{ "media_type": "text", "post_content": "I'm switching jobs and considering whether I want to roll over my 401(k). I have about $220k in my plan. Considering rolling it into an existing Fidelity IRA with a balance of about $50k. Since October of 2020, I've paid about $880 in \"plan administrative fees\" to my 401(k) provider as well as the fund expense ratios.\n\nIt looks like Fidelity does not charge administrative fees on IRA accounts, so that seems to make it a no brainer, plus the investment options are much broader.What am I missing?\n", "post_id": "61a7a1c32a3fd1002bd63546", "reply_count": 21, "vote_count": 1, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

I'm switching jobs and considering whether I want to roll over my 401(k). I have about $220k in my plan. Considering rolling it into an existing Fidelity IRA with a balance of about $50k. Since October of 2020, I've paid about $880 in "plan administrative fees" to my 401(k) provider as well as the fund expense ratios. It looks like Fidelity does not charge administrative fees on IRA accounts, so that seems to make it a no brainer, plus the investment options are much broader.What am I missing?

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It is a bit complicated because we don't know what will happen with the bill that is currently with the senate. If the backdoor Roth goes away, that changes the approach. The tax savings of a backdoor Roth are more important than the wider investment options. If you want more options, do that in your Roth IRA or brokerage account. --- 1. If you want to hold out hope that the backdoor Roth is staying: Move the old 401k into the new 401k. Why? Because even with less investment options, it allows you to avoid the traditional IRA. Having a traditional IRA balance triggers the pro-rata rule when you do a backdoor Roth. However, you already have an existing traditional IRA balance. This will cause issues with the backdoor. I would move both the old 401k and the current traditional IRA into the new 401k (not totally sure if the latter works but I've heard of it). --- 2. If you think the backdoor Roth is going away: Move the old 401k into the traditional IRA. Why? More investment options. And in your case, avoid the fees at your old 401k provider. If the old provider had good fees then it would be okay to leave it there if you wanted. --- In either scenario, I'd move your funds out of the old 401k because of the fees you're seeing.

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The last point is key — it is legal (at least for now), but the plan still has to allow it. My plan did not allow it until this year, and even then it is capped at $10k.

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What’s the % match at your new job? Is it greater than the plan administrative fees?

funny

Rolling over to the new plan for simplicity also seems valid unless you want to free up your options or you’re really mad about expense ratios on the available funds. The admin fee should be flat regardless, no?

As I understand it, this is a typical move for exactly these reasons, but tagging in to hear whether anyone else sees it differently.

How old are you?

35

I have always rolled 401k plans into one central IRA at Vanguard. 1) it’s easier to track / manage when it’s all in one place. 2) Vanguard has very low fees, and you’re likely to have much higher fees in corporate 401k accounts 3) In your own IRA account you aren’t limited to investment choices curated by the plan administrator - you’re free to invest in anything available to you through the brokerage platform you choose (Vanguard in my case, but you might prefer another).

Interesting. Makes sense for direct IRA contributions that aren’t deductible because of income limits, but what about for someone like me who has already rolled say a million dollars of 401k accounts into a traditional IRA? Also assume I have enough income surplus right now to both max out existing 401k AND max out after tax contribution limits (to the 401k? Not sure how that would work). Still worth doing? Maybe I need to go re-read details on this topic.

Roll the existing 401k and Traditional IRA into new company 401k. On the off chance backdoor Roth isn’t killed

New employer 401k: lower fees and the opportunity to take loans but with less investment options and less control. IRA: Almost any investment option on the planet available and complete control of your account but more expensive to manage and can not take loans.

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