401k Rollover - Is it Necessary?
Ever since Chuck's last day of work, I've been thinking about his 401k. We haven't received his year end statement yet but as of 9/30/09 he had about $45k in it. $21k is in company stock. His company is a small, employee-owned company and the match was always in company stock. He's fully vested so he can take the non-company stock money and roll it over if he chooses. The company stock will sit there for 5 years and then they'll pay it out to him 20% a year for 5 years. I've been looking into how to roll over a 401k and found this great how-to article at Generation X Finance. I asked Chuck to contact his 401k provider to complete steps #1 and #2 - confirm he is listed as a terminated employee and request the forms for a rollover. I would, in parallel, look into Roth IRA options and then we'd decide where to move the money. But Chuck came back to me with a good question - do we have to move the money? If it continues to do well where it is, is it OK to leave it there? We can transfer it at any time, there are no time restrictions so should we leave it sit for a while? Anyone else have any experience with this? This is the first time we've had to do this.
Saturday, January 9, 2010
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1 comments:
It's really easy to establish a rollover account and ultimately, if he switches jobs a lot, he might prefer to do so so he doesn't have scattered accounts in the future. If you are evaluating whether or not to move it, I'd consider the following: With whom has he invested, and what are his expense ratios? When my husband and I left jobs a few years go, we rolled our money over to Vanguard, and personally, I'd love it if we could invest our current 401k with them. They are client-owned and have really low expense ratios. Other people I know swear by Fidelity, and that is where my husband's current 401k is invested, but their expense ratios are higher than Vanguard's, and our account with them hasn't been performing as well. Oh, and if you were wondering, we like Vanguard's target retirement accounts. They are easy and have been performing stupendously.
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