Move 401K?

[ksgirl39]

Hello! I'm new here.

I left my last employer in September last year. I have about $12,000 in a 401K plan through Nationwide. I haven't moved it yet. Last year the company deposited profits from the company in everyone's accounts so I'm sort of waiting to see if I still get that or not before doing anything. Last year it didn't hit until March 31st. Once that happens I'm trying to decide if I should move my money or leave it where it is. I have a separate Roth IRA that I set up a couple of years ago that I was originally considering transferring the money to, but now I'm wondering if it would be best to keep it separate. I've heard that it's best to combine accounts to save on fees. On the other hand I'm also wondering if it would be best not to put all my eggs in one basket so to speak and keep them separate just in case something happened with one. Any advice?

Thank you.

[Like2Plan]

ksgirl39,
First question:
Will your old company allow you to keep your 401k funds with them?
Second question:
What are the fees and expenses with associated with keeping your 401k funds with the old company?
Third question:
Are you happy with your current 401k investments?

If your are allowed to keep your funds with the old company, the fees and expenses are lower than you could otherwise get elsewhere and you are happy with your currrent investments then I would leave the money where it is.

[bUU]

Will your old company allow you to keep your 401k funds with them?

I asked a similar question about my own situation a few weeks ago on another forum and someone graciously pointed out that 401(k) plans have never been allowed to kick people out of the plan once they had a certain amount of money in the plan, right now that number being $5,000. That poster posted the actual part of ERISA that covered this, but I cannot find it this morning. I have found a reference to it:

401(k) - Bogleheads

[disneysteve]

Keep in mind that you can't transfer your 401k to your Roth, or at least not directly. You can do a rollover IRA. Then you could convert that to a Roth but you'll have to pay taxes on the money at that point. So if you have 12K in the 401k and are in the 25% tax bracket, getting it into a Roth will cost you $3,000 in taxes.

[bUU]

Beginning in 2013, you may also now be able to convert your traditional 401(k) balance into a Roth 401(k) if your employer offers that, though as a former employer, that's doubtful.

I think this will all hinge on whether you are being charged fees on your 401(k) and what investment options you have (i.e., the quality of the fund choices, and the expense ratios for the funds you're invested in there). We'll need that info before we can really advise you further.

[Like2Plan]

I asked a similar question about my own situation a few weeks ago on another forum and someone graciously pointed out that 401(k) plans have never been allowed to kick people out of the plan once they had a certain amount of money in the plan, right now that number being $5,000. That poster posted the actual part of ERISA that covered this, but I cannot find it this morning. I have found a reference to it:

401(k) - Bogleheads

bUU,
Thanks. I knew there was a minimum amount, but I didn't know it was 5,000. Thanks for the reference, too.

[Like2Plan]

Beginning in 2013, you may also now be able to convert your traditional 401(k) balance into a Roth 401(k) if your employer offers that, though as a former employer, that's doubtful.

I think this will all hinge on whether you are being charged fees on your 401(k) and what investment options you have (i.e., the quality of the fund choices, and the expense ratios for the funds you're invested in there). We'll need that info before we can really advise you further.

Expanding on the investment option question-- another thing that is necessary to know is if the OP holds company stock.

[thesimplemoneyblog]

Another consideration about whether to wait until the employer contributes funds is if you will be "vested" in the contribution the company is making. Depending on your plan setup and what type of contribution it was from the employer, you may not be entitled to keep all of their contribution. However, since you are no longer employed there, your vesting percentage can't increase over time like it would if you still worked there, so waiting beyond the contribution date wouldn't make a difference from the perspective of how much of the contribution you could keep as a percentage of what they put in.