What to do with old 401K?

[frugalredhead]

I have just over $11,000 in an old 401K and I left the company about 9 years ago. Am I better off rolling this over to my current company's 401K, or rolling it into an IRA? And if an IRA, Roth or traditional?

I am within the income limits for a Roth IRA, but I am seeing that I will have to pay taxes to convert it. I have about $50K in my current companies 401K plan.

Let me know if you need any other details!

[Petunia 100]

My preference is to roll to your own IRA. 401k plans often (not always) have high fee structures, and you are limited in your investment choices. When you open an IRA, you choose the custodian and investment(s).

Whether or not to convert traditional to Roth is a separate decision. You have to look at your entire financial picture to make a good call on this.

[ktmarvels]

I rolled my 401Ks from 2 separate jobs into a Vanguard traditional 401k. We use Vanguard for most everything investing-wise so I knew I wouldn't forget about it. We chose to keep it traditional to maintain our diversification as we already contribute to Roth IRAs and to prevent having to pay taxes on the money.

We are still far away from retirement (early 30s), so the lower costs associated with Vanguard outweigh a lot. However I believe that employer 401k's don't have minimum distributions whereas traditional IRAs do. So if you are closer to retirement I would consider looking into this further to see if it makes a difference.

[Petunia 100]

I rolled my 401Ks from 2 separate jobs into a Vanguard traditional 401k. We use Vanguard for most everything investing-wise so I knew I wouldn't forget about it. We chose to keep it traditional to maintain our diversification as we already contribute to Roth IRAs and to prevent having to pay taxes on the money.

We are still far away from retirement (early 30s), so the lower costs associated with Vanguard outweigh a lot. However I believe that employer 401k's don't have minimum distributions whereas traditional IRAs do. So if you are closer to retirement I would consider looking into this further to see if it makes a difference.

401ks are subject to RMDs. If you are still working when you turn 70.5, you may delay your RMDs until you retire, if your plan allows it.

http://www.irs.gov/Retirement-Plans/RMD-Comparison-Chart-(IRAs-vs.-Defined-Contribution-Plans)

[ktmarvels]

Thanks for that info. I guess it was the "or retire" part that made me think it was different. I hope to be retired long before 70.5, so that shouldn't apply to us. Thanks.

[realbankingadvice]

Hello frugalredhead,

The first thing I would take a look into is the performance of you current 401K investment.

If you believe that you are growing at a decent rate with that account, I would suggest that you just roll the old 401K over to your new plan.

Now if the investment option in your current employers 401K seem scarce and the performce in north of conservative, than a Tradional IRA would be a better option.

Take advantage of the tax benefit associated with the traditional.

Unless you have a need for liquidity in your retiremnt account, I would not venture into a Roth IRA

Best of Luck

Louis

[JohnM.Hendricks]

Traditional IRA advantages are tax deductible on both state and federal tax returns for the year you make the contribution, while withdrawals in retirement are taxed at ordinary income tax rates. So with traditional IRAs, you avoid taxes when you put the money in. Traditional IRA is better option.

[ScottRUnderwood]

My opinion is to roll over your current company's 401K it will be the better option but if you are looking for IRA then you should compare both the plans yourself and choose the which suit you.

[Weird Tolkienish Figure]

I have just over $11,000 in an old 401K and I left the company about 9 years ago. Am I better off rolling this over to my current company's 401K, or rolling it into an IRA? And if an IRA, Roth or traditional?

I am within the income limits for a Roth IRA, but I am seeing that I will have to pay taxes to convert it. I have about $50K in my current companies 401K plan.

Let me know if you need any other details!

I left mine as is. Don't put all your eggs in one basket.

[bjl584]

Older thread, but I'd roll it into an IRA. More choices and lower expenses.

[frugalredhead]

Might be an old thread, but I still haven't done anything about it! I've never had an IRA, is there a best company to go through to set one up? I think I've sen Vanguard named here before as a good one, is that correct? Before I can do anything, I need to get my name changed on the account (I got married over 9 years ago and never changed it, and now I can't find my marriage certificate.) I know it's in my house, just need to figure out where!

[Chris73]

I just found this thread. If you are still looking for your marriage certificate, you can get a certified copy of it from the courthouse in the county in which you were married. A certified copy should also include a raised seal. There is a nominal fee...maybe $15 or so. I've had to do this before.

[frugalredhead]

Thanks, I may just have to do that! I hate to spend even $15 when I know it's in my house somewhere, but I just don't know where it is!

I rolled over my old 401K to an IRA with Vanguard, and plan on contributing more to it once our credit card debt is paid off.

[JodieWRoberts]

My preference is to roll to your own IRA. 401k plans often (not always) have high fee structures, and you are limited in your investment choices. When you open an IRA, you choose the custodian and investment(s).

Whether or not to convert traditional to Roth is a separate decision. You have to look at your entire financial picture to make a good call on this.

Yeah exactly, taking a look at all your roll of IRA and financial status will helps to clear your doubts.