Hey everyone, had a quick question.
So basically my company 401k is changing due to being bought out by another company. They said I have to roll over my current 401k over to the new companies 401k in 3 months once it becomes available.
My question, should I just roll it over to the new one once that becomes available? Should I roll that money over into my individual Roth IRA? Open up a brokerage and roll it over there? I know there’s traditional too but seems a bit meh to have basically 3 retirement accounts.
Also, considering a brokerage just because I’ve been meaning to open one to throw all my extra money in there after maxing out my Roth IRA which I usually just max the beginning of the year.
I’d want it to be pretty liquid too as I may use the money down in the next couple years to buy property. I know markets always not the safest play when putting that into mind but I’m willing to.
Age is 21 if that helps anything.
Company 401k/ rollover question.
byu/Unknown17041704 inpersonalfinance
Posted by Unknown17041704
5 Comments
You most likely can’t move it out of the sponsored program without quitting your job
If you could move it to a brokerage, that is a taxable event. A rollover IRA / 401k would not be
You definitely can’t roll it over to a brokerage. That would be like withdrawing your 401k, you’d have to pay taxes and penalties.
And generally you can’t just choose whether you roll over to a Roth or traditional IRA. If you were making Roth 401k contributions, you would roll those over to a Roth IRA. Traditional 401k contributions you roll into a rollover IRA. You can roll over traditional 401k to Roth IRA, but it’s a taxable event.
Roll it into the new 401k if they have solid low-fee index funds, and open a separate brokerage for your property savings, that’s the cleanest setup at 21. Just keep in mind that money you need in 2–3 years for property is risky in the market, so consider keeping some of it in a high-yield savings account instead.
Keep it in a 401k. Not an IRA. Unless your 401k is really really crappy.
401ks are protected by ERSIA. Federal law. Should your life go sideways, your nest egg is off limits from creditors. It will even survive bankruptcy.
You are young. There is value to that protection. Use it.