Quick context: I’m 29, and have ~$19,500 (fully vested) in a 401k. It’s all in a target date fund. I make $79,000 a year rn.
About a week ago I started a new job that comes with a state pension. Some I’m wondering what the best options are for my 401k account. Definitely willing to roll it into something I can still contribute to.
The new job offers supplemental retirement plans—a 457(b) and a 403(b) for those who are interested. Would those be the best options or are there other investment options that would better suit me?
My priority is low-maintenance growth. I’d like be able to set it and forget once I decide on the best account type. I’d rate my risk tolerance probably a 7.5 or 8 out of 10.
So with all that in mind, any one have any advice on how to best handle that 401k account?
Left my 401k job for one with a pension. What to do with the 401k?
byu/Cbeauski23 inpersonalfinance
Posted by Cbeauski23
6 Comments
My recommendation would be to do a direct transfer rollover to an IRA: I find it simpler than leaving an account lying around tied to an old employer, and it gives you maximum control over the investment options.
IF you don’t care about backdoor Roth, rollover to IRA at fidelity or Schwab.
If you do, roll to IRA now, and to a future 401k/403/etc at some point to maintain backdoor IRA capability and avoid pro-rata
This isn’t a life altering amount of money and you are young so you can probably be aggressive with it. Not crypto aggressive 🙂
I rolled over a 401k to an IRA years ago and since it was in an isolated account, and under $2000, I just put it in a nasdaq index fund and had it do well over the years before I finally combined it into a larger IRA.
Roll it directly to a Vanguard or Fidelity
rollover IRA and invest it in a Target Fund.
With a backdoor Roth IRA, always keep in mind the state tax implications.
That is, if you live in a state now that imposes income tax on the transfer to a Roth, but when you retire you move to a state with no income tax, or no income tax on retirement income, …then you paid the state tax and lost the potential gains on all that money … for nothing!
Keep it and get enrolled in another 401k/IRA asap. Both my spouse and I had good health care jobs with pensions and both of us were let down when our employers changed their retirement plans and closed the pensions. Keep your options and finances open.