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Are there any advantages to move 401K to new employer's 401K provider.

dombivlikar 109 26 August 8, 2016 at 05:28 PM in Finance (4)
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I recently switched my job. I have my 401K from the old employer with Fidelity. The new employer has their 401K managed by Verisight.
  1. Does it make sense to move my old 401K contribution to new one?
  2. What are the advantages?
  3. What do I loose if I keep both providers?
  4. Would my old provider charge me fees to manage 401K?

7 Comments

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Joined Jan 2007
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#2
1. Depends if they have similar funds with lower expense ratios. Doubt you will beat fidelity.
2. See 1.
3. See 1.
4. No
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Joined May 2008
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#3
Quote from flatlight View Post :
1. Depends if they have similar funds with lower expense ratios. Doubt you will beat fidelity.
2. See 1.
3. See 1.
4. No
Thanks. That's helpful
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Joined Nov 2005
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#4
I think it's mostly about the simplicity of only having 1 account, frankly. As the second poster said, there may be fee differences or differences in the types of funds you can invest in, but for most people they'd just benefit from having a single point to manage your account rather than >1.
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#5
Doubtful. Better to send it to a rollover ira within fidelity. Pick some low cost index funds and make money and stuff.
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#6
1. No, do a direct rollover to a Fidelity IRA or another big name free provider. DO NOT HAVE THEM SEND YOU THE CHECK.
2. None, move it to Fidelity or similar - it is free and you have access to probably 1000x more options than your old or new employers 401k.
3. The possibility of lower cost and/or better investment options that your old 401k will not have available.
4. Possibly, depending on how much money you have in your account and what your plan documents say. You would need to look at your 401k booklet or call the plan administrator to ask.

Just go ahead and do a rollover to Fidelity, Schwab, or similar IRA. Make sure you do a direct rollover to them - DO NOT have your 401k provider send you a check. If you do that, they are required to take out taxes - then you have to come up with the amount they withheld, deposit the extra into your new IRA, or face an early 10% distribution penalty. You can easily lose a lot of money if you don't do this correctly, which is why it is best to ALWAYS do a direct rollover.
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Joined Aug 2011
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#7
What's important is the actual funds that you own in the 401k fund and how much expense it charges. I think you can get general idea here. [youtube.com]

My advice is, rollover your old 401k to Vanguard. Vanguard is very popular because of their low expense ratio and outstanding ETFs/Funds. I rollover all my old 401k into Vanguard Rollover IRA account. Also, I opened Vanguard Roth IRA account and any annual tax refund or cash bonus received from work, I buy Vanguard ETFs through the Roth IRA account. Roth IRA is fantastic because you are funding it with after tax dollars, and as a result there's a tax benefit. Generally, all the principal + earnings earned, you can withdraw anytime tax free. There is annual contribution limit per IRS. For most people it's $5,500/yr for single filers. If your AGI is over $117K~ish, that contribution limit is lowered accordingly.
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In Arsene We Trust..........or Not
#8
Rolling over the old 401k to an IRA at vanguard is a good idea if you do not see yourself having to to a Backdoor Roth IRA contribution in the future. You would probably only need to do this if your income reaches a certain level (like 120kish if single or 180k-ish married fj).

I think your are fine just leaving it a fidelity though. Fidelity's low cost offerings are just as good as Vanguard's.
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