401K rollover

[Deleted]

Okay, so I know basically nothing about retirement accounts and we are admittedly way behind. We are in debt payoff mode, but I am still putting a total of 6% in my account every year. The company I'm with now uses Fidelity. I have two older 401K's both with very small amounts of around $2k each, one of those accounts is with Fidelity and the other is with another company. I was thinking of rolling the money in to an IRA, is that the best decision? I was looking at doing an IRA with Fidelity so that all of my money is one in place. I got as far on the Fidelity site as "Open a Rollover" and then the first thing to pop up is asking me if I want to manage it or if I want Fidelity to manage it. I am way out of my element here. Is there somewhere that I can read up on this stuff? Or like a YouTube crash course? We're trying to get our money in order. We'll be debt free (except the house) before the end of 2023, our Emergency savings will be fully funded shortly thereafter, and we will have the house paid off by the end of 2028 assuming no major financial hiccups between now and then at which time we'll be 53 and 54 respectively. 

[flygirl]

If the amounts are small (<$3k) from your old employers, I would roll them into your new 401k as long as they are on the same contribution type (pre-tax). I wouldn’t roll them into a separate IRA especially if you have Roth’s and could potentially have earnings high enough not to qualify at some point.

[ohgillian]

Jan 8, 2021 10:52:26 GMT -5 flygirl said:

If the amounts are small (<$3k) from your old employers, I would roll them into your new 401k as long as they are on the same contribution type (pre-tax). I wouldn’t roll them into a separate IRA especially if you have Roth’s and could potentially have earnings high enough not to qualify at some point.

I agree that this is good advice. I don't typically roll money into my work account, but that's what I think you should do. That would be simplest to manage. If you log into your work Fidelity plan, you will probably  have an option on there "Roll Money In" - at least this is what i see when I just logged into my work 401k account at Prudential. Your money should be able to be rolled in from anywhere; it doesn't matter than one isn't current at Fidelity.

[ohgillian]

Also, it sounds like you've done a lot of good stuff and are on a great trajectory. A lot of the crash course stuff I think would teach you that you need to get out of debt and you've already got that covered. Are you looking to learn more about how to save for retirement? Or to figure out if you're putting your money toward the right goals?

[Deleted]

Jan 8, 2021 11:37:36 GMT -5 ohgillian said:

Also, it sounds like you've done a lot of good stuff and are on a great trajectory. A lot of the crash course stuff I think would teach you that you need to get out of debt and you've already got that covered. Are you looking to learn more about how to save for retirement? Or to figure out if you're putting your money toward the right goals?

I use to follow Dave Ramsey, but after he hosted a super-spreader event, I'm looking for additional resources for everything. We don't strictly follow his debt snowball, and could probably pay off debt even faster if we did, but we have chosen to save for specific goals as well as pay down debt. So for example, we save and pay cash for Christmas and Vacation every year and just recently cash-flowed a 1st floor (minus kitchen) home renovation. We are also contributing to general savings every month and will actually have our Emergency Fund 35% funded for 6 months of expenses when we become debt free except our mortgage. We'll have paid off over $120K of debt by October 2023. And in mid-2025 we'll have another $1300/mth to throw at retirement once H is done paying child support. My H is pretty handsoff with our finances though I do keep him informed of our progress, which is frustrating, so we were actually going to do the DR Class that is offered, but now that is off the table. I don't know if we'd benefit from meeting with a Financial Advisor, since we don't really have any money to invest right now, I'm just happy that we don't have a negative net worth any longer. 

[raangoli]

I would do the same that flygirl suggested. If you're unsure of anything, if you call Fidelity customer service they should be able to answer any questions about the process.

When I rolled over an old 401k like 10 days ago, I called and had them do it just to be sure I didn't inadvertently muck anything up. It took like 15 minutes total.

[dragon's breath]

Jan 8, 2021 10:52:26 GMT -5 flygirl said:

If the amounts are small (<$3k) from your old employers, I would roll them into your new 401k as long as they are on the same contribution type (pre-tax). I wouldn’t roll them into a separate IRA especially if you have Roth’s and could potentially have earnings high enough not to qualify at some point.

All of this, except I'd do it even with a >$3k amount, unless there is some reason not to (I've been with one employer 20 years and have never rolled anything over, so don't know if there is something bad over $3k).

The time I spent in an income range where a traditional IRA would have been better than a Roth IRA was very small.  Now that I can't max a Roth IRA without going the backdoor route, I'm very glad I have no existing traditional IRA.

[ohgillian]

Jan 8, 2021 15:59:42 GMT -5 dragon's breath said:

Jan 8, 2021 10:52:26 GMT -5 flygirl said:

If the amounts are small (<$3k) from your old employers, I would roll them into your new 401k as long as they are on the same contribution type (pre-tax). I wouldn’t roll them into a separate IRA especially if you have Roth’s and could potentially have earnings high enough not to qualify at some point.

All of this, except I'd do it even with a >$3k amount, unless there is some reason not to (I've been with one employer 20 years and have never rolled anything over, so don't know if there is something bad over $3k).

The time I spent in an income range where a traditional IRA would have been better than a Roth IRA was very small.  Now that I can't max a Roth IRA without going the backdoor route, I'm very glad I have no existing traditional IRA.

So, the reason I prefer not to do this with larger amounts is that I prefer the investment options I have at Vanguard over the very limited investment options I have in my employer's Prudential-housed 401k. But that definitely may not apply to everyone. 

[ellipses84]

I roll over old accounts into a Fidelity IRA, but at the time I started it, it was for a large amount and I didn’t have another choice, like a current 401k. I manage it myself, but that just basically mean resetting it up for a Target fund based on my age / retirement age /risk comfort level. It seems like rolling into your 401k would be the easiest.

For money resources, there’s a huge #debtfreecommunity on Instagram for inspiration / advice. A lot of the people started with Ramsay but don’t necessarily follow or repeat his advice.

[mich1]

I think it depends upon what your investment options are with Fidelity at your company. I'd be inclined to pay taxes on it and start a Roth, especially since it's a fairly low amount if you don't have one. I think that everyone should have a mix of taxed and untaxed investments for retirement. You can roll it into a Target fund and read up on investing and move it out, but a Target fund is an ok place to park it while you learn about investing.

I rolled my old pension into a Target fund. It hasn't been one of my higher earning investments, but it has steadily earned as it is more conservative than my other accounts. I consider this my conservative side of my retirement so it allows me to be more aggressive with my other accounts.

[numbers]

For simplicity, I would roll over the two small accounts into your current 401k.

Call Fidelity and they'll walk you through the process. I've handled a few rollovers and it's pretty easy.