Post by covergirl82 on Apr 22, 2019 8:52:26 GMT -5
DH is changing jobs/employers. He's been with the company he's leaving for almost 13 years, so he has quite a large 401k balance. We are trying to decide if it's better to rollover his balance to his new retirement savings account (RSA) through his new employer (which will actually be a 403b), or if we should open an IRA and rollover the funds to that new account. I think that an IRA would offer more investment funds to choose from, but I'm not sure if the fees will be higher than an employer-sponsored RSA.
As a note, we don't currently have a financial advisor. Maybe this is the point where we should get one?
I wouldn't roll it over to a 403b, they frequently are run by insurance companies and have higher fees. This article touches on it a bit. The only reason I could see not wanting to roll it over is if you are above the income limits for Roth IRAs and do backdoor Roths.
Does he have the option to keep his 401k in his current employer's plan? At many companies former employees are allowed to keep their accounts in the same plan if the balance is above a certain threshold (usually just a few thousand). If his current plan offer good investment options and minimal fees, that may be a good option.
One other item to consider - Is your household income near Roth IRA limits (or expected to be in the future)? Roth IRA income limit is $193k HHI for married filing jointly in 2019. If you roll a 401k into a regular IRA account, it will impact your ability to do a backdoor Roth IRA contribution in the future due to tax implications.
Post by covergirl82 on Apr 22, 2019 10:21:57 GMT -5
azalea, I'll have to have him get info from his current employer about keeping his 401k account active there. Years ago (10+, so it's been a while) I was the 401k administrator at my company, and I thought we had implemented changes that put a higher fee structure in place for former employees, so I am worried about the cost if that is the case if he leaves it as is.
Our gross HHI is over $193K, so we wouldn't be able to do a Roth or backdoor Roth.
I recently rolled over my old SIMPLE IRA to a Vanguard rollover IRA (rather than my new 401k) when our firm switched from offering a SIMPLE to a 401k. Fees with Vanguard are lower.
I didn't liquidate my IRA before rolling it over, I just did it in-kind, so all my investments were the same I just don't pay management fees and need to manage it myself now.
azalea , I'll have to have him get info from his current employer about keeping his 401k account active there. Years ago (10+, so it's been a while) I was the 401k administrator at my company, and I thought we had implemented changes that put a higher fee structure in place for former employees, so I am worried about the cost if that is the case if he leaves it as is.
Our gross HHI is over $193K, so we wouldn't be able to do a Roth or backdoor Roth.
Yes, he should be able to do backdoor Roth (assuming he has no other non-Roth IRA accounts).
So unless he can't keep it at his former employer or the investment options and/or fees are terrible there, I think he should leave it and start doing backdoor Roth.