401(K) and Transferring

[CityGal]

I am on my last week with my current job, and am now having second thoughts about transferring my 401K. Should I leave it in my current employer’s account or transfer into a rollover? Will I incur maintenance fees or any other kind of fees if I leave it here? Is it best just to take it with me?

[WorkInProgress]

Have you talked to your HR to figure that stuff out?

Or maybe the company the 401(k) is through?

[CityGal]

HR just gave me a number to call. It wasn't very "here take my hand and I'll walk you through this" type of business. HR isn't even located where I am. To be honest, I don't even know where they are located.

[analogman]

Call the plan administrator and get the details from them.

Depending on how much money you have, how good the current plan is, and how you plan to invest the money, I think the best thing for now might be to leave it where it is. You should be able to roll it over at anytime in the future. If you roll it over now you will have fewer options in the future (can't roll it into a new company's 401k, etc).

[redav]

If you leave it, I think your former employer may be able to roll it over anyway to get rid of it. Unless you are getting a really good deal (costs, fund options, etc), it probably would be best to take it with you. You can either roll it into your new employer's plan or into an IRA. Probably the best person to talk to would be the company that administers the plan.

[SpaceMonkey]

It's almost always better to roll it over, unless there is a specific fund in your company's 401(k) that you want to keep but would not be able to get as easily somewhere else. You just have so many more options when you roll it over into an IRA, whereas most 401(k) plans only have a few funds available to you. Plus, it gives you the chance to find similar funds with lower expense ratios.

[CityGal]

Thanks for all the advice. Since I'm not sure on how to invest, I was thinking about just keeping the same funds and choosing some other stocks (right now I have the company's stocks).

[SmilesSoSweet]

I couldn't keep my 401k with my old employer for more than a year after I worked there.

I was only 80% vested in my 401k with them, so that was the reason I couldn't just leave it there permanently.

You'd definitely have to ask your old employer about how long you can keep it with them.

[analogman]

I will clarify what I posted somewhat since it seems maybe I didn't fully understand your situation.

I seem to recall that you are leaving work to start graduate school. This means you will either the 401k money at your current employer or roll it over into an individual IRA.

If you choose to roll it into an IRA, I doubt you will be able to roll your IRA into a new employer's 401K when you finish school. There are potentially some fee differences between an individual IRA and 401k that could eat into your returns long term.

1. Account maintenance fees. You may or may not have enough money to not have to pay account fees (on top of the expense ratio you would be paying) depending on which company you choose. I think a lot of companies pay the 401k administration fees so you only pay expense ratios but not account fees.

2. You would conceivably be buying shares with higher fees in an individual IRA than in your current 401k plan. For example, I have access to institutional class shares in my 401k while I only have access to investor class shares in my Roth IRA. Institutional class shares have lower fees so they will have higher returns than investor class shares of the same fund. This difference adds up over time.

It is true that you are likely to have more investment options in an individual IRA but there is likely to be a cost associated with it. In my mind whether you roll your 401k over should depend mostly on company policy, investment options within the plan, and your desired investment vehicles.

[lowbrass]

My answer is, it depends on the variables.

My opinion is, Fidelity is the best place to have a 401k. If that's who your previous employer used, then I recommend that you keep your funds there.

Or, if it's not Fidelity, and your new job does have Fidelity, then transfer it. You won't regret it.

That said, I used to be with a company that had Fidelity as a provider. Unfortunately, my company got bought out, and I'm now forced to give that up for JP Morgan, whose fund selection just doesn't compare. Because I've been assimilated into the bigger company's rules, it appears that I don't have a choice, but I'm going to ask, anyway, if it can stay.

[pepsi91307]

Ahhh man, you reminded me! I haven't checked on m 401k since I left my last job.

Thanks for bringing up this question. It sure relates to me, and gives me info on a question I've had for some time but kept forgetting to follow up on!

[CityGal]

First, thank you all for replying. Second, I think I should've given you all background info, so as to better help you in answering. Better late than never, so here it goes....


I've been with my current employer for about four years. Sometime late last year was when I started investing into the 401k. I only invested up to their match, which was 3%. Really there isn't much money there. I would say about 1500. The company uses Fidelity to manage the accounts. About 75% of my money is in a fund called 2050 (I think) and the other 25% is in the company stocks. I'll be starting grad school in a few weeks, so I won't be switching employers. It will most likely be a good year before I rejoin the workforce. My only real concern about leaving the money where it is now is that I may forget about it. So, what should I do with my little savings?

[redav]

My only real concern about leaving the money where it is now is that I may forget about it. So, what should I do with my little savings?
Don't forget about it!

I would talk to the folks at Fidelity to find out exactly what the plan rules are. Will they automatically kick you out of the plan? Will they change expenses on you? Will there be any fees? All that sort of thing.

If you expect to rejoin the work force in a year or two, it may be best to just leave it where it is for now. That way when you go back to work, you will have the option of rolling it into your new plan.

You own a target fund, which is a fund made up of other funds that adjusts its allocation to match when you want to retire. This type of funds are becoming increasingly popular, so you should be able to get a fund just like it where ever you go. Your 25% in company stock is high. There are some things you could do, but again, it may be best to just wait for a while.

[CityGal]

Don't forget about it!

I would talk to the folks at Fidelity to find out exactly what the plan rules are. Will they automatically kick you out of the plan? Will they change expenses on you? Will there be any fees? All that sort of thing.

If you expect to rejoin the work force in a year or two, it may be best to just leave it where it is for now. That way when you go back to work, you will have the option of rolling it into your new plan.

You own a target fund, which is a fund made up of other funds that adjusts its allocation to match when you want to retire. This type of funds are becoming increasingly popular, so you should be able to get a fund just like it where ever you go. Your 25% in company stock is high. There are some things you could do, but again, it may be best to just wait for a while.


Thanks for all your advice. Will call Fidelity to see what's up.

[twentity]

Just want to put it out there that when you transfer your money, make sure that it is written out to the new accounts name and not to you. Or you would be taxed to death.

[redav]

Just want to put it out there that when you transfer your money, make sure that it is written out to the new accounts name and not to you. Or you would be taxed to death.
If it is made to you (it is a withdrawal rather than a rollover), you have something like 60 days to put it back into an IRA or 401(k). But you are correct, avoiding that entirely is the best thing to do.

I have found that if you simply call the company where you are putting it, they will take care of just about everything.