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New job, what to do with 401k?

Discussion in 'Off-Topic' started by andrew1220, Feb 9, 2019.

  1. Varmint

    Varmint NES Member

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    Not unique no, but Fidelity is maybe the biggest 401k provider? Vanguard doesn’t offer brokerage option, no. Vanguard is great if you’re a stock market bull. I’m not.

    I’m not sure for rollovers there’s any benefit to Fidelity over a brokerage firm. Someone else here would know.
     

  2. buckfarack

    buckfarack NES Member

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    Yeah. If you bought Amazon five years go you’d be doing ok... but you need to have some money to invest when those opportunities arise and a low five figure IRA parked in a mutual fund w access to a brokerage account isn’t a bad thing. Even if you put it in an index fund and just ride that. Doesn’t really matter if it’s fidelity, vanguard, Merrill, etc. just have the option
     
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  3. andrew1220

    andrew1220 NES Member

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    I never looked into where my Vanguard 401k made investments. I just went with whatever the default was through my employer, since I don’t follow/understand this financial stuff all that well. But now is the time it seems!
     
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  4. Matt-CZ

    Matt-CZ NES Member

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    Rolled over my previous job's 401k into a vanguard IRA. Vanguard, Fidelity, or Schwab, you'll be hard pressed to beat a low cost index fund IRA. It's not very exciting, but a target date fund with either of these is pretty good. Index funds regularly outperform actively managed funds every day of the week.
     
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  5. andrew1220

    andrew1220 NES Member

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    Ahh that’s a good point. It just didn’t seem very appealing as it’s just putting money aside and only grows with my contributions - no matching from the state etc. Unless I misunderstood how the 457 plan works. Of course setting any money aside for retirement is great - regardless if there aren’t any contributions from my employer.
     
  6. andrew1220

    andrew1220 NES Member

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    Good to know. Thanks for sharing this info. Sounds like I’ll have to make some calls to Vanguard soon. I’ll also research Fidelity as well.
     
  7. meh

    meh NES Member

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    Pretty easy to roll over into an IRA at any discount brokerage, too. At this point, between my wife and me, we've got a dozen accounts in a half-dozen brokerages. That's kind of a nuisance to keep track of, but the point is that all of them knew how to roll over a 401K into a rollover IRA painlessly.

    BTW, if ever you're tempted to cash out a 401K or ordinary IRA, don't just take 10% of it and figure that's a penalty you can live with. Instead, make a copy of last year's tax file and recompute last year's taxes but with the fictional withdrawal added in to that tax year. Tax laws change, but the difference in total tax owed is probably going to be a better predictor of the real cost of cashing out.
     
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  8. andrew1220

    andrew1220 NES Member

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    Good point. My wife learned this last year when she cashed out her 401k to pay off some debt.
     
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  9. Enzo

    Enzo NES Member

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    Check to see if the deductions to the SmartPlan are pre tax. I believe they are.
     
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  10. CoastieRon

    CoastieRon NES Member

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    Noted.

    Lol. I'm fine (bit I've been doing it a while)

    Everything requires research, and asking the question on a gun forum will get 80 different answers, and 5 of them are good. I suggested what I have done and have been successful with. YMMV.
     
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  11. meh

    meh NES Member

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    I also learned it the hard way. I can't remember if I was fully aware that it would end up being taxed at a higher marginal rate than I was used to. Probably that didn't come as a surprise, but I don't remember. What I do remember is that I wasn't prepared to see myself phased out of the child tax credits. Did not see that coming.
     
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  12. andrew1220

    andrew1220 NES Member

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  13. buckfarack

    buckfarack NES Member

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    Yeah, I remember writing a five figure check to the IRS that year. Still, worked out great for me, never regretted a dime of it.
     
  14. Matt-CZ

    Matt-CZ NES Member

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    All three of these are pretty much the same business and they compete back and forth on low cost index funds. Usually there is not much of a difference in what they offer.

    When it comes to 401k funds, there's really no reason to pay high expense ratios. For my target date fund, 2055 retirement with Vanguard, I'm only paying 0.15%. Some funds (like the funds I'm stuck with my current employer's 401k) are much higher, some over 1%. There's no reason to pay this much and these actively managed funds don't perform better enough to justify their high costs.

    The three big companies often have better rates depending on how much your have to invest (vanguard has "Admiral" funds with lower costs after you hit a certain minimum). Cost compare to see what the best value is you can get with your current amount and plan to check every few years for better deals.
     
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  15. Rob Boudrie

    Rob Boudrie NES Member

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    Once you hit 59.5, you should do an annual gap analysis in early December. The tax brackets have a sharp jump between 12% and 22%. Even if you don't need the money, it can make sense to withdraw as much as you can if you are in a 12% bracket without getting ot the 22% bracket. This is especially true if you expect to be in a bracket greater than 12% in future years (for example, if the RMDs starting at age 70 would put you there) as you may never have a chance to withdraw $$ at the 12% rate. You also need to consider your chances of moving to a no income tax state in the future when making this evaluation.
     
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  16. Junior314

    Junior314 NES Member

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    Didn't read through the rest but someone asked why IRA over 401k.

    The real winner is a Roth IRA. All the contributions are after tax and its grows tax free, which allows you to withdraw at retirement tax free. And you have alot more flexibility to choose the types of investments especially depending on who you invest through. My employers 401k options are horrendous. I believe the maximum contribution per year for Roth IRA was just increased to $6k? So if your married you and your spouse could contribute $12k to a Roth IRAs.

    Side Note: Not a fan of cashing out retirement to pay debt unless you are truly on the verge of collapse. You are taxed and penalized like crazy!
     
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  17. Rob Boudrie

    Rob Boudrie NES Member

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    A 401K with a company match can beat a Roth IRA. Just do the mathematical analysis.

    compare the scenarios, assuming 20% tax rate:

    1. Putting in $100K pre tax money, having it grow 10x to $1M, taxed at 20% netting $800k

    2. Putting in $80K post tax money, having it grow 10x tax free, and netting $800k.

    Of course, this conclusion is predicated on your rage being the same at both deposit and withdrawal times which may not be accurate.

    MA residency dis-favors the Roth if you will be making your withdrawal in a no income tax state.
     
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  18. andrew1220

    andrew1220 NES Member

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    Good to know. Appreciate this info!

    Yeah I wasn’t thrilled that she withdrew her 401k to pay debt but I couldn’t convince her otherwise.
     
  19. Junior314

    Junior314 NES Member

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    If this thread teaches you anything it’s that you need to do your research and consult with some professionals.[laugh]
     
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  20. Varmint

    Varmint NES Member

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    We haven’t qualified for Roths in years, but do you trust a future America run by people like Occasional Cortex to let you rich people have untaxed retirement nest eggs? GLWT.
     
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  21. Rob Boudrie

    Rob Boudrie NES Member

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    Sure ... but she'll use the fact that someone has accumulated a nice nest egg by saving as an excuse to deny that person social security so the money can be given to someone who did not save.
     
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  22. fshalor

    fshalor NES Member

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    I did the same thing a few months ago, but through E-Trade. I usually bump some in every tax return too if I end up owing a little money as it comes out pretaxed.

    First thing I did on E-Trade was buy a small amount of Ruger stock. Mostly just to say I own it. (ish).
     
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  23. smokey-seven

    smokey-seven NES Member

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  24. EddieZoom

    EddieZoom NES Member

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    Stick with Vanguard. Pretty sure most if not all IRA's now are "brokerage" IRA's regardless of investment company so if buying/selling individual stocks is something you want to play with, you can. Notice I said "play"...stick with core of broad based mutual funds (index funds would be my choice).

    BTW, I once took a job that offered a pension and thought "great, I'll be set for retirement if I can just make this work for x more years"....nope, hated it so much I was gone in 18 months ;-)

    Plan/Save as if there is no pension coming when you an old geezer...that way you'll be good no matter what happens in your career.
     
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  25. andrew1220

    andrew1220 NES Member

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    Good to know, thanks for chiming in Eddie.

    Yeah that’s very true regarding the pension/retirement. I haven’t even started yet but I’m really hoping this is something I can do/enjoy for the next 30 years. That would suck to bank on a pension and then leave after a few years. That’s the only thing that has me nervous. I was at my previous job for almost 8 years and it was my first gig out of the college. So this will be a big change for me. But if I don’t like it, I’m sure I can move around within the department if something else I like opens up. We shall see!....
     
  26. boiler_eng

    boiler_eng NES Member

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    Yep, on top of that building asset accumulation into your budget in leaner times leads to good practice in plentiful times along with a cheaper retirement overhead because you have been leading a more frugal life.
     
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  27. andrew1220

    andrew1220 NES Member

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    Haha yeah. I’ve got some great advice but of course random people on the internet don’t know my financial situation to give the best advice but it’s relatively simple. Only trying to figure out what to do with a 401k. Not too many options really.
     
  28. andrew1220

    andrew1220 NES Member

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    Rolled a 401k into a IRA?

    Nice! I don’t own any stocks but it would be cool to own stock in a gun company just because lol.
     
  29. andrew1220

    andrew1220 NES Member

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  30. Maddawg1952

    Maddawg1952 NES Member

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    I rolled a previous employers 401k into an IRA with Fidelity, they have an office on Endicott St. in Danvers, been happy with the results.
     
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