reacted in the most recent market crashes? Did you continue regular contributions during recent market crashes? Did you increase contributions? Did you sell off any investments?

[meadowrue]

I have some more details! Not including every option but both plans have all the same Target Date funds, and I’m ignoring the really high expense ratios across the board. Both allow for Roth conversions.

Old employer 401K
VINIX (Vanguard Inst. Index)- 0.035%
VIEIX (Vanguard Extended Market) - 0.05%
TRLGX (T. Rowe Price Large Cap Core Growth) - 0.55%
FOCSX (Fidelity Small Cap Growth) - 0.6%
VTSNX (Total Int) - 0.08%
MGRDX (MFS Int. Growth) - 0.7%
VBTIX ((Total Bond) - 0.035%
Reliance MetLife (stable value) - 0.61%

New employer 401K
VINIX - 0.035%
VMCIX (Vanguard Mid Cap) - 0.04%
VSCIX (Vanguard Small Cap) - 0.04%
TPLGX (T. Rowe Price Inst. Large Cap Growth) - 0.56%
VTSNX (Vanguard Total Int) - 0.08%
RERGX (American Funds Europacific Growth) - 0.46%
VBTIX (Vanguard Total Bond) - 0.035%
VAIPC (Vanguard Inflation Protected Admiral Shares) - 0.1%
Invesco Stable Value - 0.18%

Still leaning towards rolling old plan into new plan. Thinking of the following AA:
50% VINIX
15% VMCIX
10% VSCIX
15% VTSNX
10% VBTIX

My current (old employer) AA is:
46% VINIX
26% VIEIX
18% VTSNX
10% VBTIX

Appreciate any thoughts or suggestions!

Both plans offer good, diversified, index funds with very low expense ratios, you fortunate. It's great that both plans permit Roth conversions.

I suggest rollover of the old account into the new plan.

I suggest simply using just Vanguard Institutional Index I (a S&P 500 index fund, covers 80% of the U.S. stock market) (VINIX) by itself for investing in in U.S. stocks. I don't see a need to add an extended market fund or small-cap and mid-cap funds.

The U.S./ex-US asset allocation is within the range of what is reasonable in my opinion.

I can't comment on the stock/bond asset allocation without knowing more about you and your personal ability, willingness and need to take risk. What is your age? About how long until expected retirement? Do you have have debt? Do you have dependents? Will you be eligible for both a substantial pension and Social Security benefits? Do you you have other accounts? Do you have a very large emergency fund?

How have you reacted in the most recent market crashes? Did you continue regular contributions during recent market crashes? Did you increase contributions? Did you sell off any investments?

Thanks for the advice. I thought about the 3-fund portfolio and will definitely reconsider. I don’t like complexity but I do like diversification. As to the other Qs:
I am OK with risk. I increase contributions when markets are down. I once sold out of a highly volatile growth fund in my HSA but took a profit and decided VTSAX was better for me. I could set it and forget it vs the volatile fund that I kept itching to track daily. Risk is good but I don’t need the biggest rollercoaster ride.
43 years, stable job, not too much debt (small mortgage and small HELOC which I’m aggressively paying down). Hoping to retire at 62, but it might be 65!
Should have good SSI. Getting a lump sum pension of $50K this year from old employer. New employer contributes around 20% of my salary per year to retirement.

[Duckie]

I suggest simply using just Vanguard Institutional Index I (a S&P 500 index fund, covers 80% of the U.S. stock market) (VINIX) by itself for investing in in U.S. stocks. I don't see a need to add an extended market fund or small-cap and mid-cap funds.

I thought about the 3-fund portfolio and will definitely reconsider. I don’t like complexity but I do like diversification.

If you want to add the mid/small caps be aware that they are less than 20% of US assets. So your listed 25% of mid/small caps is a little high. 20% of 75% is no more than 15%.

[ruralavalon]

I am OK with risk. I increase contributions when markets are down. I once sold out of a highly volatile growth fund in my HSA but took a profit and decided VTSAX was better for me. I could set it and forget it vs the volatile fund that I kept itching to track daily. Risk is good but I don’t need the biggest rollercoaster ride.
43 years, stable job, not too much debt (small mortgage and small HELOC which I’m aggressively paying down). Hoping to retire at 62, but it might be 65!
Should have good SSI. Getting a lump sum pension of $50K this year from old employer. New employer contributes around 20% of my salary per year to retirement.

Is that ("New employer contributes around 20% of my salary per year to retirement") an employer contribution to your 401k account, or an employer funded pension plan?

[meadowrue]

I suggest simply using just Vanguard Institutional Index I (a S&P 500 index fund, covers 80% of the U.S. stock market) (VINIX) by itself for investing in in U.S. stocks. I don't see a need to add an extended market fund or small-cap and mid-cap funds.

I thought about the 3-fund portfolio and will definitely reconsider. I don’t like complexity but I do like diversification.

If you want to add the mid/small caps be aware that they are less than 20% of US assets. So your listed 25% of mid/small caps is a little high. 20% of 75% is no more than 15%.

Thanks for this advice. Does it make sense to have both midcaps and small caps? Could I just go with midcaps at 15% and put an extra 10% into VINIX to achieve my goal of a little more diversification and higher risk/reward without ramping up the risk too much?

[meadowrue]

I am OK with risk. I increase contributions when markets are down. I once sold out of a highly volatile growth fund in my HSA but took a profit and decided VTSAX was better for me. I could set it and forget it vs the volatile fund that I kept itching to track daily. Risk is good but I don’t need the biggest rollercoaster ride.
43 years, stable job, not too much debt (small mortgage and small HELOC which I’m aggressively paying down). Hoping to retire at 62, but it might be 65!
Should have good SSI. Getting a lump sum pension of $50K this year from old employer. New employer contributes around 20% of my salary per year to retirement.

Is that ("New employer contributes around 20% of my salary per year to retirement") an employer contribution to your 401k account, or an employer funded pension plan?

It’s an employer funded ESOP which can be diversified into a 401K every year, if desired. I had another thread about that because that’s another decision I will need to make down the road! Really appreciate this forum for helping me make smarter, more thoughtful financial decisions.

[rocketman2]

Does it make sense to have both midcaps and small caps? Could I just go with midcaps at 15% and put an extra 10% into VINIX to achieve my goal of a little more diversification and higher risk/reward without ramping up the risk too much?

With VINIX, it doesn't make sense to have midcaps, since VINIX (S&P 500) already covers a large portion of the index VMCIX uses (CRSP Mid Cap).* As such, you should only use VSCIX.

As a rule of thumb, if you are weighting by market cap, the ratio of VINIX to VSCIX should be around 6 to 1. That means if you are putting 75% in US stocks, around 65% should be in VINIX and 10% in VSCIX.

* I believe all except ~50 or so stocks in CRSP Mid Cap are in the S&P 500. To confirm, you can compare the portfolio composition of VOO and VO. Notice that the top holdings of VO appear in VOO also, starting around page 15 of the holdings list.

[meadowrue]

Does it make sense to have both midcaps and small caps? Could I just go with midcaps at 15% and put an extra 10% into VINIX to achieve my goal of a little more diversification and higher risk/reward without ramping up the risk too much?

With VINIX, it doesn't make sense to have midcaps, since VINIX (S&P 500) already covers a large portion of the index VMCIX uses (CRSP Mid Cap).* As such, you should only use VSCIX.

As a rule of thumb, if you are weighting by market cap, the ratio of VINIX to VSCIX should be around 6 to 1. That means if you are putting 75% in US stocks, around 65% should be in VINIX and 10% in VSCIX.

* I believe all except ~50 or so stocks in CRSP Mid Cap are in the S&P 500. To confirm, you can compare the portfolio composition of VOO and VO. Notice that the top holdings of VO appear in VOO also, starting around page 15 of the holdings list.

This is so helpful, thank you!

[tetractys]

I started a new job this month. Both my previous employer and current employer have Charles Schwab as their 401K provider. Can anyone explain the pros/cons to rolling my old 401K into my new 401K (consolidate) vs opening up a new IRA? I don’t want to leave my old 401K as is because the investment options aren’t great. I like the new 401K plan but Schwab is giving me the option to open an IRA if I choose.

If it makes a difference, I will be receiving a lump sum pension payout of around $50K at the end of this year (old employer ended their pension plan). I will need to put it somewhere, tax-deferred.

I’m leaning towards just moving old 401K into new 401K but I want to make sure I’m not missing anything important. Thanks for the help.

If your new 401K has satisfactory index funds with very low expense ratios and covered fees then go ahead and roll into that. Otherwise transfer into a Rollover IRA at Vanguard where ERs are low AND you’ll never be surprised by hidden fees.

[ruralavalon]

Thanks for this advice. Does it make sense to have both midcaps and small caps? Could I just go with midcaps at 15% and put an extra 10% into VINIX to achieve my goal of a little more diversification and higher risk/reward without ramping up the risk too much?

"In a 401(k) plan with limited choices you might very well opt for an S&P 500 index fund to serve as the domestic stock component of a three-fund portfolio." Wiki article, Three-fund portfolio, Other considerations.

In my opinion Vanguard Institutional Index I (VINIX) is good enough by itself for investing in U.S. stocks. VINIX is a S&P 500 index fund, which covers 80% of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies. In the 30 years since the creation of the first total stock market index fund the performance of the two types of funds has been almost identical. Portfolio Visualizer, 1993-2023 I used the oldest share classes to get the longest possible period for comparison.

Some years one fund type was a little bit ahead, some years the other fund type was a little bit ahead. (Currently portfolio visualizer shows that a S&P 500 index fund has had a higher return, higher Compound Annual Growth rate [CAGR], lower volatility [Stdev], and a higher risk-adjusted return [Sortino ratio]. The differences are small, and will change over time.) So it seems that adding small-cap and more mid-cap has had no significant impact performance.

For anyone who wants to mimic the content of a total stock market index fund the wiki gives several formula for Approximating total stock market.

[ruralavalon]

I am OK with risk. I increase contributions when markets are down. I once sold out of a highly volatile growth fund in my HSA but took a profit and decided VTSAX was better for me. I could set it and forget it vs the volatile fund that I kept itching to track daily. Risk is good but I don’t need the biggest rollercoaster ride.
43 years, stable job, not too much debt (small mortgage and small HELOC which I’m aggressively paying down). Hoping to retire at 62, but it might be 65!
Should have good SSI. Getting a lump sum pension of $50K this year from old employer. New employer contributes around 20% of my salary per year to retirement.

Is that ("New employer contributes around 20% of my salary per year to retirement") an employer contribution to your 401k account, or an employer funded pension plan?

It’s an employer funded ESOP which can be diversified into a 401K every year, if desired. I had another thread about that because that’s another decision I will need to make down the road! Really appreciate this forum for helping me make smarter, more thoughtful financial decisions.

That's fairly unusual, I did not expect that, but is a nice feature.

Returning to the stock/bond asset allocation issue, asset allocation is a very personal decision which must be based on your own individual ability, willingness and need to take risk.

At age 43 I commonly suggest about 20-30% in bonds or other fixed income investments (fixed income can include bonds, bond funds, I-bonds, CDs, savings accounts, a Stable Value Fund or Guaranteed Income fund, money market funds). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019),"The Best Diversifiers for Your Equity Portfolio", link;
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?", link;
5) White Coat Investor (9/23/2016), "In Defense of Bonds", link;
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?", link;
7) Morningstar (4/13/2021), "Which Bonds Provide the Biggest Diversification Benefits?", link; and
8) Age versus stocks graph, and Bogleheads' stock allocations bar graph and table.

I hope that this helps.

[krafty81]

Speaking from a CEO perspective, I want the best deal for my employees. We are about to ditch an old 403b for a much better one. One "drain" on our plan, however, is the fact that 25% of the accounts are "ghosts" that no longer work at our large non-profit. If you really want to stick it to your old company, keep their old 401k - there is still a "per head" cost to the previous employer if you do.

[meadowrue]

Speaking from a CEO perspective, I want the best deal for my employees. We are about to ditch an old 403b for a much better one. One "drain" on our plan, however, is the fact that 25% of the accounts are "ghosts" that no longer work at our large non-profit. If you really want to stick it to your old company, keep their old 401k - there is still a "per head" cost to the previous employer if you do.

Haha! Love this advice. Still don’t even want to see their name pop up when I log onto Charles Schwab. I don’t want to stick it to them. I just want to wash my hands of them.

[meadowrue]

I am OK with risk. I increase contributions when markets are down. I once sold out of a highly volatile growth fund in my HSA but took a profit and decided VTSAX was better for me. I could set it and forget it vs the volatile fund that I kept itching to track daily. Risk is good but I don’t need the biggest rollercoaster ride.
43 years, stable job, not too much debt (small mortgage and small HELOC which I’m aggressively paying down). Hoping to retire at 62, but it might be 65!
Should have good SSI. Getting a lump sum pension of $50K this year from old employer. New employer contributes around 20% of my salary per year to retirement.

Is that ("New employer contributes around 20% of my salary per year to retirement") an employer contribution to your 401k account, or an employer funded pension plan?

It’s an employer funded ESOP which can be diversified into a 401K every year, if desired. I had another thread about that because that’s another decision I will need to make down the road! Really appreciate this forum for helping me make smarter, more thoughtful financial decisions.

That's fairly unusual, I did not expect that, but is a nice feature.

Returning to the stock/bond asset allocation issue, asset allocation is a very personal decision which must be based on your own individual ability, willingness and need to take risk.

At age 43 I commonly suggest about 20-30% in bonds or other fixed income investments (fixed income can include bonds, bond funds, I-bonds, CDs, savings accounts, a Stable Value Fund or Guaranteed Income fund, money market funds). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019),"The Best Diversifiers for Your Equity Portfolio", link;
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?", link;
5) White Coat Investor (9/23/2016), "In Defense of Bonds", link;
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?", link;
7) Morningstar (4/13/2021), "Which Bonds Provide the Biggest Diversification Benefits?", link; and
8) Age versus stocks graph, and Bogleheads' stock allocations bar graph and table.

I hope that this helps.

Thank you so much for taking the time to share this. I will study it at length and really appreciate the advice.