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New job, what to do with 401k?

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

  1. nastynatural

    nastynatural NES Life Member NES Member

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    Congratulations on the new job. Hope it works out for you!
     
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  2. andrew1220

    andrew1220 NES Member

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    Thanks!! I hope so too. Fingers crossed...
     
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  3. Obie1

    Obie1 NES Member

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    Personally, I'd roll into a Roth IRA, pay the taxes now and not later. Invest aggressively (eg, emerging markets, small caps, etc). Then don't look at your statements more than once a quarter. Don't get out when times look bleak, save as much as you can, even if it means foregoing immediate pleasures. One day, like me, you will wake up in your 60s and maybe be considered by your Democrat friends as rich.
     
    Last edited: Feb 10, 2019
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  4. slap shot

    slap shot NES Member

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    Admittedly did not read all (serious) responses but,

    Hookers and Blow!!!!!!
     
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  5. andrew1220

    andrew1220 NES Member

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    Of course! How the hell did I overlook hookers and blow?!...[laugh]
     
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  6. Rob Boudrie

    Rob Boudrie NES Member

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    I use a planner at the Fidelity office in Framingham. Unfortunately, I can't qualify for the $10M in assets plan, but am still on a tier where I have a specific planner assigned.

    The advice is primarily centered on Fidelity products but is generally good and the person well qualified (CFA rather than CFP), and we understand each other when discussing finance. The planner is very helpful when my wife and I are contemplating different strategies and we want a qualified third party opinion. We did not opt for the fee-based automatic trading that would suck about .6% or so from our assets each year. That sounded good until my wife and I looked at that fee in dollars, not percentage.
     
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  7. Varmint

    Varmint NES Member

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    Eddie is right, Vanguard does have a brokerage option. Trades are $7 for first 25/year and $20 after that. Fidelity is $5/trade.
     
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  8. buckfarack

    buckfarack NES Member

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    I don’t know about either of those but you can w Merrill Edge for around $6 per trade. Shouldn’t be hard to find somewhere you can open an IRA and be able to buy stocks and mutual funds for low cost. I’m not advocating stocks, I’d stick to an index fund for now, but you always want the option to buy a stock if the right opportunity comes along.
     
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  9. buckfarack

    buckfarack NES Member

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    I don’t know why you’d leave your assets in a former employer’s 401k program when you can get much more flexibility w a self-directed IRA program. And I was responding specifically to the OP, not the internets. Age and amounts invested are major factors in the decision here which may not be the same factors for the rest of the people out there.
     
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  10. Varmint

    Varmint NES Member

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    Well, when you say "this is better", people expect explanations why. I gave 2 reasons why it might not be better, and you're crapping on them without providing any explanation why you say it's better.

    He wants to buy stocks, and Vanguard allows you to buy anything: stocks, bonds, options, ETFs. Etc. So please explain how it's more flexible to move it to an IRA. That'd be more helpful.
     
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  11. buckfarack

    buckfarack NES Member

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    I didn’t say not to go with Vanguard, I said he shouldn’t leave his assets in a former company 401k and should move them to an IRA where he isn’t subject to former company 401k restrictions. Usually company 401k plans limit what yiu can invest in, can he buy & sell stocks in the former company 401k plan? Can he buy any mutual funds he wants Or does he have to buy the ones available to the plan? What happens down the road if they select a new provider?
     
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  12. enbloc

    enbloc NES Life Member NES Member

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    Good luck Andrew. You are a great guy and your new boss will respect that.
    ~Matt
     
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  13. Rob Boudrie

    Rob Boudrie NES Member

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    OK. who gets the reference to Merril Lynch Pierce Fenner and Ziggy without Googling it?
     
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  14. andrew1220

    andrew1220 NES Member

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    Thanks Matt! Appreciate the kind words.
     
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  15. Broccoli Iglesias

    Broccoli Iglesias

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    Good strategy.

    But I highly recommend you dont use your 401K money on individual stocks. It worked out for Buck, but for every success story you have thousands that dont work.

    A lot also depends on your understanding of the market and how much time you spend researching and reading.

    For 90% of people, several mutual funds with VERY LOW fees is the best option. It is essentially what you do in a 401K.

    OPTION 2: DONT WORK FOR THE GOVERNMENT.
     
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  16. andrew1220

    andrew1220 NES Member

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    Ya it definitely seems like a bad idea to keep it with a former employer. Or at the very least, there’s no advantage.
     
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  17. andrew1220

    andrew1220 NES Member

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    I don’t follow the market at all so I think rolling it into a Vanguard IRA would be easy and the best option for someone like me - for the time being anyway.

    “Don’t work for the government” [laugh]
    I wanted better security, more money, better retirement and a better work/life balance. All of which this job will give me. What I don’t know is how difficult/stressful it will be compared to my last job....
     
  18. Broccoli Iglesias

    Broccoli Iglesias

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    Merrill is free for 100 trades if you have around $60K (maybe more or less). Not all the money needs to be in the brokerage account, money in a regular BofA account and in a ML ROTH IRA also counts.
     
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  19. Broccoli Iglesias

    Broccoli Iglesias

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    Vanguard has good, low fee mutual funds. But you dont need to use Vanguard to buy their funds. I invested in 2 or 3 of their funds through my ML brokerage account.

    Now, that's a regular brokerage acct, not an IRA, so I dont know if that makes a difference.
     
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  20. andrew1220

    andrew1220 NES Member

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    I have just over half that so not a lot. Maybe once I’m settled in I’ll look into stocks etc but I don’t have the knowledge to make smart investment decisions at the moment.
     
  21. andrew1220

    andrew1220 NES Member

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    Good to know, thanks.
     
  22. buckfarack

    buckfarack NES Member

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    I don’t disagree with you. I think it’s a better idea to stick to funds and not buy individual stocks. But... if a once in a lifetime chance presents itself it’s nice to have the ability to buy an individual stock with retirement money you’re nowhere near to using. How many of us would like to have bought Amazon five years ago? Microsoft in the 80’s? AOL in the early 90’s? Not because it’s the hot stock of the moment that everyone is talking about but because you found a product either through work, a hobby, etc. and you saw the potential for the next big thing? When I first used aol I was stunned, I thought how much I’d love to buy stock in it because I thought it would be the next great thing. It wasn’t until a couple years later when I switched jobs and rolled over a small 401k into an IRA brokerage account that I actually had the funds [that I’d risk] to do it. I wasn’t gonna use the money I was saving for a house but was willing to bet that pot of money. If I’d have lost it, given the normal rates of return on 9k from ‘94 to now, in all honesty it wouldn’t make a material difference in my finances today. But what happened with it sure made a difference in my life. You want to have the resources if the opportunity arises, that’s all I’m saying.
     
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  23. Rob Boudrie

    Rob Boudrie NES Member

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    Fidelity processes buys/sells for Vanguard and other firms mutual funds, but the fees per transaction are steep (something like $70 comes to mind). This also means that you do not have to trigger a sale event (relevant on non-IRA and similar accounts) to move Vanguard shared into fidelity - you can do a direct share move rather than sell-move cash-buy, thus triggering a tax if profit and no deductible loss if not (wash sale rule).
     
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  24. Varmint

    Varmint NES Member

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    I'm not sure in his case, he should be able to log in and see if he can open a brokerage account. If not, definitely roll it over to a brokerage firm (Fidelity, TD Ameritrade, a few others mentioned here). If his former employer changes 401k providers it doesn't affect him though, his account is still his.
     
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  25. Varmint

    Varmint NES Member

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    To the OP, the difference between buying a mutual fund and buying an ETF is you can buy more shares in a mutual fund for no transaction cost, while buying more of the ETF will cost you $5 or whatever the fee each time. Not sure if that's the case buying a Vanguard mutual fund through a brokerage, is there a fee?

    Also keep in mind people say index funds are safe, they're anything but. They only appear safe cause we're 10 years into a record bubble market.

    In a downturn you'll see quarterly returns like these (Vanguard Mid cap growth in 2001-2002):
    0.07%
    -15.71%
    -15.45%
    0.20%
    -23.52%
    15.48%
    -30.22%

    Make sure you're ok with watching 50% of your money vaporize in a year or two. Yes, the last two crashes were bailed out by Federal Reserve money printing, maybe it'll work 3 times, but either way it's a mental roller coaster ride.

    Managed funds lose less in downturns, which is why people used to prefer them, before the Fed rigged the markets.
     
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  26. Varmint

    Varmint NES Member

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    I also like the individual stock idea, for a 30 year old playing with retirement money. Look out there and pick a world class company that has a good dividend, and has a solid return nearly every year. Think Disney, McCormick, McDonald's, (I'd have said Apple when Jobs was alive) etc. But $1000 worth and watch it grow.

    You'll learn about investing if you're more 'invested' mentally. So pick a company you like. Just keep in mind, many of the greatest companies from 1960 are now gone.
     
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  27. a73elkyss

    a73elkyss NES Member

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    It's not really that funny how fast the next 30 years fly by. Like Obie1, waking up in your 60's happens way to fast. Oh, and make sure your house is paid off before that "waking moment".

    I understand what you are saying and have considered that exact scenario. Now if someone would make a "Forever ROTH", like the "Forever stamp" from the USPS......

    But if the OP believed in the Roth, even a modest 5 figure amount compounding would be quite the tax free asset.

    YMMV as I'm just following along what you all are talking about.

    Jay
     
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  28. MarkT

    MarkT NES Member

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    Good advice. Roll it.
     
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  29. Broccoli Iglesias

    Broccoli Iglesias

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    Backdoor Roth. Check it out.
     
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  30. Broccoli Iglesias

    Broccoli Iglesias

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    You are doing the right thing. Educate yourself, THEN talk to a professional. You will be able to ask smarter questions, skip all the basic BS and you will be able to spot a bad deal sooner.
     
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