Should You Rollover Your Old Employer’s 401(k)? #AskTheMoneyGuy
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As you move from one job to another, you might be wondering what to do with your old employer’s 401(k) plan. Should you keep it where it is or roll it over to your new plan or an IRA? The answer depends on your individual circumstances and long-term financial goals.
First, let’s understand what a rollover is. It refers to the transfer of funds from one retirement account to another without incurring taxes or penalties. There are two types of rollovers: direct and indirect. In a direct rollover, the funds are transferred directly from one account to another. The indirect rollover involves withdrawing the money in the form of a check and depositing it into a new account within 60 days.
Here are some factors to consider before deciding whether to rollover your old employer’s 401(k):
1. Investment Options:
One of the primary factors in your decision should be the investment options available in your old and new employer’s plans. If your old plan has better investment options, such as lower fees or better returns, it may be a better idea to keep it. However, if the new plan provides more diverse investment options or lower fees, you may want to roll over your old plan.
2. Fees:
Fees are an essential factor when making rollover decisions. Does the old plan have high management or administrative fees? If yes, then rolling over the plan into an IRA might help reduce the expenses.
3. Employer Match:
If your old employer’s plan had an employer match, you need to understand the vesting schedule. If the vesting schedule takes several years to become 100% vested, you might want to roll over the funds into an IRA to avoid forfeiting the money.
4. Required Minimum Distributions (RMDs):
When you reach age 72, you’re required to take RMDs from your retirement accounts. However, if you’re still working in your sixties and have not yet retired, you may be exempt from RMDs. If you roll over your old 401(k) into an IRA and plan to continue working in your sixties, you could avoid RMDs temporarily.
5. Ease of Management:
Having multiple 401(k) plans can be challenging to manage. It’s simpler to consolidate your old 401(k)s into one IRA. In addition, an IRA allows you to have more control over investment options, leading to ease of management.
In conclusion, should you rollover your old employer’s 401(k)? You should consider the factors listed above, along with your personal financial goals and circumstances, before making a decision. Whether you roll it to an IRA or your new employer’s plan, a rollover can be a valuable financial move in the long run. Just remember to do your research, consult a financial advisor, and make an informed decision that aligns with your financial goals. #AskTheMoneyGuy
My employer is going to be switching to a different 401k broker, so my question is, when they switch over will they be transferring my assets? or will they be selling my assets and transferring my funds? Cause right now with the market down and if I sell out of my assets well then I lose about 20% or 30% of my capital.
Should I rollover when market is good or bad ?? It make a difference maybe
Man, you guys are telling me I need to know something about my various 401k investment vehicles? Lame! You're supposed to provide the 1 step solution to all of my problems! </sarc>
I recently separated from the military and am trying to figure out if I should transfer my TSP to my new employer. They are both great retirement plans, but my thought process is that if I transfer my money to my new employer then in the long run I will yield greater return due to compound interest from the one large account rather than having two separate accounts with lower value. Is that a good thought process or am I misunderstanding how rate of return works?
Do they take out fees or tax when you rollover your old 401k to new employer?
What concerns me about rolling over is this…what if I roll over at a time when one or more of my funds are, as an example, down 15%? Aren't I essentially realizing a substantial loss in those positions?
I am capable of handling 2 accounts. Why roll over?
But isn't a larger sum of money better for exponential growth? Thus, consolidate / rollover makes the most sense?
I'm a stay at home mom now but have two different traditional 401(k) accounts with previous employers that have been going on for awhile (both in target retirement index funds, one through Vanguard and one through ADP). QUESTION: Can I roll them over to my husband's traditional IRA so we have all pre-tax investments together?
Wish I learned this stuff in school. Thank you!!!
I love your channel! I have a question and would greatly appreciate your feedback. I am saving 15% in my employers traditional 401k and about 2% in a Roth IRA. My wife is a teacher and has a pension that will pay her the average of her last three years salary. What’s the best way to account for my wife’s pension as a household? In other words, how does my wife’s pension influence how I should be saving for our retirement? Hopefully this comment reaches you and makes sense.
I have 401k my employer now offers roth 401k. My question is should I roll over half of money in to Roth 401k. Please respond thank you
What about compounding? Isn't that a thing with 401Ks? As much as I would like to have control over the investment of the dollars with a trad IRA, I also love the power of compounding. Unless I am missing something, shouldn't this be why rolling over to your new employer's 401k be the way to go?
Thanks for the very helpful video! But, when retirement fund "Grows up!" at 4:01, I felt just a little scared for the other traffic on the road…lol
When you rollover a 401k, I guess the government doesn’t care anymore what was the initial contribution, right? Cause you tax it when you remove it?
Good job on this video
So what somebody explain…… A rollover is selling and then takin that money n puttin it in say a roth ira? Or is it actually transferring over those investment funds into another retirement accnt with a diff brokerage house?
Once I quit . Can I pay the penalty to do an early withdrawal, and start flipping cars & houses with my money ?. Is there rules what to do with it . I just want to triple the money so don't have to worry as bad .
Great video, I have an 403b $65K account in my old job recently I opened an account with Fidelity. I would like to roll over this old account into Fidelity, but I don’t know should roll into a 401k or pay taxes and roll over a Roth IRA?
I am getting ready to start a new job and i had a good 401k retirement plan through Vanguard with company matching and worked over 15yrs and was fully vested. This new job has a 401k through ADP and you have to be there 6-months before joining, i am wondering .. can i just leave my 401k where it is after i leave my current job and then after 6-months when i join new employers 401k just do a rollover IRA ? This is all confusing to me, thanks in advance for any comments
if I did a rollover of my old employer set up roth 401K to an IRA, would I be able to separate employer contributions from my roth deferal contributions and then use the CARES act to pull money out of my roth IRA tax free?