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Roll into new 401k or roll into ira
Posted on 8/19/10 at 1:51 pm
Posted on 8/19/10 at 1:51 pm
I just became eligible to start contributing to my new companys 401k. I have about 30k in my old one. Should i just roll it into my new 401 or should i roll into an ira.I know there are more funds to pick from in an ira but i will only have that 30k in there and not investing more. Futhermore i have no idea what to buy once i get an ira, so im thinking it would be just as easy to roll it into my new ira... What do you guys think? im 29 if this helps any.
Posted on 8/19/10 at 1:59 pm to keeton350
Roll into an IRA.
Then either invest it all in an index fund or pick 20-30 stocks from the S&P 500.
Either way, you won't have to worry about it until retirement.
Just the opinion from a guy that never had a 401k, so you should probably ignore it.
Then either invest it all in an index fund or pick 20-30 stocks from the S&P 500.
Either way, you won't have to worry about it until retirement.
Just the opinion from a guy that never had a 401k, so you should probably ignore it.
Posted on 8/19/10 at 2:14 pm to TheHiddenFlask
Now I've worked for only one employer (and in my case it's the Feds) but I would NEVER roll an existing account into another company's 401k. If that company (Heaven forbid) goes bust you lose both your current investment AND your prior one.
TheHiddenFlask is right -- roll it into YOUR OWN IRA, then you can decide what investments are suitable for you.
TheHiddenFlask is right -- roll it into YOUR OWN IRA, then you can decide what investments are suitable for you.
Posted on 8/19/10 at 2:48 pm to keeton350
Lord knows if we'll get favorable treatment for capital gains when you take it out, but if there is a benefit for capital gains, you should keep it in the 401K.
When you take it out of the 401K, you'll get capital gain treatment on the earnings (to the extent they qualify). If you roll it over into an IRA, all earning will be ordinary income.
When you take it out of the 401K, you'll get capital gain treatment on the earnings (to the extent they qualify). If you roll it over into an IRA, all earning will be ordinary income.
Posted on 8/20/10 at 8:52 am to Newbomb Turk
quote:
When you take it out of the 401K, you'll get capital gain treatment on the earnings (to the extent they qualify). If you roll it over into an IRA, all earning will be ordinary income.
Capital gains really don't come into play with 401k plans unless you own company stock within the plan that qualifies for NUA treatment. Other than that, if you make pre-tax contributions to the plan all distributions are treated as ordinary income. For post-tax contributions, the gains attributable to those contributions are taxed as ordinary income.
quote:
Roll it into a ROTH ira
This. Unless you are in a 25% or higher tax bracket doing a Roth conversion is a no brainer. In 2010 you can make the conversion. You will have to pay income tax on every dollar you convert, but can defer paying the taxes until you file tax returns for 2011 and 2012. You will be 31 with a retirement plan that will grow tax deferred and will be tax free when you make distributions @ 59.5 yrs old.
Posted on 8/20/10 at 1:35 pm to Quidam65
quote:
Now I've worked for only one employer (and in my case it's the Feds) but I would NEVER roll an existing account into another company's 401k. If that company (Heaven forbid) goes bust you lose both your current investment AND your prior one.
That could not happen unless the OP was 100% invested in the employer's stock and it went to zero. The 401k assets are separate from the employer's assets.
I would do a direct transfer to a traditional IRA with another custodian, brokerage firm, etc. You will find your investment options to be much greater at a brokerage firm than the vast majority of 401k plans at typical employers. Fidelity, Vanguard, Schwab, WellsTrade, etc.
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