401k advice question

[pxc]

Given the type boards I normally frequent I figure a golf board might have a few more knowledgeable types.

I have a 401k from my last employer that I haven't done anything with. It doesn't have much in it at all, as I went from contractor to employee to a new job in a relatively short period of time.

There's no new cash going into it obviously. I can roll it over into an IRA but don't know a ton about this stuff. I have a friend who loves stocks and managing them, that just isn't me. So I'm trying to decide on a course of action here. I could just leave it there and check it occasionally - before the economy tanked my funds seemed to be doing well enough. I could move it to an IRA and start putting money into it again, maybe just in an index fund or something since I'm no stock guru. I could just draw the money out but the taxes seem prohibitive and I don't need the cash.

I don't know a ton about IRAs. If I talk to Fidelity (401k provider) my guess is they'll try to sell me on something rather than tell it to me straight. It seems like my best option, but if anyone has any input I'd welcome it.

[ChiChiIsMe]

I'd roll it into a Roth IRA invested in good growth-stock mutual funds.

Also, make sure they roll it over direct, and not cut you a check, if they cut you a check there will be withholding.

[jaragon126]

I was in a similar situation: I had a 401k from a previous employer and the place I'm at now doesn't have a retirement plan. So, what I did was roll my 401k over into a roth IRA at the bank that I have my checking & savings accounts at (Wells Fargo).

I emailed Wells Fargo to ask them what my options were and an investment specialist called me on the phone. I know nothing about stocks, I didn't want to spend any time trying to figure out what's good or not ... I just wanted to put my money somewhere & hopefully earn more than a low interest savings account.

The guy informed me that they had 3 IRA "packages" that would work good for me. One was low risk, one was mid risk, one was high risk. Each of the packages included many investments or "funds" i guess you would call them ... so all my eggs weren't in one basket. The guy helped me decide on the mid risk after asking me some questions about what I was looking for (I didn't want anything too risky because I didn't want to lose my money).

Now I get updates a few times a year, and I don't have to lift a finger. They do all the management themselves, I don't get charged a bunch of money for making stock trades or anything. My money is just in a fund that hopefully ends up earning more money than it loses

[cirem22]

there is not one simple answer for retirment funds. You need to do what will work for your situation. There are a number of funds for different risk profiles. Simply put if your retiring soon, leave it, its probably not worth any fees you may incur during the transfer (plus the headache) but if you have another retirement fund and plan to add to your retirement fund then by all means move it. If you leave it with your old 401k you will have your $ parked in the same investments and funds, averaged in over the life of your prior job with no more $ being applied. If you move it you can now average in any future $ you may put toward retirement. With the given fact that you are NOT one to time the market, this is the way you want to handle your investments, averaging in your investments over time. Each month, quarter or year adding to your investment, regardless of market movement. By doing this you have taken the timing factor out of play. If you leave your 401k there then you will not have access to do that with your prior investments, you have indirectly timed the market. Just my two cents.

[Uber$winG]

I’d cash it in… buy a brand new golf cart shaped like a Porsche, get a new truck with trailer to haul it, and buy some Miura irons. But that’s just what I’d do.

[pxc]

there is not one simple answer for retirment funds. You need to do what will work for your situation. There are a number of funds for different risk profiles. Simply put if your retiring soon, leave it, its probably not worth any fees you may incur during the transfer (plus the headache) but if you have another retirement fund and plan to add to your retirement fund then by all means move it. If you leave it with your old 401k you will have your $ parked in the same investments and funds, averaged in over the life of your prior job with no more $ being applied. If you move it you can now average in any future $ you may put toward retirement. With the given fact that you are NOT one to time the market, this is the way you want to handle your investments, averaging in your investments over time. Each month, quarter or year adding to your investment, regardless of market movement. By doing this you have taken the timing factor out of play. If you leave your 401k there then you will not have access to do that with your prior investments, you have indirectly timed the market. Just my two cents.

Thanks, that made a lot of sense and was very helpful.

[whetstone]

Good advice, here.

there is not one simple answer for retirment funds. You need to do what will work for your situation. There are a number of funds for different risk profiles. Simply put if your retiring soon, leave it, its probably not worth any fees you may incur during the transfer (plus the headache) but if you have another retirement fund and plan to add to your retirement fund then by all means move it. If you leave it with your old 401k you will have your $ parked in the same investments and funds, averaged in over the life of your prior job with no more $ being applied. If you move it you can now average in any future $ you may put toward retirement. With the given fact that you are NOT one to time the market, this is the way you want to handle your investments, averaging in your investments over time. Each month, quarter or year adding to your investment, regardless of market movement. By doing this you have taken the timing factor out of play. If you leave your 401k there then you will not have access to do that with your prior investments, you have indirectly timed the market. Just my two cents.

If he moves it to a Roth, he will have to pay tax on the entire amount first. I agree that all future retirement funds should go to a Roth.

I'd roll it into a Roth IRA invested in good growth-stock mutual funds.