What should I do with my savings from my prior job?

Question

I recently took another job with a better retirement/benefit plan. I had worked for 10 years at another place and wanted to know what should I do with the money that had been put into my retirement plan. I want to roll it over to something else seeing as I'm not contributing to it anymore. I do have a financial advisor, but wanted some other opinions as well.

Answer 1

I'd go with a rollover IRA of mutual funds with a major mutual fund company. The type of mutual fund, and level of risk, would depend on your age.

Answer 2

I assume your old "retirement plan" was a defined contribution plan, like a 401(k), rather than a defined benefit plan, which are what traditional pensions are called. If you like the old plan, you can leave it alone. You can also move it to a traditional IRA (not a Roth IRA.) The IRA gives you a lot more choices, and reduces the amount of mail you get.

You can probably also move it into your new employer's plan. But again, you're limited to the investment choices in that plan, which will be fewer than in an IRA.

Answer 3

Assuming you're younger than 40 and have more than $3000 in the account: I advise you open an account with Vanguard and roll it over to an IRA, then invest it in a low-expense index stock fund like VTSMX (Vanguard's Total Stock Market Index). If you have more than $100k, get the "Admiral Shares" version, with an even lower expense ratio. Then sit on it until you're 59.5 and watch it grow. :-)

Good luck with your new job,

Doug

Answer 4

If you already have an IRA account set up you can roll it into it. If not you could set one up now and then roll it. One important thing to remember so as not to pay taxes on it now is to not have it sent to you but straight to the bank where you have your IRA. Discuss this with your bank. I did this myself.