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As far as I know, all 401ks charge recurring fees to the employees. Some even charge percentage fees based on your balance. This is on top of the fund fees you'd have to pay for Fidelity/Vanguard/etc funds.

Also, as far as I know, personal IRAs at places like Fidelity and Vanguard do NOT charge recurring fees.

Isn't it always better to roll over your 401k at a company you left into your own personal IRA where you have no fees, and can invest in whatever funds you want?

I'm trying to think if there are any advantages to rolling over a 401k into a new company's 401k, or leaving it in the old company's 401k account...

Chris W. Rea
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Michael Pryor
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1 Answers1

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I'm trying to think if there are any advantages to rolling over a 401k into a new company's 401k, or leaving it in the old company's 401k account...

Advantages of 401k (either the old one or the new one):

  1. (In the company where you're currently employed) you can take a loan from your 401k.

  2. Depending on the plan choices you may have funds with much lower expense ratios in 401k than are available to retail investors (IRA).

  3. There are no RMD (Required Minimum Distributions) from 401k.

  4. 401k balance doesn't affect the IRA->ROTH conversion (the IRA loophole).

  5. You can start withdrawals from 401k at the age of 55, IRA - at the age of 60.

Disadvantages, as you mentioned, are fees and plan choices' limitations. The decision is yours, but it's not straight-forward. You'll need to decide which trade-offs to make.

littleadv
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