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Message
Just opened a Vanguard account.401k rollover done...help allocating funds?
Posted on 1/15/16 at 3:58 pm
Posted on 1/15/16 at 3:58 pm
Let me preface this by saying I have only very surface level knowledge of mutual funds, ETFs, and stocks and I know I'm wading into some deep water here. However, recently I've decided to finally do a rollover from a previous employer's 401k into a traditional IRA. This 401k was basically automatically set up to pick from variety of funds, stocks, etc so I never touched it besides contributing from my paycheck.
All of the funds from the 401k are on their way to the Settlement Fund I set up which as I understand is basically the loading dock before deciding where to invest specifically in next. Once that happens...I have no idea where to go from there. Obviously I'd like to diversify as much as possible, but short of picking names on a list, I don't know what I'm doing here. I tried calling the investment "help line" and didn't get much specific help there either.
All of the funds from the 401k are on their way to the Settlement Fund I set up which as I understand is basically the loading dock before deciding where to invest specifically in next. Once that happens...I have no idea where to go from there. Obviously I'd like to diversify as much as possible, but short of picking names on a list, I don't know what I'm doing here. I tried calling the investment "help line" and didn't get much specific help there either.
This post was edited on 1/27/16 at 2:51 pm
4
Posted on 1/15/16 at 4:06 pm to Brettesaurus Rex
Are you two years from retirement or twenty years from retirement? Lots of questions that would be specific to your situation. Based on what you've said so far, probably best to select a low cost target date fund... and stay away from individual stocks.
Good luck.
Good luck.
Posted on 1/15/16 at 4:11 pm to Jag_Warrior
I'm 26...so a long ways from retirement.
And another thing I'm not fully understanding. The account I have set up has a 5500 max contribution to it, which is where I plan on sending my pre-tax regular deposits. But what if I just want to buy some stock of companies I'm interested in separate from that, does that have to be done through the same IRA and count towards the yearly limit?
And another thing I'm not fully understanding. The account I have set up has a 5500 max contribution to it, which is where I plan on sending my pre-tax regular deposits. But what if I just want to buy some stock of companies I'm interested in separate from that, does that have to be done through the same IRA and count towards the yearly limit?
This post was edited on 1/15/16 at 4:12 pm
Posted on 1/15/16 at 4:15 pm to Brettesaurus Rex
You have an IRA (rollover) account right now. That's why it has a $5500 annual contribution limit. You can also set up a separate trading account and fund it with as much money as you desire.
Posted on 1/15/16 at 4:18 pm to Jag_Warrior
Ahhh ok. So I can treat my IRA rollover account like my 401k with regular contributions...and then I guess another account for anything else. Keeping the IRA pre-tax and then I guess the other one post-tax?
Posted on 1/15/16 at 6:52 pm to Brettesaurus Rex
Just get in the habit of contributing monthly to max it out for the year.
If you want to do specific stocks you can make broker account (I think that's the term lol)
I've got a Ira. I'm probably going to open another account with a few mutual funds since I don't want to deal with individual stocks.
If you are still clueless, read some help sites on Vanguard. Or give them a call.
If you want to do specific stocks you can make broker account (I think that's the term lol)
I've got a Ira. I'm probably going to open another account with a few mutual funds since I don't want to deal with individual stocks.
If you are still clueless, read some help sites on Vanguard. Or give them a call.
Posted on 1/15/16 at 7:49 pm to Brettesaurus Rex
quote:
Just opened a Vanguard account....now what?
Posted on 1/15/16 at 9:31 pm to RebelOP
Just threw my first contribution in. Fun fact I just learned, I can still contribute to my 2015 $5,500 limit all the way through April, which should help when I got to do my taxes.
No sense in touching 2016 until I've put as much as I can in to lower the 2015 first right?
No sense in touching 2016 until I've put as much as I can in to lower the 2015 first right?
Posted on 1/15/16 at 9:37 pm to Brettesaurus Rex
In my opinion Vanguard is a good choice. You admit that you are rather new at this. I think you should put the rollover into the Vanguard Total Stock Market mutual fund instead of trying to pick individual stocks. It is a diversified stock fund and has low management fees. You do not need any bonds at your young age.
Once you gain more knowledge you can begin to pick individual stocks in an account outside of your IRA.
Once you gain more knowledge you can begin to pick individual stocks in an account outside of your IRA.
Posted on 1/15/16 at 9:48 pm to PlanoPrivateer
Thanks for the advice
That was the long term plan, to have the IRA and then maybe a separate account for individual stocks I was interested in.
That was the long term plan, to have the IRA and then maybe a separate account for individual stocks I was interested in.
Posted on 1/15/16 at 10:06 pm to Brettesaurus Rex
What is considered an average or good expense ratio? For example the one you mentioned is at .17%. Which as I'm reading means they take .17% every year to cover "managing" the account?
Posted on 1/16/16 at 5:41 am to Brettesaurus Rex
Depending on the amount of money in the rollover, it might make sense to take the tax hit now and convert it to a Roth. Might want to at least investigate that option so any future growth will be tax free.
Posted on 1/16/16 at 6:35 am to Brettesaurus Rex
.17 is not very expensive at all. Cheapest isn't always the best, but for your situation low cost index funds with a good allocation would be fine.
Posted on 1/16/16 at 8:07 am to Lsut81
quote:
btw, max your 2015 Roth IRA prior to tax day
That's the current goal.
I also need to figure out whether converting to a Roth is a good idea or not. I've done some reading but I still can't really tell. My 401k was traditional so I transfered it to a traditional, but I'm assuming I can converter to a Roth at anytime.
I'm a 1099 employee taking my own taxes out so based on the few articles I read thought it might be better to keep the tax benefits now. Can't you claim/deduct whatever you put in for that tax year? Hence another reason I was trying to hurry and Max out 2015
Posted on 1/16/16 at 9:11 am to Brettesaurus Rex
quote:
I also need to figure out whether converting to a Roth is a good idea or not. I've done some reading but I still can't really tell. My 401k was traditional so I transfered it to a traditional, but I'm assuming I can converter to a Roth at anytime.
I am by no means an expert, but I would leave your current 401k in the standard IRA since it was pre tax. I'd imagine the tax implications could get tricky.
Begin funding a Roth IRA from your pay check. Put a few hundred a pay check towards your roth. Your Roth should be the first thing you max, since it is tax free gains.
Posted on 1/16/16 at 2:33 pm to Lsut81
It looks like if opened a Roth, I would still be held to the 5500 total contribution between them.
The more I'm reading I'm wondering if the traditional wouldn't be better because of the possible tax deduction. I'm 1099 so I'm looking for as many of those as possible. However, I also read being able to do that may be hampered by factors such as your SO having a retirement plan at work. Even though she doesn't contribute herself, only her company, I'm wondering if that still qualifies as the "active participant" disqualifier/limiter?
Anyone have experience / knowledge of that?
Eta: goddammit. Looks like none will be able to be deducted because of her having a plan at all, even though only the company contributes puts us over the combined limit. This sucks. Maybe Roth is the way to go.
The more I'm reading I'm wondering if the traditional wouldn't be better because of the possible tax deduction. I'm 1099 so I'm looking for as many of those as possible. However, I also read being able to do that may be hampered by factors such as your SO having a retirement plan at work. Even though she doesn't contribute herself, only her company, I'm wondering if that still qualifies as the "active participant" disqualifier/limiter?
Anyone have experience / knowledge of that?
Eta: goddammit. Looks like none will be able to be deducted because of her having a plan at all, even though only the company contributes puts us over the combined limit. This sucks. Maybe Roth is the way to go.
This post was edited on 1/16/16 at 3:28 pm
Posted on 1/16/16 at 3:27 pm to Brettesaurus Rex
You can start with a traditional (and use it for 401k and/or pension rollovers for when you change jobs). And you can also have a Roth, which may come in handy if/when you're no longer able to contribute to the traditional (and get a deduction) because of income limitations.
Considering your age, who knows where taxes will be in 40 years? Many advisors are now suggesting the mix and match approach with regard to traditional and Roth retirement plans. Give yourself as many options as you can.
Considering your age, who knows where taxes will be in 40 years? Many advisors are now suggesting the mix and match approach with regard to traditional and Roth retirement plans. Give yourself as many options as you can.
Posted on 1/16/16 at 4:48 pm to Jag_Warrior
Two points.
First, if your balance in the Vanguard Total Stock Market Index fund is $10,000 or more you qualify for Admiral status and the annual expense ratio drops to 0.05%.
Second and potentially more important you said,
Edited to correct spelling from well to will.
First, if your balance in the Vanguard Total Stock Market Index fund is $10,000 or more you qualify for Admiral status and the annual expense ratio drops to 0.05%.
Second and potentially more important you said,
quote:If I understand you correctly, you are self employed. As such you are eligible to set up plans that will permit you contribute more than $5500 per year. Call Vanguard and speak with a rep. They will be happy to help you with this.
I'm 1099 so I'm looking for as many of those as possible.
Edited to correct spelling from well to will.
This post was edited on 1/16/16 at 4:50 pm
Posted on 1/16/16 at 5:53 pm to PlanoPrivateer
I'm right at 10k so I'd be putting it all in that. Which if that's already a pretty broad fund I don't mind and the expense ratio dropping that much is also very nice.
They did tell me about a SEP-IRA...but I'm hoping to be converted over to a W2 employee at some point so I'm not not sure I'd want to go that route right now.
They did tell me about a SEP-IRA...but I'm hoping to be converted over to a W2 employee at some point so I'm not not sure I'd want to go that route right now.
Posted on 1/16/16 at 6:50 pm to PlanoPrivateer
quote:
First, if your balance in the Vanguard Total Stock Market Index fund is $10,000 or more you qualify for Admiral status and the annual expense ratio drops to 0.05%.
If they offer admiral on the investments he wants and not all admirals are .05%
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