Make sure you move the money from the 401k to IRA within 60 days!
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Iām not an advisor. but I donāt think you can roll into a 401K at a new company with old money. At least weāve never been able to. You can definitely roll out 401K to IRA. Iād check with a tax person.
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Be aware that if your son is high income and eventually wants to do backdoor Roth, he cannot have that money in a pre-tax IRA.
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"If he wants to āsimplifyā things and move everything to Vanguard, he can convert his Fidelity 401k into a Vanguard rollover IRA with no tax implications. Is that correct? "
Yes, make it a trustee-to-trustee transfer so son never has to touch the money.
"And then if/when he gets another job with a 401k, he can reconvert that rollover IRA to the new 401k. Still correct? "
Not sure, but note, not all employers allow Transfers-in.
āThe stock at ML can be transferred to Vanguard with no tax issues, right?ā
Yes, but double check to confirm that it is all pre-tax stock. (My former company had an Employee Stock plan which had both pre- and post tax amounts. The post-tax can be transferred to a Roth.)
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Thanks so much! He just called with another potential job on the horizon. This kid ā¦
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Just to clarify, the 60 days rule only applies to money that was sent to the plan participant as a distribution. It must be deposited into the new plan within 60 days to avoid tax headaches. A direct rollover avoids the hassle of having to deposit the distribution money into the new plan within 60 days. Most plans that allow rollovers can handle that.
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I would stay away from Vanguard, I transferred all of my Vanguard accounts to Fidelity, horrible customer service, plus they do mess up quite a bit now that they go for low fee.
Itās not like that before.
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I was able to do that with one company.
And I had a seamless transfer of my assets to Vanguard. I have never had any problem with the company, which I have used exclusively since 2015.
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I also do not believe he can go into another company 401k with other money.
DDās income was low enough to go state pension fund to IRA to Roth IRA (we use Fidelity). She paid the taxes for the Roth conversion. She now is āstarting overā in new company with their matching on 401k.
Once he has an IRA, he may want to have the stocks go into the IRA - so would have to go through Merrill Lynch to have those stocks sold and have those funds go directly into IRA w/o his hands on it.
I have no experiences with Vanguard. Have used several others over the years with company 401ks, etc. I just get to learn the investments within our 401k and go from there.
One company sale had DH with funds he needed to roll over, and we were young and inexperienced with investments. Merrill Lynch had their hands on it, and we could not pull it out w/o 3% charge the first year, 2% charge the 2nd year, and 1% charge the third year. They gave a stock recommendation, and it turns out the minor recommendation was the great one - we had 20% in it and it surpassed the 80% in their chief recommendation. Poor advising and IMHO they were working for themselves and Merrill Lynch and not for us - what we purchased was new issue. Once we became more savvy and had time to investigate, we pulled our stuff out.
I didnāt think so either, but thatās what the woman on the phone said. He may not be interested in doing all that I asked about, but he asked me and I didnāt know so I asked because I am always asking questions.
When I was with them, I rarely called them for advice, in fact Iāve avoided the advisor at all cost. I only called them for basic stuff that I must call them. I donāt need a financial advisor, Iām also my own tax advisor, since my background was in accounting before I transferred to engineering.
But the level of incompetence at Vanguard is above what I can tolerate for a financial firm.
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Maybe itās because I am enrolled in the Personal Adviser service. I have loved my advisers over the years and they are extremely responsive and efficient.
Here are a few for you to read if you have time, but there are so many like these pop up if you do some googling.
āThey mess up after the people die and thatās could cause problem for your heirs.ā
Everyoneās needs are different. Been with Vanguard for 30+ years and have never had an issue. But then my needs are minimal. All of my actions are completed online, and I call maybe once every few years.
As to heirs, I found Vanguardās beneficiary group to work well when my mom passed.
I read the article you posted and am non-plussed. The posterās account was setup for quarterly statements, so yeah, the month-end report was not available. (And Iām glad Vanguard does not respond to an individual mortgage request for balances ā keeps costs lower.)
There are many on bogleheadās that prefer a bricks-and-mortar office, and Fidelity works great for them.
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We are all the product of our experiences. I know people who always buy brands of vehicles that are consistently ranked at the bottom of the āmost reliableā lists. Why would they do that? Because they have had good experience with them in terms of reliability. And in a few cases, they bought the top āreliableā brands and had problems with them (no maker has 0% reliability issues). You do what works for you.
I have had Vanguard accounts for 30 years. Havenāt had any issues with them. I know other people with Fidelity accounts (my son has most of his investments with Fidelity in large part because that is where his 401(k) is so it makes easier tracking). He has a Vanguard Roth IRA that I set up for him. Not sure if he moved it to Fidelity as I turned it over to him when he got his first job. Again, people do what works for you. Why there are options.
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Yes, you can rollover IRA (funds from old 401(k)) to new 401(k).
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The woman said something about rolling the 401k into a traditional IRA or a rollover IRA and that a difference is that a rollover IRA is what can be rolled into the new 401k.
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Yes.
I rarely called them when I was with them. In fact I avoided their advisors at all cost. But the level of incompetence there is above what I could tolerate for a financial firm.
I only called them to fix their mistakes or to fix basic stuff.
The people they put to helping customer service is best described as incompetent. They gave wrong answers so many time, and so confusing, my goodness, their low cost model has gone wrong in my opinion.
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