Roll over or keep it there?

[cptacek]

I have about $84,000 in my 401(k). My division of my company is being sold next week to a private equity firm, and so we will have the chance to do one of three things:

1) Keep the money with the old 401(k) - which is with Fidelity
2) Roll the money over to the new 401(k) plan - which will pretty much be a duplicate of the old 401(k) plan (except the option to buy the old company stock)
3) Roll the money over to a self directed IRA

I have been fairly aggressive in my fund picks because I thought this money was for 30 years from now, not next week. I have the following investments in the 401(k):
45.2% - S&P 500 index
15.95% - Company stock (more about this high percentage later)
9.5% - Pimco Total Return (a bond fund)
8.37% - Vang Morgan Grth Adm (large cap growth)
7.65% - TCW Value Opps CL I (mid cap blend)
7.59% - Vanguard PRIMECAP Fund Admiral Shares (large cap growth)
5.74% - Hartford MidCap Fund HLS IA (Mid Cap growth)

As for the Company stock, when I first started to invest, I only put in 4%, since that is what the company matched, and they matched it all with company stock. I have since upped my contribution to 17% and they still match dollar for dollar on 4%, but is matched based on my contribution percentages. The percentage of the company stock in my portfolio has slowly dropped (it was at 50% at one time!!!) and I have transferred some of it to the S&P fund in the past. Since the announcement of the sale, I haven't touched it because "everyone" said that the sale will raise the price of the stock. (not so much)

My contributions are as follows:
40% - S&P 500 index
5% - Company stock
15% - Pimco Total Return (a bond fund)
10% - Vang Morgan Grth Adm (large cap growth)
10% - TCW Value Opps CL I (mid cap blend)
10% - Vanguard PRIMECAP Fund Admiral Shares (large cap growth)
10% - Hartford MidCap Fund HLS IA (Mid Cap growth)

I also have ~$9500 in my Roth IRA (a growth fund) and ~$11,000 in a taxable MF (a growth-and-income fund). $4000 more is on its way to the Roth in the next couple of weeks, and I contribute ~$50 a month to the taxable MF.

Ok, my question is, which of the three options do I do?

Another wrinkle is that it was announced that we will get a $.255/share cash dividend on May 1 to shareholders of record as of April 3 (on the company stock). So, assuming that the concensus is to move the money somewhere, do I wait until after May 1 to do it? Or, if I move it sometime between April 3 and May 1, what happens to that money?

[jIM_Ohio]

The dividend does not factor in, as the dividend reduces the value of the stock and increases the number of shares (it is a zero sum game... no advantage or disadvantage either way).

My suggestion is to roll this over into an IRA. This was YOU have control of this, not your old company, not your new one, but YOU.

Takes about 30 minutes to download the forms and fill out. If you like Fidelity, call them and tell them what you want to do, and they may fill the forms out for you.

[Ima saver]

I would also roll the money over into a self directed IRA.

[cptacek]

I thought dividends were good?

[jIM_Ohio]

dividends are good when dealing with long term investing, but whether you sell now, or sell after dividend will not matter.

If stock is $100/share and you have 25 shares, which pay a $1.00 dividend.

before:

25 shares, $100/share total $2500

after

25 shares, $99.00 share (subtract dividend from share price) total $2475,
$25 earned from dividend buys 25/99=.253 shares

so 25.253*$99.00=$2500

zero sum game (the dollar value of account remains constant).

[anonymous_saver]

I agree, I would do a direct rollover to an IRA to a place like Vanguard because of their low fees.

However, I would re-think your distributions amounts. You are being a bit redundent with have an Index 500 and the other funds in your account. You may wish to consolidate these a bit just to have a bit more ease when looking at it. I can't tell by quickly looking, but do you have an International Index fund? That may be a good idea to think about. Maybe have 15% of your money in an international fund could help round out your portfolio. Plus if you have a Roth IRA, you could even transfer some IRA money each year into your Roth IRA from your direct rollover so you don't have to be taxed on it when you retire.

What is your age by the way, that could potentially change how we all look at your question.

[cptacek]

I'm 29 and single, but hoping to become a fiance here shortly

As for what you say here:
"Plus if you have a Roth IRA, you could even transfer some IRA money each year into your Roth IRA from your direct rollover so you don't have to be taxed on it when you retire."
does transferring from an IRA into the Roth IRA affect the Roth IRA contribution for that year? I think I would rather keep adding to the Roth IRA than sit that year out so I could transfer from the IRA.

[jIM_Ohio]

conversion does not count as contribution

[MonkeyMama]

Other things to consider (because I am keeping money in an old 401k).

1 - you may have access to mutual funds otherwise closed
2 - Depends on fees (I pay none and can invest as little as $1k in each fund if I so desire.

However, the reason this appeals to me so much is that my overall retirement balance are relatively low. So I have an easy way to diversify into many funds with no cost or minimum considerations. My 401k is with Fidelity but many funds offered from other fund companies.

However, I plan to triple my retirement balance in the next few years and will likely rollover this amount to a self-directed IRA as my money grows. I am frustrated by lack of choices, but enough sweet choices that I couldn't get otherwise, I Am keeping for now. I do go back and forth on this. For now I am really pleased with the funds - all in 1 place without paying a borker.

Overall though, given the choice to roll to another 401k or an IRA I Would go for the IRA. Nothing beats money you have under your control, you can do whatever you want with it really. Vs. being stuck with certain funds and fees, etc.

I would only keep it in the old 401k in the meantime if you have excellent choices and lower fees than otherwise. As for me I can pick up and roll out anytime, why I would not consider rolling it to another 401k. Then it would be tied down and rife with restrictions.

But had to share some reasons why you may want to stay with it for ther short-term.

[jIM_Ohio]

I agree on the closed fund issue... just make sure if you make the decision to keep the 401k it's a GOOD closed fund. Not all closed funds are created equal.

Vanguard Health care or a good small cap fund would be much different than a closed balanced fund (which are dime a dozen, IMO).

[trainedmonkey]

I would rollover to a self directed IRA. I prefer Fidelity as a platform. A self directed IRA will give you choice among several fund families and not the limited choices you have in your 401K.

I would take advantage of the opportunity to roll any money in a limited plan into an unlimited plan. In a self directed IRA you'll have choice among stocks, bonds, stock funds, bond funds, etc.

[MonkeyMama]

That was why I had Fidelity Intl Discovery - I forgot that one was closed. Excellent Fund! But I just traded it for Dodge & Cox Intl, in my 401k. I am thinking I should open that one on my own though since I don't intend to keep my 401k forever - fear that one may close to new investors. Something to keep in mind for open funds you like in your old 401k.