Combine 401ks??

[Flipper 61]

I took the buyout and opted for very early retirement ... not sure the end part is smart but there is likely no going back to continue to accrue benefits so take it and move on was the decision.

I have a few 401ks over the seasons and wonder if I should roll them all into a single account or consider other types of investment as well.

Any recommendations?  Maybe financial service providers to avoid (I've had one recommend Fidelity, the main is Merrill).

Thanks ...

[Alias Detective 1,399]

59 minutes ago, Flipper said:

I took the buyout and opted for very early retirement ... not sure the end part is smart but there is likely no going back to continue to accrue benefits so take it and move on was the decision.

I have a few 401ks over the seasons and wonder if I should roll them all into a single account or consider other types of investment as well.

Any recommendations?  Maybe financial service providers to avoid (I've had one recommend Fidelity, the main is Merrill).

Thanks ...

Never combine into a 401k.   You lose a lot of flexibility by doing so.  Roll to your own IRA is the move.  
 

like car maintenance, if you know what your doing and wish to do so Fidelity, Vanguard and alike are options.  If you don’t know how to handle, likely your largest asset, get an advisor based on recommendations from friends.

 

Based on your all in one account question it sounds like you need help from an advisor.

[Alias Detective 1,399]

lastly, since you are GEEK Club rich and have over a million a commission based advisor is your best choice of advisor.  PM me.  

[supermike80 1,906]

5 hours ago, Alias Detective said:

Never combine into a 401k.   You lose a lot of flexibility by doing so.  Roll to your own IRA is the move.  
 

like car maintenance, if you know what your doing and wish to do so Fidelity, Vanguard and alike are options.  If you don’t know how to handle, likely your largest asset, get an advisor based on recommendations from friends.

 

Based on your all in one account question it sounds like you need help from an advisor.

This.  Move into an ira. You can choose the funds you want to invest in. 

[easilyscan 924]

You'll do fine with Fidelity. I have a large taxable account, an existing IRA, an HSA, & just initiated a rollover IRA & am in the process of rolling my Vanguard 401(k) there.

I made one small mistake after retirement. Tried to make a contribution to the existing IRA. Forgot that once you're retired and have no earned income, you can no longer make contributions to a tax deferred retirement accounts. No big deal. One extra line on my tax return & a fine of about $15

 

 

 

[Beaker15 241]

How old are you?  One negative of rolling to an IRA is that there would be a 10% penalty for withdrawals before 59 1/2.  Most 401ks allow for withdrawals after age 55 with no penalty.  If you may need some money from the plan before 59 1/2 keeping in the 401k may make sense.  Otherwise, I agree with rolling to an IRA with more investment options.

[jonmx 2,429]

If you are still fairly young and are in a low tax bracket, the smart move would be to start converting into a Roth IRA.  Both types of IRAs grow tax free, but traditional IRAs count as income and are taxable when you take them out in retirement while Roth IRAs count as income and are taxed now.   There are a couple reasons you might want to pay the taxes now:

1.  Your top tax rate will be higher when you retire.

2.  The additional income when you retire can trigger penalties for SS and Medicare.  Higher income folks pay much higher rates for Medicare for instance.  

3.  Having a mixture of Teaditional and Roth IRAs give you flexibility to optimize your taxes when you make withdrawals particularly if you have an emergency or situation you want to withdraw a large amount in one year. 

[Alias Detective 1,399]

30 minutes ago, Beaker15 said:

How old are you?  One negative of rolling to an IRA is that there would be a 10% penalty for withdrawals before 59 1/2.  Most 401ks allow for withdrawals after age 55 with no penalty.  If you may need some money from the plan before 59 1/2 keeping in the 401k may make sense.  Otherwise, I agree with rolling to an IRA with more investment options.

Good point.  Are you 55 years old or older?

[supermike80 1,906]

2 hours ago, jonmx said:

If you are still fairly young and are in a low tax bracket, the smart move would be to start converting into a Roth IRA.  Both types of IRAs grow tax free, but traditional IRAs count as income and are taxable when you take them out in retirement while Roth IRAs count as income and are taxed now.   There are a couple reasons you might want to pay the taxes now:

1.  Your top tax rate will be higher when you retire.

2.  The additional income when you retire can trigger penalties for SS and Medicare.  Higher income folks pay much higher rates for Medicare for instance.  

3.  Having a mixture of Teaditional and Roth IRAs give you flexibility to optimize your taxes when you make withdrawals particularly if you have an emergency or situation you want to withdraw a large amount in one year. 

And no RMD's with a Roth

[easilyscan 924]

4 hours ago, Beaker15 said:

How old are you?  One negative of rolling to an IRA is that there would be a 10% penalty for withdrawals before 59 1/2.  Most 401ks allow for withdrawals after age 55 with no penalty.  If you may need some money from the plan before 59 1/2 keeping in the 401k may make sense.  Otherwise, I agree with rolling to an IRA with more investment options.

I'm over 59 1/2. When you say that most 401(k)s allow for withdrawals after age 55 with no penalty, I assume you're referring to SEPP 72t method ?

As far as I know, that's the only way you can take withdrawals/distributions before 59 1/2 without penalty. 

https://www.investopedia.com/terms/r/rule72t.asp

[IndyColtsFan 325]

Rolling 401Ks is a big part of what I do for a living. 

What I do with them depends on timeline and objectives.

If it's stick it in something and leave it, with no plans to contribute to it, that's one thing. It actually comes with a percentage match up front. I can put a rider on it that guarantees you can't lose what you put in, but it has to be the right situation. 

If it's something you want to contribute to, that's another thing.

If it's the former but you're wanting something a little bit more conservative, that's another thing. 

 

[Beaker15 241]

7 minutes ago, easilyscan said:

I'm over 59 1/2. When you say that most 401(k)s allow for withdrawals after age 55 with no penalty, I assume you're referring to SEPP 72t method ?

As far as I know, that's the only way you can take withdrawals/distributions before 59 1/2 without penalty. 

https://www.investopedia.com/terms/r/rule72t.asp

No, the rule of 55 allows you to take penalty free withdrawals at age 55 from your 401K if you leave your job.  For example, if you retire at age 55 it may make sense to keep your 401K until age 59 1/2 if you may need funds from your retirement account in the short term.  

[easilyscan 924]

9 minutes ago, Beaker15 said:

No, the rule of 55 allows you to take penalty free withdrawals at age 55 from your 401K if you leave your job.  For example, if you retire at age 55 it may make sense to keep your 401K until age 59 1/2 if you may need funds from your retirement account in the short term.  

I wasn't aware of that. 

Thanks

[Beaker15 241]

13 minutes ago, easilyscan said:

I wasn't aware of that. 

Thanks

You have to be at least age 55 when you retire early for it to work though.  So if you retired at age 53 it does not apply and you would have to pay a 10% penalty on all withdrawals before 59 1/2 whether it be from 401k or IRA.