What is the best for Roll over my previous 401K to new employer 401K or IRA ?

Question

I just got a new job and want to know what is the better saving ways to roll over my previous employee 401K.
Which way is better between rolling over my previous employer 401K to new employee 401K Plan or personal IRA?
My new employer pay all the expenses on the 401K plan which is a great saving for me on maintainance expense compare to personal IRA which I will have to pay.
Please explain in detail why should I convert to my new employer 401K or Personal IRA as following.

1) Account Maintenance cost.
2) Withdrawn after retired at 60 years old.
3) What other cost compare with employer 401K and personal IRA


Thanks
Alex

Answer 1

Alex,
I would suggest you roll the 401k to an IRA. The reasons why are three fold:
1) The possibility for unlimited investment options (stocks, bonds, mutual funds, cds, etc) in a self-directed IRA account.
2) The opportunity for you to control it. Not tied up in your employer's plan. Also you will never have black-out periods nor forced changes of 401k vendor (which happens at many companies).
3) Availability if you are still working after 59 1/2 to pull funds from the IRA without triggering a loan (like a 401k).

As far as the costs go, I think you are misinformed. It may seem that you are getting your 401k mutual funds for free. Actually, each of them charge internal management fees that can range from .2%-2%. You never see it b/c it is taken out of the funds performance.

To answer your questions:
1) Annual fees can range from as low as $0 for some no-load mutual fund companies to around $30-$40 for a self-directed IRA through a full-service advisor.
2) Regardless of whether you have an IRA or 401k...after 59 1/2, you can withdraw either plan without 10% penalty. You only pay taxes.
3) If you buy CDs or bonds, the comission is built in to the price. If you buy stocks, you pay a comission on the buy & sell. If you buy mutual funds, you have a few options: a) no load=$0 upfront (but no service) Ex: Fidelity, Vanguard b) A,B,C shares through a full service broker Ex: American Funds, Franklin Templeton
If you know what you're doing, you can do fine with a no-load family. If you need a little hand-holding, then check out broker satisfaction at JD Power for best broker. Hope this helps!

Answer 2

This is an easy one. Roll it to an IRA. No brainer.

You're focusing on the wrong variable. It's not about cost, it's about value.

An IRA will give you much more flexibility (and insure that you control your financial service provider and not your employer's HR department).

Can your new 401(k) guarantee lifetime income? Do they allow you to buy ETFs? What about individual stocks? Ever thought about trading options or commodities? What about FDIC principal guaranteed CDs? Does your new 401(k) come with an investment advisor? Exactly how many mutual fund options are there in that 401(k)? Blackout periods only exist with 401(k)s.

I'm not saying that all of these things are important to you, but none of them are even available to you with a 401(k).

Answer 3

Don't have time for a long explanation... I'd like to simply add my vote to a rollover. It's not even a contest. Too many reasons to go through now. Check out;
Schwab or Fidelity Brokerage. Look at Vanguard or T. Rowe Price.

If you feel you must have a brooker (and pay commisions)... Do the American Funds with Edward Jones.

JUST DON'T BRING YOUR FUNDS TO THE NEW EMPLOYER
(Less good choices, freedom etc.)

Answer 4

Roll it into a Roth IRA, you will be able to withrawal everything tax free