Retirement-Era |OT| How to Invest For Retirement

Tom Penny · Mar 24, 2024

I'll repost this since i put in the stock thread. Within a few years I'm hoping to get a buyout at my job and I'm going to take and attempt a new path /early retirement hopefully

If any of you were to retire in the next few years how would you reallocate an a 90/10 stocks to cash brokerage account and 100% mutual fund sp500 nasdaq index fund 401k?

Smiley90 · Mar 24, 2024

Tom Penny said:
I'll repost this since i put in the stock thread. Within a few years I'm hoping to get a buyout at my job and I'm going to take and attempt a new path /early retirement hopefully

If any of you were to retire in the next few years how would you reallocate an a 90/10 stocks to cash brokerage account and 100% mutual fund sp500 nasdaq index fund 401k?

How early are we talking? Look at what withdrawal rate you'd need to extrapolate 20-50 years out and go from there. A lot more info and math needed!

Chaosblade · Mar 24, 2024

vypek said:
I am starting a new job in a couple of weeks and it made me think about the new retirement account and made me think of a couple questions.

Is there ever any benefit of not rolling over a 401k from a previous employer into something from the new employer? I've been at this current role for a couple of years and didn't think to roll over the account from the employer before that. Now with this new job I'm starting, I'm thinking I should roll both of those 401ks into the one from the new employer. This is the correct move to make, right? There is no reason I should leave them separate?

There's not really any reason to keep them separate but there might be very good reasons to take action on the previous 401K. Companies typically cover fees as part of the retirement benefit, so it's entirely possible that you are losing money to fees with the old account since the company is not paying those for you anymore. Would definitely check into that and get it rolled over, either into the new 401K or a personal 401K from Vanguard/Fidelity.

Ashes of Dreams · Mar 25, 2024

Hey there. I made this thread a few months ago and due to various reasons only tonight got around to setting up the account and I'm a bit overwhelmed.
Is there anyone here familiar with Vanguard, their website, and their ROTH IRAs?

I ask because I just went through the process of setting up an account, linked my bank, told them to transfer the money I'm using from the bank into the account and... I'm not sure what comes next? It says I opened a "ROTH IRA Brokerage Account", but how do I go from that to having the ROTH IRA?

It says it takes a few days to process and I understand that but I still have no idea what to do once it does. I also downloaded the mobile app and on THERE it tells me that they are going to charge my bank twice and on the website I'll need to confirm those charges to be able to use it but I don't see an option for that on the website at all. I go to a ROTH IRA someone linked in my thread and going to buy it just acts like I'm opening a new account even though I was logged in?

I'm so confused and nervous.
I just want to put this money into the ROTH IRA and maybe throw some more money into it here and there but mostly never look at it.

HTupolev · Mar 25, 2024

Ashes of Dreams said:
It says I opened a "ROTH IRA Brokerage Account", but how do I go from that to having the ROTH IRA?

Sometimes the phrase "brokerage account" is used to refer to a taxable account, for example when someone is contrasting it with "their IRA."

But they're both just different types of brokerage accounts.

A Roth IRA with Vanguard is a Roth IRA Brokerage Account. In the same way that a taxable account with Vanguard is a taxable brokerage account.

It says it takes a few days to process and I understand that but I still have no idea what to do once it does.

Money that you transfer into your account will go into what's called a "settlement fund." This is basically your "cash": when you're making transactions, it'll show up as your "funds available to spend."
Vanguard uses their federal money market fund (VMFXX) as the default option for settlement fund, which makes the settlement fund have comparable performance to an HYSA. Currently cash in VMFXX is earning a bit over 5% annually, but of course this will go down if interest rates fall. (Yes, this means that your "cash" is technically being held in a mutual fund. Don't worry about it, this is normal. Fidelity does the same thing with their SPAXX fund for example.)

Anyway, as far as what to do? Buy the investments that you want to buy.

I also downloaded the mobile app and on THERE it tells me that they are going to charge my bank twice and on the website I'll need to confirm those charges to be able to use it but I don't see an option for that on the website at all.

Have you gotten micro-charges in your bank account? Vanguard might do that to validate the link. But ACH transactions can take time...

Not sure why the interfaces disagree.

I go to a ROTH IRA someone linked in my thread and going to buy it

What do you mean "buy an IRA"? Which post in your thread are you referring to?

Ashes of Dreams · Mar 25, 2024

HTupolev said:
Sometimes the phrase "brokerage account" is used to refer to a taxable account, for example when someone is contrasting it with "their IRA."

But they're both just different types of brokerage accounts.

A Roth IRA with Vanguard is a Roth IRA Brokerage Account. In the same way that a taxable account with Vanguard is a taxable brokerage account.

Money that you transfer into your account will go into what's called a "settlement fund." This is basically your "cash": when you're making transactions, it'll show up as your "funds available to spend."
Vanguard uses their federal money market fund (VMFXX) as the default option for settlement fund, which makes the settlement fund have comparable performance to an HYSA. Currently cash in VMFXX is earning a bit over 5% annually, but of course this will go down if interest rates fall. (Yes, this means that your "cash" is technically being held in a mutual fund. Don't worry about it, this is normal. Fidelity does the same thing with their SPAXX fund for example.)

Anyway, as far as what to do? Buy the investments that you want to buy.

Have you gotten micro-charges in your bank account? Vanguard might do that to validate the link. But ACH transactions can take time...

Not sure why the interfaces disagree.

What do you mean "buy an IRA"? Which post in your thread are you referring to?

Sorry this really isn't my world at all. Stocks and retirement funds were never something I saw myself bothering with but I'm honoring the wishes of the person who gave me this money, and what they said was "put it into a ROTH IRA". That's all I know, I'm completely out of my depth here. I don't understand half these terms or acronyms. So if I said something that doesn't make sense, it's because I'm completely confused.

In my thread, this post here linked to what I understand to be the thing I'm actually going to be buying with the money. So my understanding was that I set up the account, transfer money from the bank into the account, then use the money in the account to buy this. Am I mistaken? When I click "buy" on this page, it brings me to stuff I don't understand at all, like I'm setting up an account again. But I backed out because as I understand it, I need to wait 2 to 3 days for the money to transfer anyway.

feline fury · Mar 25, 2024

.

Ashes of Dreams said:
Sorry this really isn't my world at all. Stocks and retirement funds were never something I saw myself bothering with but I'm honoring the wishes of the person who gave me this money, and what they said was "put it into a ROTH IRA". That's all I know, I'm completely out of my depth here. I don't understand half these terms or acronyms. So if I said something that doesn't make sense, it's because I'm completely confused.

In my thread, this post here linked to what I understand to be the thing I'm actually going to be buying with the money. So my understanding was that I set up the account, transfer money from the bank into the account, then use the money in the account to buy this. Am I mistaken? When I click "buy" on this page, it brings me to stuff I don't understand at all, like I'm setting up an account again. But I backed out because as I understand it, I need to wait 2 to 3 days for the money to transfer anyway.

Have you seen the two microcharges on your regular bank account yet? Do you see the deposit in your Vanguard account yet?

Ashes of Dreams · Mar 25, 2024

feline fury said:
Have you seen the two microcharges on your regular bank account yet? Do you see the deposit in your Vanguard account yet?

No. I guess I'll check back tomorrow. But I'm not sure where to go on the website once I do. Or what to do after that.

feline fury · Mar 25, 2024

Ashes of Dreams said:
No. I guess I'll check back tomorrow. But I'm not sure where to go on the website once I do. Or what to do after that.

It's been a while since I've done it but IIRC, you'll see the microcharges (+microcredits) on your bank account and you enter those amounts into the Vanguard account to confirm you own the bank account. The idea is that only the holder of the bank account can see the exact amount of the microcharges. So a stranger can't open a Vanguard account and initiate a transfer from your bank account.

After that, it might be a few days before the transfer settles and then you can buy equities in the Roth IRA.

vypek · Mar 26, 2024

Chaosblade said:
There's not really any reason to keep them separate but there might be very good reasons to take action on the previous 401K. Companies typically cover fees as part of the retirement benefit, so it's entirely possible that you are losing money to fees with the old account since the company is not paying those for you anymore. Would definitely check into that and get it rolled over, either into the new 401K or a personal 401K from Vanguard/Fidelity.

Thank you!

HTupolev · Mar 26, 2024

Ashes of Dreams said:
In my thread, this post here linked to what I understand to be the thing I'm actually going to be buying with the money. So my understanding was that I set up the account, transfer money from the bank into the account, then use the money in the account to buy this. Am I mistaken?

No, you're not mistaken.

I wonder if there's a problem with how your browser is interacting with Vanguard's web interface. Was the upper right part of the window on the "Vanguard Target Retirement 2050 Fund" page showing you as being logged in when you clicked "buy"? The behavior you're describing sounds like what would happen if it thinks that nobody is signed in.

That shouldn't be an issue though.

Go to your Dashboard on the Vanguard website, open the "Transact" drop-down, and then click on "Buy & Sell."
At this point, you should be on a screen that's asking you for a "ticker symbol." A ticker symbol is just a string of characters used to identify something like a stock or a fund. For example, "MSFT" is the ticker symbol for shares of Microsoft stock. If you go back to the "Vanguard Target Retirement 2050 Fund", you'll see the letters "VFIFX" splashed out huge at the top of the page. "VFIFX" is the ticker symbol for this fund, so that's what you would use if that's the fund that you want. Punch that in, and hit the button for the quote, and that should hopefully get you where you're trying to be.

However, I just looked a bit more thoroughly through the old thread, and you said you'd rather aim for 2060? That would be this fund, in which case you'd want to use ticker symbol VTTSX.

Ashes of Dreams · Mar 26, 2024

feline fury said:
It's been a while since I've done it but IIRC, you'll see the microcharges (+microcredits) on your bank account and you enter those amounts into the Vanguard account to confirm you own the bank account. The idea is that only the holder of the bank account can see the exact amount of the microcharges. So a stranger can't open a Vanguard account and initiate a transfer from your bank account.

After that, it might be a few days before the transfer settles and then you can buy equities in the Roth IRA.

Okay I explored the website enough to find a page that says the two transactions will be taken out in 2-3 days, so I guess I'm waiting on those.

HTupolev said:
No, you're not mistaken.

I wonder if there's a problem with how your browser is interacting with Vanguard's web interface. Was the upper right part of the window on the "Vanguard Target Retirement 2050 Fund" page showing you as being logged in when you clicked "buy"? The behavior you're describing sounds like what would happen if it thinks that nobody is signed in.

That shouldn't be an issue though.

Go to your Dashboard on the Vanguard website, open the "Transact" drop-down, and then click on "Buy & Sell."
At this point, you should be on a screen that's asking you for a "ticker symbol." A ticker symbol is just a string of characters used to identify something like a stock or a fund. For example, "MSFT" is the ticker symbol for shares of Microsoft stock. If you go back to the "Vanguard Target Retirement 2050 Fund", you'll see the letters "VFIFX" splashed out huge at the top of the page. "VFIFX" is the ticker symbol for this fund, so that's what you would use if that's the fund that you want. Punch that in, and hit the button for the quote, and that should hopefully get you where you're trying to be.

However, I just looked a bit more thoroughly through the old thread, and you said you'd rather aim for 2060? That would be this fund, in which case you'd want to use ticker symbol VTTSX.

This is very helpful, thanks. I'll come back to this post when the account is verified in a few days. If there's any further issues I will post again.

Appreciate you all helping me through this.

henhowc · Mar 26, 2024

20 years later and my work is now offering a 403b Roth. I still can't wrap my head around the maths though since retirement is still a good 13-18 years. First world problems but having a pension forces you to have to do additional maths without knowing what taxes will look like.

Anyone else in that situation? Are you still doing traditional, 403b Roth, or both?

Baphomet · Mar 26, 2024

Found a good out of house hobby , my best friend got me back into playing Pokemon TCG and I am loving it.

Squirrel Killer · Mar 26, 2024

Baphomet said:
Found a good out of house hobby , my best friend got me back into playing Pokemon TCG and I am loving it.

Great to have a good hobby, but I wouldn't suggest Pokemon cards as a retirement strategy. ;)

Baphomet · Mar 26, 2024

Squirrel Killer said:
Great to have a good hobby, but I wouldn't suggest Pokemon cards as a retirement strategy. ;)

Ahh I just play for fun , not hooked on buying or pursuing rare/expensive cards. I am good with my simple retired life :)

Smiley90 · Mar 26, 2024

Baphomet said:
Found a good out of house hobby , my best friend got me back into playing Pokemon TCG and I am loving it.

Thought I clicked on the wrong thread by accident here :D

Ashes of Dreams · Mar 28, 2024

I think everything went smoothly? I was able to verify my bank and then I simply bought the fund I wanted. I think it's gonna take until Monday to show up because of the Holiday, so I guess I'll check back then. Website is really overwhelming and I don't understand most of what it's saying. Is there anything else I should know or do?

HTupolev · Mar 29, 2024

Ashes of Dreams said:
I think it's gonna take until Monday to show up because of the Holiday, so I guess I'll check back then.

And if what you purchased is a mutual fund, don't expect the order to go through until late that day. Mutual funds get valuated and traded a single time per day, based on the results of that day's stock market trading session. The actual execution time tends be hours after the markets close, and Vanguard isn't known for being very hurried about this. As long as it executes by 7:30 ET or so, it's working as expected.

The moment in the evening when the mutual fund executes its trades is also the moment that the value of the investment will update in the web interface. So if you owned $3000 in let's say VFIAX this morning, and its value went up by .11% today, the value of the investment would have updated from $3000 to $3003.3 at some moment around 5-6 hours ago (since I'm posting this a bit after midnight ET).
But I'm just saying this to explain the financial machinery. I would not recommend keeping a close eye on the investment. The best thing to do with a retirement investment, after picking a reasonable asset allocation, is ignore it and contribute more money when you're able.

Squirrel Killer · Mar 29, 2024

HTupolev said:
But I'm just saying this to explain the financial machinery. I would not recommend keeping a close eye on the investment. The best thing to do with a retirement investment, after picking a reasonable asset allocation, is ignore it and contribute more money when you're able.

And to help illustrate that, one of the big three (Vanguard/Fid/CS) did a study of the best performing retirement portfolios and found that the best performers were the ones owned by people that had forgotten they had accounts with them.

Ashes of Dreams · Mar 29, 2024

HTupolev said:
And if what you purchased is a mutual fund, don't expect the order to go through until late that day. Mutual funds get valuated and traded a single time per day, based on the results of that day's stock market trading session. The actual execution time tends be hours after the markets close, and Vanguard isn't known for being very hurried about this. As long as it executes by 7:30 ET or so, it's working as expected.

The moment in the evening when the mutual fund executes its trades is also the moment that the value of the investment will update in the web interface. So if you owned $3000 in let's say VFIAX this morning, and its value went up by .11% today, the value of the investment would have updated from $3000 to $3003.3 at some moment around 5-6 hours ago (since I'm posting this a bit after midnight ET).
But I'm just saying this to explain the financial machinery. I would not recommend keeping a close eye on the investment. The best thing to do with a retirement investment, after picking a reasonable asset allocation, is ignore it and contribute more money when you're able.

Yeah that's definitely what I intend to do. I never thought I'd even open something like this so I'm not going into it with intentions of watching it closely. I put the money in and the only time I intend to engage with it is once in awhile throwing something extra in there.

PatAndTheCat · Apr 9, 2024

Can anyone do a gut check for me:

I am 31 making 120k a year. I have the following
135k in my 401k (target date fund)
8k in my HSA
11k in my a HYSA (emergency fund, but growing it to help buy a house next year. My employer will give me 10k for a downpayment)

I have a 17k car loan at 3%. I have no student loans.

I feel behind, but maybe I'm not? Hard to balance saving with wanting to travel.

CubeApple76 · Apr 9, 2024

PatAndTheCat said:
Can anyone do a gut check for me:

I am 31 making 120k a year. I have the following
135k in my 401k (target date fund)
8k in my HSA
11k in my a HYSA (emergency fund, but growing it to help buy a house next year. My employer will give me 10k for a downpayment)

I have a 17k car loan at 3%. I have no student loans.

I feel behind, but maybe I'm not? Hard to balance saving with wanting to travel.

I'd say you are more or less on target. Aim should be 1x salary at 30, and you're basically there. I would try and pay off the car before looking at a house if possible.

PatAndTheCat · Apr 9, 2024

CubeApple76 said:
I'd say you are more or less on target. Aim should be 1x salary at 30, and you're basically there. I would try and pay off the car before looking at a house if possible.

Yeah, I've been paying extra. I think if I focused on it I could pay off most of it this year. Thankfully here in Detroit I can get a decent house between 150-250k

LaneDS · Apr 9, 2024

PatAndTheCat said:
Can anyone do a gut check for me:

I am 31 making 120k a year. I have the following
135k in my 401k (target date fund)
8k in my HSA
11k in my a HYSA (emergency fund, but growing it to help buy a house next year. My employer will give me 10k for a downpayment)

I have a 17k car loan at 3%. I have no student loans.

I feel behind, but maybe I'm not? Hard to balance saving with wanting to travel.

I mean, depends on where you want to be.

At 30, I was nowhere near what you're describing. I think you're way, way ahead of most people financially at that point and on a good path financially! Car loan interest rate is small enough where you can pay that down without thinking about it and hopefully save for a future home purchase.

PatAndTheCat · Apr 9, 2024

LaneDS said:
I mean, depends on where you want to be.

At 30, I was nowhere near what you're describing. I think you're way, way ahead of most people financially at that point and on a good path financially! Car loan interest rate is small enough where you can pay that down without thinking about it and hopefully save for a future home purchase.

Yeah, I guess if I am near average I am happy. I feel guilty about not saving more in my 20s but I also paid off my student loans early so I never need to worry about them. My car only has 17k miles so I hope if I pay that off early I can start saving for my next vehicle. I already have 15k in my 401k for this year, so I should easily max it.

LaneDS · Apr 9, 2024

PatAndTheCat said:
Yeah, I guess if I am near average I am happy. I feel guilty about not saving more in my 20s but I also paid off my student loans early so I never need to worry about them. My car only has 17k miles so I hope if I pay that off early I can start saving for my next vehicle. I already have 15k in my 401k for this year, so I should easily max it.

Totally anecdotal but at 30 I was making way less, had like $100k in student loan debt (plus auto debt), and was only starting to realize what a 401k is and that one should be contributing to it. At 42, I'm fine, so seeing where you're at I also think you're way ahead of the pack and doing great.

PatAndTheCat · Apr 9, 2024

LaneDS said:
Totally anecdotal but at 30 I was making way less, had like $100k in student loan debt (plus auto debt), and was only starting to realize what a 401k is and that one should be contributing to it. At 42, I'm fine, so seeing where you're at I also think you're way ahead of the pack and doing great.

Awesome that is reassuring and glad to hear you are fine. I feel like at 100K I am starting to notice the power of compound ~~interest~~ growth. A 1% gain is equivalent of what I invest in a month! Thankfully my employment is safe so I need to stop stressing so much about retirement at my age.

LaneDS · Apr 9, 2024

PatAndTheCat said:
Awesome that is reassuring and glad to hear you are fine. I feel like at 100K I am starting to notice the power of compound ~~interest~~ growth. A 1% gain is equivalent of what I invest in a month! Thankfully my employment is safe so I need to stop stressing so much about retirement at my age.

For sure. There are likely to be ups and downs and you'll make mistakes along the way, but just manage debt (i.e. avoid it when possible and when not, do so smartly), save what you can (but still live your life!), and work smartly- you'll be just fine, I imagine!

ArrogantBastard · Apr 9, 2024

Just opened an IRA with Vanguard for my wife and myself. Maxed out last year and went ahead and maxed out this year too. $13500 each.

Plan on just dumping it all in VOO tomorrow morning, bad idea?

We are late late in this, should have started twenty years ago. 40+

CubeApple76 · Apr 9, 2024

ArrogantBastard said:
Just opened an IRA with Vanguard for my wife and myself. Maxed out last year and went ahead and maxed out this year too. $13500 each.

Plan on just dumping it all in VOO tomorrow morning, bad idea?

We are late late in this, should have started twenty years ago. 40+

Statistically doing a one day max out of your Roth works out more often than not (since the market tends to finish more years up than down. If you have the means to do it I'd just go ahead and max it.

Smiley90 · Apr 9, 2024

PatAndTheCat said:
Can anyone do a gut check for me:

I am 31 making 120k a year. I have the following
135k in my 401k (target date fund)
8k in my HSA
11k in my a HYSA (emergency fund, but growing it to help buy a house next year. My employer will give me 10k for a downpayment)

I have a 17k car loan at 3%. I have no student loans.

I feel behind, but maybe I'm not? Hard to balance saving with wanting to travel.

You're doing way above average. Keep in mind, more than 60% of Americans live paycheck to paycheck and don't have savings.

Comparison is the thief of joy - there will always be people doing better than you. That doesnt mean you're not doing well yourself, enjoy!

ArrogantBastard · Apr 9, 2024

My wife also has a 401k from a company she no longer works for, how much of a pain is it to roll this over into her newly created IRA?

Specifically her 401k is with Fidelity and we would want to be rolling it over to Vanguard IRA.

vypek · Apr 13, 2024

Now that I've left my previous employer, the company that holds my 401k emailed me and let me know that I have options. One of them being to leave the money where it is but given that my 401k before last is being charged tiny fees, it does seem best to move the money. But I really have no idea what to choose and worried I might be overthinking things. Is there a really good resource that compares and mentions the best option or a recommendation on what should be done with old 401ks? I don't know whether to roll 401k(1) and 401k(2) into my new employers 401k, into my existing IRA, or into a brand new IRA (but there would be no advantage to that I assume?). I want to try and make good decisions so I don't have a massive regret in the future but I get overwhelmed trying to keep track of and plan out different options. Even when selecting the new 401k I just went with a target date fund instead of trying to use the free managed services. Anyone have any resources I can read or recommendations on old 401ks?

Squirrel Killer · Apr 13, 2024

I believe the best practice is to move the old 401k to your new 401k provider because sometimes the old 401k provider will charge you more fees. It also helps you keep track of it easier since that's one less service to log in to.

tokkun · Apr 13, 2024

vypek said:
Now that I've left my previous employer, the company that holds my 401k emailed me and let me know that I have options. One of them being to leave the money where it is but given that my 401k before last is being charged tiny fees, it does seem best to move the money. But I really have no idea what to choose and worried I might be overthinking things. Is there a really good resource that compares and mentions the best option or a recommendation on what should be done with old 401ks? I don't know whether to roll 401k(1) and 401k(2) into my new employers 401k, into my existing IRA, or into a brand new IRA (but there would be no advantage to that I assume?). I want to try and make good decisions so I don't have a massive regret in the future but I get overwhelmed trying to keep track of and plan out different options. Even when selecting the new 401k I just went with a target date fund instead of trying to use the free managed services. Anyone have any resources I can read or recommendations on old 401ks?

It mostly depends on the details of your 401K, such as the funds offered and the associated fees.

In general, 401Ks can range from being slightly better than IRAs to being significantly worse, so you probably wouldn't have massive regrets if you pick the IRA.

HTupolev · Apr 13, 2024

vypek said:
Now that I've left my previous employer, the company that holds my 401k emailed me and let me know that I have options. One of them being to leave the money where it is but given that my 401k before last is being charged tiny fees, it does seem best to move the money. But I really have no idea what to choose and worried I might be overthinking things. Is there a really good resource that compares and mentions the best option or a recommendation on what should be done with old 401ks? I don't know whether to roll 401k(1) and 401k(2) into my new employers 401k, into my existing IRA, or into a brand new IRA (but there would be no advantage to that I assume?). I want to try and make good decisions so I don't have a massive regret in the future but I get overwhelmed trying to keep track of and plan out different options. Even when selecting the new 401k I just went with a target date fund instead of trying to use the free managed services. Anyone have any resources I can read or recommendations on old 401ks?

Usually an IRA is the best option, both due to flexibility and lack of fees. But if your new 401k is great in terms of fees and fund options, that's also fine.

Another consideration would be if you're a high earner and might want to do backdoor Roth conversions. The pro-rata rule makes it cumbersome to do this if you have pre-tax assets in an IRA, and keeping them in 401k avoids having to deal with this.

ArrogantBastard · Apr 15, 2024

I cannot resist checking VOO every day and I need to stop, shits going to give me an ulcer. Set it and forget it...

CubeApple76 · Apr 15, 2024

ArrogantBastard said:
I cannot resist checking VOO every day and I need to stop, shits going to give me an ulcer. Set it and forget it...

Instead of just checking every day, set it to 6 months:

The drop feels brutal day to day, but is really just giving back a tiny amount of the last 6 months of gains.

ArrogantBastard · Apr 15, 2024

CubeApple76 said:
Instead of just checking every day, set it to 6 months:

The drop feels brutal day to day, but is really just giving back a tiny amount of the last 6 months of gains.

Yah, I just need to ignore it entirely...

HTupolev · Apr 15, 2024

ArrogantBastard said:
Yah, I just need to ignore it entirely...

Or play mind games.

"If I was willing to buy then, why not buy now when I can get more shares for my money!?"

ArrogantBastard · Apr 15, 2024

HTupolev said:
Or play mind games.

"If I was willing to buy then, why not buy now when I can get more shares for my money!?"

We just funded our IRA and bought in at 471, its all good. Hurts but we knew it going in.

vypek · Apr 15, 2024

Squirrel Killer said:
I believe the best practice is to move the old 401k to your new 401k provider because sometimes the old 401k provider will charge you more fees. It also helps you keep track of it easier since that's one less service to log in to.

Yeah, my old 401k is being charged some fees and avoiding that as well as consolidating so I don't have so many accounts to log into is a big motivator.

tokkun said:
It mostly depends on the details of your 401K, such as the funds offered and the associated fees.

In general, 401Ks can range from being slightly better than IRAs to being significantly worse, so you probably wouldn't have massive regrets if you pick the IRA.

My new workplace actually is a 401k provider and from what I understand, there would be no fee for us but I could be mistaken and want to run that by more people. I could also look at the funds more but for all 401k choices I've just gone with the target date fund for the year I turn 65. It is good to know that an IRA seems like a safe bet. I think I did see something about moving from traditional 401k to a roth IRA so I'm sure there'll be plenty of guides for my situation.

HTupolev said:
Usually an IRA is the best option, both due to flexibility and lack of fees. But if your new 401k is great in terms of fees and fund options, that's also fine.

Another consideration would be if you're a high earner and might want to do backdoor Roth conversions. The pro-rata rule makes it cumbersome to do this if you have pre-tax assets in an IRA, and keeping them in 401k avoids having to deal with this.

Thank you. I'll consider that as well.

Thanks for the replies, everyone. It is starting to seem like either choice is solid and an improvement over the scenario I'm in now where I just leave them in accounts and let fees chip away at them.

Editing to add: I'm actually not sure how to tell if my 401k is good based on its funds. What exactly should I be looking at to tell if its worth considering for a rollover compared to just going into my Roth IRA and trying to manually allocate funds and re-balance on my own?

HTupolev · Apr 16, 2024

vypek said:
What exactly should I be looking at to tell if its worth considering for a rollover compared to just going into my Roth IRA and trying to manually allocate funds and re-balance on my own?

It seems like you're asking multiple different questions? If the old 401(k) is pre-tax Traditional, a Roth (whether 401k or IRA) is a very different sort of vehicle. You can usually convert from the former into the latter, but you'll have to pay income tax on the money when you do (just like you would for any new wages that you're putting into the Roth).

vypek · Apr 17, 2024

HTupolev said:
It seems like you're asking multiple different questions? If the old 401(k) is pre-tax Traditional, a Roth (whether 401k or IRA) is a very different sort of vehicle. You can usually convert from the former into the latter, but you'll have to pay income tax on the money when you do (just like you would for any new wages that you're putting into the Roth).

Sorry, yeah my posts were kind of asking questions in different directions. Based on the responses I started to wonder how to properly evaluate if the employer 401k is a good vehicle. If I could figure that out I would just roll it into my new employers 401k. If I could evaluate it not being good, I'd go with my current IRA. I did realize that I'll have to pay tax to go from traditional 401k to my Roth IRA but I thought that was the recommendation and what most people were doing.

HTupolev · Apr 17, 2024

vypek said:
I did realize that I'll have to pay tax to go from traditional 401k to my Roth IRA but I thought that was the recommendation and what most people were doing.

I wouldn't say that there's a single generally-applicable "recommendation", it just depends on whether you actually want the assets to be in Roth or not based on your situation. If you want to maintain their status as pre-tax Traditional, you could roll into a Traditional IRA. The caveat I brought up before about later Roth IRA backdooring is only relevant if you're putting the money into a Traditional IRA.

If you want to use the funds to increase your Roth allocation, you may want to check the tax implications carefully. This will depend on the size of the 401(k), your taxable income for the current year, and how that aligns to the tax brackets. If the 401(k) is a decent chunk of money, you could tax-bomb yourself by converting it to Roth all at once. Converting across multiple years could help with that, but you'll need to check if that's possible, as not all 401(k) plans support partial rollovers.

vypek · Thursday at 10:11 PM

HTupolev said:
I wouldn't say that there's a single generally-applicable "recommendation", it just depends on whether you actually want the assets to be in Roth or not based on your situation. If you want to maintain their status as pre-tax Traditional, you could roll into a Traditional IRA. The caveat I brought up before about later Roth IRA backdooring is only relevant if you're putting the money into a Traditional IRA.

If you want to use the funds to increase your Roth allocation, you may want to check the tax implications carefully. This will depend on the size of the 401(k), your taxable income for the current year, and how that aligns to the tax brackets. If the 401(k) is a decent chunk of money, you could tax-bomb yourself by converting it to Roth all at once. Converting across multiple years could help with that, but you'll need to check if that's possible, as not all 401(k) plans support partial rollovers.

Oh okay, I think I understand what you are saying a lot better now and I appreciate the help and advice you've been providing. Thanks!

hockeypuck · Monday at 11:33 AM

Chaosblade said:
There's not really any reason to keep them separate but there might be very good reasons to take action on the previous 401K. Companies typically cover fees as part of the retirement benefit, so it's entirely possible that you are losing money to fees with the old account since the company is not paying those for you anymore. Would definitely check into that and get it rolled over, either into the new 401K or a personal 401K from Vanguard/Fidelity.

If you roll over into a personal 401k, isn't the person still paying fees?

HTupolev · Monday at 12:47 PM

hockeypuck said:
If you roll over into a personal 401k, isn't the person still paying fees?

I'm not sure what's meant by "personal 401k": 401k plans are always associated with an employer, even if there's only 1 employee on the plan. A personal retirement account would typically be some form of IRA.

But regardless of designation, the point would be to move assets into an account with fewer or zero fees.

Chaosblade · Monday at 3:48 PM

"Personal 401K" was a mistake, but the point stands. There are more fees that just the fund fees that are easily waived with companies like Vanguard. Lingering unrolled-over 401Ks could be losing money to addition account fees and service charges.

Retirement-Era |OT| How to Invest For Retirement

Resettlement Advisor

Unshakable Resolve

Unshakable Resolve

Unshakable Resolve

Unshakable Resolve

Unshakable Resolve

Unshakable Resolve

Resettlement Advisor