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Best Practice; Old 401k
Posted on 10/16/24 at 11:24 am
Posted on 10/16/24 at 11:24 am
In the middle of a job change and of course, have a 401k with the former.
I've previously moved one to Vanguard and left another with Fidelity from prior employer.
Pros/cons of moving to a consolidated IRA with Vanguard, leaving, moving into new companies?
I've previously moved one to Vanguard and left another with Fidelity from prior employer.
Pros/cons of moving to a consolidated IRA with Vanguard, leaving, moving into new companies?
6
Posted on 10/16/24 at 11:38 am to Lsut81
quote:
Pros/cons of moving to a consolidated IRA with Vanguard, leaving, moving into new companies
Pros - all in one place, easier to track, more investment options .
Cons - hoses you if you are someone who does a backdoor Roth.
Other option would be to roll it into new employer 401k depending if they allow it or if it has good investment options/expense ratios.
Posted on 10/16/24 at 1:02 pm to Puffoluffagus
Keeping multiple seperate 401k or IRA accounts could be useful if you ever use 72(t) for penalty free early withdrawals. It would give you more flexibility setting up payments.
This post was edited on 10/16/24 at 1:10 pm
Posted on 10/16/24 at 2:47 pm to Lsut81
Following
Same position
Same position
Posted on 10/16/24 at 4:22 pm to Lsut81
Consider the Rule of 55 if you are close enough to age 55 that it affects you.
If you are 55 or older when you leave an employer, you can take withdrawals from that 401K without tax penalty, but ordinary income tax applies. It is only applicable to the 401K at an employer you leave at 55 or older, it doesn't apply to rollovers or old 401K's at other employers from before.
In most instances, it is best to roll over your 401K to an IRA at a brokerage that gives you more investment choices and usually better costs, but if you might retire early, rolling your old 401K into a new employer's 401K might make sense.
If you are 55 or older when you leave an employer, you can take withdrawals from that 401K without tax penalty, but ordinary income tax applies. It is only applicable to the 401K at an employer you leave at 55 or older, it doesn't apply to rollovers or old 401K's at other employers from before.
In most instances, it is best to roll over your 401K to an IRA at a brokerage that gives you more investment choices and usually better costs, but if you might retire early, rolling your old 401K into a new employer's 401K might make sense.
Posted on 10/16/24 at 4:45 pm to Lsut81
quote:Depends on the size of the account and limits of SIPC protection. If that is an issue, consider separating the accounts.
Pros/cons of moving to a consolidated IRA with Vanguard, leaving, moving into new companies?
If one platform performs better in a particular arena than the other (e.g., Fidelity w/ fixed income assets), take advantage of those strengths, even if it means multiple accounts.
If SIPC protection is not a consideration, and all else is equal, go with KISS and consolidate into a single account.
Posted on 10/16/24 at 5:30 pm to Lsut81
I’ve rolled 2 old ones into same Schwab traditional IRA. It’s fun messing around with whatever you want and selling without having to worry about taxes until I’m an old geezer
Posted on 10/16/24 at 6:15 pm to NC_Tigah
quote:
limits of SIPC protection
Isn't it 1m on Roth/Traditional IRAs?
Posted on 10/16/24 at 7:41 pm to NC_Tigah
Is SIPC limit really a significant consideration? Securities are segregated and not vulnerable to creditors even in event of brokerage bankruptcy. The major brokerages also have additional insurance policies in place just in case SIPC limits are ever exceeded.
Posted on 10/16/24 at 8:00 pm to TorchtheFlyingTiger
quote:
Is SIPC limit really a significant consideration?
It's a reason we're working out of several accounts.
quote:Cash and related accounts aren't.
Securities are segregated ... even in event of brokerage bankruptcy.
Posted on 10/16/24 at 8:24 pm to NC_Tigah
You planning to be sitting on $250k+ cash in brokerage?
Posted on 10/16/24 at 8:40 pm to TorchtheFlyingTiger
quote:OK.
You planning to be sitting on $250k+ cash in brokerage?
Yes, it happens, and not infrequently. That's why I mentioned it.
Posted on 10/16/24 at 11:15 pm to Lsut81
Robinhood is offering 3% back if you transfer an IRA to them over $10,000. They also give you 5% on cash.
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