I think one thing people should consider whether to roll one’s old 401k into his or her new employer’s 401k plan is that if you’re 55 or older and you are laid off, you are able to tap your CURRENT 401k without penalty (ordinary taxes will apply). I know the Money Guy(s) will strongly advise against tapping one’s retirement account before retirement, but if you run out of your emergency funds, this may be the only option. Hopefully none of us will have to make this choice, but it’s always good to know about this option and to be prepared.
That is an important point. You have some flexibility there if you do absolutely need it or have so much in your 401k you want to retire a little early. I heard the rules of your employer plan might only allow a one distribution vs continued withdrawals so that is a potential gotcha to watch for...
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?
One thing that maybe needs to be mentioned is it is very dificult to find out how much you are actually paying in fees for your 401k, well at least in my case. Wish these companies would be more up front with there expenses instead of being all sneaky about it.
There is more legal protection in a 401k over an IRA too. But I believe, at least here in CA, if you roll over from a 401k to an IRA, as long as it is under, I believe $1.4 million, you can't lose that in a lawsuit either. The other thing is, if you are 55 and you leave that employer and leave your 401k alone, you can make penalty free withdrawals. If you roll it into an IRA, you have to wait until you are 59 1/2. I rolled mine over because you never know when the company will change plans and if I die, my beneficiaries would have to track down my old employer. Then I converted it from Prudential, who had very few choices and mostly expensive choices to Schwab which had thousands of choices and almost no cost. I went from paying fees of .8 - 1.5 % in Prudential to .04 - .09% in Schwab - a huge difference.
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?
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?
I’m wondering the same thing I just changed my work status and now I have 2 401k under the same company and the same 401k management… adding to that already stablished fund should grow exponentially compared to starting from 0
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?
Question: my former employer sold the company and now i have been given the option to access my ESOP stocks which is around 28,000. I want to use the funds to purchase a home but am not sure what is more beneficial. Do I cash out and get penalized the 20% which would leave me with roughly 22,000 and then get screwed during tax season? Or do I roll it over to a RIA until am actually ready to buy a home? Any advised is appreciated.🙏
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.
2:17 you mention roth conversion strategy, I had an old employer get brought out so I had the option to convert my pension to a roth ira, which I did and now the old 401k account is also getting switched from fidelity to empower, I was planning on rolling this 401k to an IRA. Will this impact the taxes on future roth conversions?
Hi! What if you have an outstanding 401K loan with you Walmart/Merril Lynch 401K but you can't afford to totally pay it off before you go to your new job next week? Merril Lynch, thru Walmart is very strict. They will NOT let me continue to make bi weekly paycheck deduction payments. What can I do? I feel like I will be butchered. In general, can I just roll it over on my new job?
I wanted to rollover my 401 K account (Employer’s plan with MassMutual ) to new employer who has associated with Fidelity. Will there be any hidden fees / charges/ deductions / internal operating expenses ?
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.
Regarding the 401k rollover, does the money you rollover get added to your current one? Let's say 20k in old 401k, and 10k in new 401k. After rollover you can invest the 30k in your specific fund?
It gets added to your current account, but the administrator of your 401k is still tracking the source and performance of those dollars. They do the same thing with employer match and profit sharing too.
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?
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?
Reading this comments makes me realize I'm going to crush most of you in retirement. You never not ever borrow money from your 401k unless you're going to be homeless. let it grow and use it for its purpose retirement. Not trying to sound like a douche but a 401k is for retirement only. Donate plasma sell your car and buy a cheaper one, don't take money out of your 401k. Think about what you would do if you didn't have the money.
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 .
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?
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 the Vanguard plan is better than the ADP plan - you always have the option of leaving it at Vanguard. Make sure you have a vested balance over $5k so that you are not impacted by automatic distribution rules 👍
@@MoneyGuyShow THANKS! yes i have way more than $5k in it .. my 10yr return is nearly 11% , been in the 401k since 2005 .. glad to know i can leave it there. Next March i will be eligible for new employers 401k (ADP) and at that time will have the big decision whether to roll over my current 401k plan into the new employers or leave it where it's at
NEVER roll over to a new employer. The employer can change their plan even if it is good now so roll it into your account. You are wrong that you take a penalty on a withdrawal if over 55. When over 55 you do not but you still pay taxes on it. If you are going to be unemployed for some time you may want to withdrawal part. If you do then you want to watch timing. You may be able to time after year end to make taxable event the following year. You must not roll over first. See the plan rules. Keeping in a 401k or rolling over an amount may allow you to still take out a loan against your 401k up to $50k and you are NOT allowed to do that for a self directed rollover IRA. While taking out 401k loans is frowned upon it can be and easy source of emergency funds. I have done this in the past to buy rental property with cash then pay the loan back paying myself. This could be a consideration in the difference of accounts.
Yes, but usually you cannot take out a loan on a 401k unless you are still employed there and once you end your employment, it has to be paid back, usually in 60 days or you get taxed and penalized just as if it were a withdrawal. Loans from 401k's are on an employer plan basis.
No loans after you depart, and I remember stating that it was 55 in 401ks (if you have separated from employment) and not 59.5, but maybe that was another episode we recorded 😏
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!
