Where to roll over 401K

[mariafromnj]

Mh left his old job a few months ago and I will be leaving mine shortly. We will have a large amount of money from our 401k accounts that will need to be rolled over.
We are clueless when it comes to investing.
We talked to Fidelity about rolling over the accounts but the problem is we have no idea what to invest the money in.
We have stocks at TD Ameritrade and we can put the money there too.
Both have managed account options that would take about 1% each year to manage the account.
Is this worth it since we don't have a clue?

[cjeanette]

If you already have accounts at TD I would look into rolling it into an IRA there. I would consider 1% worth it if you don't want to have to manage it yourself. It's a pretty standard rate.

[msmerymac]

The investment funds for clueless people are either a total stock market index fund or a target date retirement fund. The target date funds re-adjust as you age, so they become more conservative the closer you are to retirement. In that way, they are only sort of actively managed - they're really easy for the fund manager to move around. I think the one at Vanguard only has a .18% annual fee, so I imagine Fidelity's would be cheaper.

Your options for the 401k are to either leave it as-is there, to roll it into a traditional IRA and then back door it into a Roth IRA, or to roll it directly into a Roth IRA, but then you'd need to pay taxes on it. It depends on your other retirement investments what you want to do, but generally people like rolling old 401ks into backdoor Roth IRAs because then you don't have to pay taxes on the withdrawals.

[kellygreen]

May 6, 2015 14:32:32 GMT -5 mariafromnj said:

Mh left his old job a few months ago and I will be leaving mine shortly. We will have a large amount of money from our 401k accounts that will need to be rolled over.
We are clueless when it comes to investing.
We talked to Fidelity about rolling over the accounts but the problem is we have no idea what to invest the money in.
We have stocks at TD Ameritrade and we can put the money there too.
Both have managed account options that would take about 1% each year to manage the account.
Is this worth it since we don't have a clue?

We were in a similar boat and chose to bit the bullet and hire a financial planner.  I think he charges 1.25%.

[cjeanette]

May 6, 2015 14:55:12 GMT -5 msmerymac said:

they are only sort of actively managed -

No, they are not actively managed at all. They just automatically move to different asset classes as time goes on. That is still passive management.

[expatpumpkin]

May 6, 2015 15:03:08 GMT -5 kellygreen said:

May 6, 2015 14:32:32 GMT -5 mariafromnj said:

Mh left his old job a few months ago and I will be leaving mine shortly. We will have a large amount of money from our 401k accounts that will need to be rolled over.
We are clueless when it comes to investing.
We talked to Fidelity about rolling over the accounts but the problem is we have no idea what to invest the money in.
We have stocks at TD Ameritrade and we can put the money there too.
Both have managed account options that would take about 1% each year to manage the account.
Is this worth it since we don't have a clue?

We were in a similar boat and chose to bit the bullet and hire a financial planner.  I think he charges 1.25%.

That sucks.  He probably also has you in load mutual funds.  I bet this is really costing you over 2% - good luck finding the fees outline, though, as they are not overtly reported to clients - and that's a TON to give away.  You could be sacrificing 30%+ of long term earnings.  I recommend you consider a target index fund at Vanguard or Fidelity.

[cjeanette]

May 6, 2015 15:53:02 GMT -5 expatpumpkin said:

May 6, 2015 15:03:08 GMT -5 kellygreen said:

We were in a similar boat and chose to bit the bullet and hire a financial planner.  I think he charges 1.25%.

That sucks.  He probably also has you in load mutual funds.  I bet this is really costing you over 2% - good luck finding the fees outline, though, as they are not overtly reported to clients - and that's a TON to give away.  You could be sacrificing 30%+ of long term earnings.  I recommend you consider a target index fund at Vanguard or Fidelity.

I would not jump to this assumption.  He may not even have her in mutual funds at all.

Depending on the asset level 1.25% isn't unheard of.

[polarbearfans]

I used Charles scwabb to roll into an IRA. Super easy and I just chose a target fund. Well originally I laddered CDs because we were thinking of borrowing against for a house and then came to our senses lol

[rubytue]

I was in a similar situation (although it was a small 401k). I rolled it into TD Ameritrade bc I had other accounts there. It's easier for me to have everything together.

You can buy vanguard funds at TD, many are in their no fee EFT list, so no fees to buy or sell.

Also someone above mentions three options, leave in the 401k, roll then backdoor Roth, or roll straight into Roth. You can also roll into IRA and not turn that into a Roth. Then there is no taxable event and the money stays in a tax deferred account (so yes, taxes later), but you have more options and control than just leaving in the 401k.