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An incredibly naive 401K question

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An incredibly naive 401K question

Old 01-24-2020, 04:56 PM
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Default An incredibly naive 401K question

My wife's company was sold.

The old company's 401K was with Fidelity, the new company's 401K is with Charles Schwab.

Question #1: It there a time limit or restriction on how long she has to roll it over? Is there a penalty if she rolls it of in 3 months, 1 year, 5 years, etc...?

Question #2: Are there any advantages or disadvantages of NOT rolling it over and just leaving it with Fidelity and starting fresh with Schwab?

She has been maxing it out and has done very well with Fidelity and God willing and the Creek doesn't rise, she will be working for 20 more years (she is considerably younger than me).

Nothing like The Hull Truth for Medical, Legal or Financial advice right?
Old 01-24-2020, 05:06 PM
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Originally Posted by Tawn View Post
My wife's company was sold.

The old company's 401K was with Fidelity, the new company's 401K is with Charles Schwab.

Question #1: It there a time limit or restriction on how long she has to roll it over? Is there a penalty if she rolls it of in 3 months, 1 year, 5 years, etc...?

Nope. I LITERALLY just rolled one over today from an employer I've been removed from for 5 years. Direct into an IRA. No prob llama. What you want to make damn sure if is that it's a DIRECT rollover. Do not ever receive any monies or it's a taxable event.

Question #2: Are there any advantages or disadvantages of NOT rolling it over and just leaving it with Fidelity and starting fresh with Schwab?

Doesn't really matter. You can't combine it with her current 401k (????...someone please call me out if that's wrong). An advantage of moving it to a rollover IRA is a much better selection of funds, and far less expense. Whether you leave it or move it is personal preference as far as having everything in one place. Both brokerage houses are great.

She has been maxing it out and has done very well with Fidelity and God willing and the Creek doesn't rise, she will be working for 20 more years (she is considerably younger than me).

Nothing like The Hull Truth for Medical, Legal or Financial advice right?
Hope this helps.

Also if the company was sold and she's still with it, generally they roll the old plan into the new one. You can't withdraw or move it as far as I know.
Old 01-24-2020, 05:12 PM
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I have to assume that the plan from her original employer will be no more at some point and she won't be able to stay in it? If so, wouldn't the plan and participants be moved to new company plan at Schwab - probably put into a money market fund then she can invest as she wishes in the new plan's fund offerings?

At Vanguard (my wife and I both worked there) they would communicate with any new participants in similar situation, there was no guessing. I would think Schwab would do same.
Old 01-24-2020, 05:19 PM
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Originally Posted by NCSUboater View Post
Hope this helps.

Also if the company was sold and she's still with it, generally they roll the old plan into the new one. You can't withdraw or move it as far as I know.
That does help. Thank you.

As she has explained it to me, the new company is not doing a direct rollover for them. They must do it themselves or they can just chose to leave their current balance with Fidelity and start fresh with Schwab.

The last time the company was sold, they didn't give them that option - they did the direct rollover for them.

FWIW, it is a medical imaging facility (a chain really). This is the second time it has been sold in four years.

Old 01-24-2020, 05:20 PM
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Everything else aside, are the investment options better at one vs the other?
Old 01-24-2020, 05:22 PM
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Leave it alone and start new, done it many times.
Less eggs in one basket.
Old 01-24-2020, 05:23 PM
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Originally Posted by Tawn View Post
That does help. Thank you.

As she has explained it to me, the new company is not doing a direct rollover for them. They must do it themselves or they can just chose to leave their current balance with Fidelity and start fresh with Schwab.

The last time the company was sold, they didn't give them that option - they did the direct rollover for them.

FWIW, it is a medical imaging facility (a chain really). This is the second time it has been sold in four years.
In this case I'd stay with Fidelity. If for anything it gives you more investment options and diversity. Both good companies too - not as good as Vanguard - but still ok.

Last edited by kone; 01-24-2020 at 05:28 PM.
Old 01-24-2020, 05:24 PM
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Originally Posted by kone View Post
I have to assume that the plan from her original employer will be no more at some point and she won't be able to stay in it? If so, wouldn't the plan and participants be moved to new company plan at Schwab - probably put into a money market fund then she can invest as she wishes in the new plan's fund offerings?

At Vanguard (my wife and I both worked there) they would communicate with any new participants in similar situation, there was no guessing. I would think Schwab would do same.
The way I understand it, she will no longer contribute to the Fidelity account but it will continue to set there and grow (hopefully). Obviously the new employers match will go into the new 401K with Schwab.

The company is not doing the direct rollover for them. She did receive a rollover form from Schwab but she is debating just leaving her old 401K balance with Fidelity and starting from scratch with Schwab.
Old 01-24-2020, 05:26 PM
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Originally Posted by aubv View Post
Everything else aside, are the investment options better at one vs the other?
From what I have learned, it is pretty mush a wash.
Old 01-24-2020, 05:43 PM
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Originally Posted by Tawn View Post
The way I understand it, she will no longer contribute to the Fidelity account but it will continue to set there and grow (hopefully). Obviously the new employers match will go into the new 401K with Schwab.

The company is not doing the direct rollover for them. She did receive a rollover form from Schwab but she is debating just leaving her old 401K balance with Fidelity and starting from scratch with Schwab.
Which firm provides the most protection of your investments if all others factors are equal?
Old 01-24-2020, 05:51 PM
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From a risk stand point, thinking in terms of a computer system hack, it isn't the worst thing in the world to have funds at two different brokerages.
Old 01-24-2020, 06:01 PM
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The plan may dictate if you need to do something with the funds. Fidelity won’t complain as they are making money off the management fee.

from an early retirement standpoint, access to an employer 401k is less restrictive. It may have to be rolled into the new plan to be considered the employer you are retiring from.

Outside of that that everything else is covered above.
Old 01-24-2020, 06:04 PM
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All eggs in one basket is a good point. Plan fees are something to consider. From what I’ve seen I think Fidelity has decent fees
Old 01-24-2020, 06:05 PM
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Went thru a similar situation 5 years ago.
The only downside of keeping funds in original plan that I found, was that I would not have been able to take out a loan if needed.

Old 01-24-2020, 06:07 PM
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Originally Posted by 999 View Post
All eggs in one basket is a good point. Plan fees are something to consider. From what I’ve seen I think Fidelity has decent fees
now that you mention it, I believe that was another concern i had keeping funds with Fidelity
Old 01-24-2020, 06:10 PM
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Originally Posted by BACKTOTHESEA View Post
from an early retirement standpoint, access to an employer 401k is less restrictive. It may have to be rolled into the new plan to be considered the employer you are retiring from.
Good point! Put Rule of 55 into the Google machine.
Old 01-24-2020, 06:27 PM
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A lot of times, the employer is covering some of the expenses. And a lot of the time, employers cut a deal with Fidelity to give employees some good funds and some marginal funds in order that the employee doesn't make some dumb decisions and not get a decent ROE.

I was fortunate that my company let us play all of Fidelity's funds if we paid the expenses, and I hand picked the very best funds for many years. But when we retired and left the company, we were required to exit MegaCorp's 401K program and I moved all money into a self directed IRA Rollover account.

The company will tell her when she must exit their plan. If she prefers Fidelity, then she can move her accounts to a Fidelity Rollover IRA. New funds can go to Schwab.
Old 01-24-2020, 06:37 PM
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Where did the LIKE button go?

I appreciate all the input guys.

She has a Jumbo CD that matures in June 2020. As soon as that money becomes available I am marching her ass to a financial advisor so he can help her.

I am out of my depth here. Mine is easy. Navy retirement check and a Govt TSP account; It can't get much simpler.
Old 01-24-2020, 06:47 PM
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Others have said to look at the Funds and Fees options. And I like simple. If you have the same fees and fund options having everything in one place would be simpler.


I had an option fairly recently of keeping my 401k or rolling it over into an IRA and I did the rollover because the fees and funds were better at Vanguard than the 401k Company.


Old 01-24-2020, 06:54 PM
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Originally Posted by Tawn View Post
Where did the LIKE button go?

I appreciate all the input guys.

She has a Jumbo CD that matures in June 2020. As soon as that money becomes available I am marching her ass to a financial advisor so he can help her.

I am out of my depth here. Mine is easy. Navy retirement check and a Govt TSP account; It can't get much simpler.
An earlier post talks jokingly about getting your financial advice here on Hull Truth. I know that others on here would say that a financial advisor is great but that some of us feel better going on sites like Bogleheads.org or reading John Bogle's "The Little Book of Common Sense Investing" and doing it ourselves.
Granted the market has rocked and rolled since 2009 but I have done pretty well doing my investing myself.

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