Opening a rollover IRA

[seeyalater52]

I’m leaving my first real professional job in December after 7 years. It’s the first place I’ve worked where I’ve saved for retirement and I have a decent chunk in my 401k.

I know since I’m leaving I have some options in terms of what to do with the account: keep it, roll it over to my new job, or move it to another account.

I’m not a finance whiz by any stretch but without getting into all of the details it sounds like my best option may be to open a new account, say with Fidelity, to roll the money into. I’m in my mid-30s so I’d like to be able to set it and forget it. Something like a target retirement age at XX year would be great for me (that’s how it is invested now.)

Any insight into what type of account management I ought to be looking at? To be honest the explanations about the different account levels and what they offer go totally over my head.

[RockNVoll]

Congrats on your new job.

I historically have done exactly what you describe and rolled into rollover IRAs. The only reason to maybe not do this is if you think you'll want to take advantage of a backdoor Roth IRA option at some point because that's easier to do if you don't have money in a traditional IRA; however, (1) the backdoor Roth loophole is rumored to be closing soon and (2) it's not impossible to do a backdoor Roth even if you do have a traditional IRA, it just takes more work.

So, that said, if you do a traditional rollover IRA, all you need to do is open an account. It would be self-directed; you really don't need any "account management." digital.fidelity.com/search/main?q=rollover%20ira&type=o-NavBar is a good place to get started if you want to go with Fidelity. Most firms bend over backwards to get your money into their institutions, so definitely feel free to call customer service if you want your hand held through it.

[seeyalater52]

Nov 23, 2021 15:41:40 GMT -5 RockNVoll said:

Congrats on your new job.

I historically have done exactly what you describe and rolled into rollover IRAs. The only reason to maybe not do this is if you think you'll want to take advantage of a backdoor Roth IRA option at some point because that's easier to do if you don't have money in a traditional IRA; however, (1) the backdoor Roth loophole is rumored to be closing soon and (2) it's not impossible to do a backdoor Roth even if you do have a traditional IRA, it just takes more work.

So, that said, if you do a traditional rollover IRA, all you need to do is open an account. It would be self-directed; you really don't need any "account management." digital.fidelity.com/search/main?q=rollover%20ira&type=o-NavBar is a good place to get started if you want to go with Fidelity. Most firms bend over backwards to get your money into their institutions, so definitely feel free to call customer service if you want your hand held through it.

Thank you! So it sounds like “self directed” would allow me to select into some sort of target retirement date sort of situation? I wouldn’t actually have to decide on and buy my own… whatevers? As you can see from the phrasing of my question I don’t have any idea how to manage my own stuff but I can definitely stick it into some long term scheme as long as the self directed option allows for such a thing.

[jlt19]

Nov 23, 2021 15:45:43 GMT -5 seeyalater52 said:

Nov 23, 2021 15:41:40 GMT -5 RockNVoll said:

Congrats on your new job.

I historically have done exactly what you describe and rolled into rollover IRAs. The only reason to maybe not do this is if you think you'll want to take advantage of a backdoor Roth IRA option at some point because that's easier to do if you don't have money in a traditional IRA; however, (1) the backdoor Roth loophole is rumored to be closing soon and (2) it's not impossible to do a backdoor Roth even if you do have a traditional IRA, it just takes more work.

So, that said, if you do a traditional rollover IRA, all you need to do is open an account. It would be self-directed; you really don't need any "account management." digital.fidelity.com/search/main?q=rollover%20ira&type=o-NavBar is a good place to get started if you want to go with Fidelity. Most firms bend over backwards to get your money into their institutions, so definitely feel free to call customer service if you want your hand held through it.

Thank you! So it sounds like “self directed” would allow me to select into some sort of target retirement date sort of situation? I wouldn’t actually have to decide on and buy my own… whatevers? As you can see from the phrasing of my question I don’t have any idea how to manage my own stuff but I can definitely stick it into some long term scheme as long as the self directed option allows for such a thing.

Yes, it’ll be super easy to just search for a “target date mutual fund”. You’ll just have to choose which year to pick (2045 for example). I have my IRA with Vanguard, but all of my brokerage accounts are with Fidelity. I think it’s a lot easier to navigate.

[RockNVoll]

Nov 23, 2021 17:05:43 GMT -5 jlt19 said:

Nov 23, 2021 15:45:43 GMT -5 seeyalater52 said:

Thank you! So it sounds like “self directed” would allow me to select into some sort of target retirement date sort of situation? I wouldn’t actually have to decide on and buy my own… whatevers? As you can see from the phrasing of my question I don’t have any idea how to manage my own stuff but I can definitely stick it into some long term scheme as long as the self directed option allows for such a thing.

Yes, it’ll be super easy to just search for a “target date mutual fund”. You’ll just have to choose which year to pick (2045 for example). I have my IRA with Vanguard, but all of my brokerage accounts are with Fidelity. I think it’s a lot easier to navigate.

Yep, exactly. FWIW, when I've used target date funds I tend to pick a year that's much later than my intended retirement date because I want the money to stay heavier in stocks vs. bonds for longer.  Just something to consider, but all depends on your own risk tolerance and overall portfolio.

Stick around, seeyalater52, and ask any questions you like if you want to learn more about money. We all started somewhere, and it's so empowering to learn how to make your money work for you!

[seeyalater52]

Thank you both! This board is the best!

[aspentosh]

IMO, Rollover IRA is going to be the easiest to maintain if you don't want to think about it. It goes with you no matter where you work or how many jobs you switch between and you can just dump all your 401k contributions into it without worry. It also, generally, would open up more options for investing than your current 401k will offer.

And like Rock N Voll, if we choose target date funds, we generally choose 10-15 years past when my H wants to retire. We're ok with the risks right now (he's 40, I'm 37).

[seeyalater52]

I did this very adult thing today and thanks to all your great advice it was pretty easy! Opened the Vanguard IRA account and then requested the distribution from my former employer. Now just waiting for it to be approved, processed, and funded into my new account!

Thank you so much!