changing Jobs, what would you do with 401k

[robertg]

I'm about to change jobs and have about 130k in my 401k. As I understand it, I can roll that into IRA's, without any penalty. Or in 180 days I can roll it into my new employers 401k. I have no experience in this at all, what would you guys recommend. Where's the best return on IRA's?or is there a benefit to rolling it into my new 401 k when that oportunity arises? Help.

[bja]

robertg - great question. First off, a 401k & an IRA are just accounts its the investment you hold within them that generate the return for you. So to answer your question "what's the best return on IRA's" - it can vary greatly. Some people put all there money in to one investment and if that does very well or it may do very poorly. I would suggest you diversify these assets in to many different mutual funds or solid stocks & bonds. This will ensure you don't blow your retirement money.

If you are married and have kids I would definitly suggest you roll your current 401k money in to an IRA. This will ensure you don't lose your money to taxes should something happen to you it will be easier for your spouse your children to keep that money and not give it up to the government.

If you choose to do this make sure you find someone who knows what they are doing and invest that money according to your goals. Like I said - find about 5-6 good mutual funds or exchange traded funds. This would be the best way to getting about a 10-12% average return over a 10yr period. If you choose to invest in stocks do so wisely, its not easy. If you don't have the knowledge or experiance then don't do it.

One final point...if you roll in to your new employer's plan the only investment choices you have are the ones they give you. Most likey they will give you list of mutual funds to choose from. Also, like I said previously if something happens you to your spouse will have to pay taxes on the money she receives. If you go with the IRA it will transfer directly to her name and defer taxes until she withdrawals from the IRA at retirement. It's much more advantageous to be in the IRA for those couple reasons.

Let me know if you have any more questions.

[robertg]

Thanks BJA,
I had no idea about the tax advantage to IRA's should something happen to me. My ultimate goal is to live, but I know the birth to death ratio was at 1/1
last time I checked so I'll definately go with transfering current 401k into ira's.
My wife thanks you.

robert

[bja]

Robert - You're welcome! If you need any ideas once you transfer your money let me know. You want to make sure you diversify yourself properly and not take an big risky bets on stocks. Once you have that money it will be easier to access which depending on your personality could be good or bad! haha. Make sure you get some advice on how to invest the money!

Take care,
Brent

[Hoosiercatdaddy]

what is the penalty for wearly withdrawl of 401k? Isnt it like 35% -40%??? Or something close to those robbery terms

[NY Mane]

Personally, I would transfer it to a no-load mutual fund IRA. You will not lose any money and you will pay no taxes on it. Vanguard has great no load funds. No load = no upfront fees. The IRA grows tax-free just like a 401(k). You will be taxed when you withdrawal at retirement. Do not go to a CFP or broker because he/she will tell you to transfer it to a fund that they have a financial stake in. You will pay upfront fees out of the $130K that will go into their pockets. And then you will be charged a monthly or quarterly fee out of your pocket into their pocket. And then any deposits you make will have a percentage taken out and put into the CFP's pocket.

Call Vanguard, their fees are so low. I have $20K in VFORX. No 12-b fees, no upfront fees and no deferred sales charge fees. Do some research. You will find that a lot of fund managers rip off the public.

[NY Mane]

10 Reasons You Should Never Buy a Load Fund:

http://mutualfunds.about.com/gi/dyna...504%28b%29.htm


Low cost funds:

http://mutualfunds.about.com/gi/dyna...wCostFunds.htm

[bja]

No loads are fine as long as you're ok with always underperforming the market - I mean you have NO chance of outperforming it.

i.e, Market performance - internal expense ratio (which they all have, even if there 10bps)

If you want to go that route try Powershares.com > these are ETF's and trade on the exchange ALL day so you have liquidity. And the annual expenses are only .40-.70%! These are black box ETF's and they DO outperform their benchmarks.

[bja]

Originally Posted by Hoosiercatdaddy

what is the penalty for wearly withdrawl of 401k? Isnt it like 35% -40%??? Or something close to those robbery terms

you have to pay ordinary income taxes + 10% early withdrawal penalty

[bja]

Originally Posted by NY Mane

Personally, I would transfer it to a no-load mutual fund IRA. You will not lose any money and you will pay no taxes on it. Vanguard has great no load funds. No load = no upfront fees. The IRA grows tax-free just like a 401(k). You will be taxed when you withdrawal at retirement. Do not go to a CFP or broker because he/she will tell you to transfer it to a fund that they have a financial stake in. You will pay upfront fees out of the $130K that will go into their pockets. And then you will be charged a monthly or quarterly fee out of your pocket into their pocket. And then any deposits you make will have a percentage taken out and put into the CFP's pocket.

Call Vanguard, their fees are so low. I have $20K in VFORX. No 12-b fees, no upfront fees and no deferred sales charge fees. Do some research. You will find that a lot of fund managers rip off the public.

I would go with a self service broker if you go that route...like etrade & buy some ETF's.

[bja]

There are good reasons for CFP's etc...but usually not till your up over $500k or so...maybe even more depending on how complex your situation really is.

I agree with NY...save some dough on the broker, just make sure you dont blow yourself up!

[robertg]

Since I've changed employers, there is no tax penalty to transfer to IRA's. Or there better not be.

[bja]

no to do a direct rollover from a 401k to an IRA within 60 days there is no tax consequences...you're fine.

[jonnyblaze]

Forget all this shit, tkae the penalty and cash it out. HAve the greatest two months of your life including drinking, f*cuking, gambling, smoking, traveling and live to tell about it.


You only live once hommie.

[elopez]

Originally Posted by NY Mane

Personally, I would transfer it to a no-load mutual fund IRA. You will not lose any money and you will pay no taxes on it. Vanguard has great no load funds. No load = no upfront fees. The IRA grows tax-free just like a 401(k). You will be taxed when you withdrawal at retirement. Do not go to a CFP or broker because he/she will tell you to transfer it to a fund that they have a financial stake in. You will pay upfront fees out of the $130K that will go into their pockets. And then you will be charged a monthly or quarterly fee out of your pocket into their pocket. And then any deposits you make will have a percentage taken out and put into the CFP's pocket.

Call Vanguard, their fees are so low. I have $20K in VFORX. No 12-b fees, no upfront fees and no deferred sales charge fees. Do some research. You will find that a lot of fund managers rip off the public.

Tough to make a blanket statment like that... I would have never found out about my largest holding (agthx) if it weren't from my broker.

It has a 10 year average annual return (including loads and fees of 12+%) vs Vanguards S&P 500 fund's 7+%.

Its the largest fund in America with almost $150 billion in it, I doubt that many people/institutions are dumb....