I'll be leaving my current company soon and have no intention of leaving my 401k in their plan. I have a feeling the defense industry is going to be in for some serious, serious pain over the next 4-7 years and going forward.
I don't have a ton of money in the 401k since I've only been with the company a couple of years, but I'd still like to hear what you guys think.
Thoughts/opinions/suggestions?
No one?
z31maniac wrote: No one?
Patience, grasshopper! All the good financial minds are in bed resting late at night, not howling at the moon! 
Remember, your contract with regard to your 401k is with the managing investment company and not with your employer. If you like the investments within your 401k, I do not see a compelling reason to move it just because you change jobs.
That said, you do need to monitor investment options, and compare fees. Also, one or more of your fund options may be discontinued over time, and you may find that a self-directed or other plan is preferable. You may roll over your 401k into a new plan at any time, so it's not something you need to feel rushed about. Whatever you do, don't cash it out!
^Yes, but our match, is only matched in the company stock. So, regardless of the company running it (Fidelity) it's basically 75% company stock.
Definitley, absolutely no plans to cash it out.
Are you completely vested yet? My guess is that if you've only been with the company for a few years some portion of the company stock is not really yours yet and will go away as soon as you depart the company.
I had a similar situation last year, and I just rolled the balance into my new employers 401k plan. There may have been better things to do with it, but I wanted it all in s single account for simplicity.
^All but about 3.5% is vested.
That does complicate matters.
http://finance.yahoo.com/retirement/article/102738/Know-Your-NUA
My employer dropped their match 1-1/2 years ago due to the economy tightening the belt.
When I occasionally ask if there are plans to bring it back they tell me they'll let me know with a condescending tone. Just asking! That $1,500 match might turn into $10,000 in 20 years.
I got very lucky with mine. When I finally moved it, after being let-go by my employer, I put it into a long term CD about 6 months before the economy tanked in '08. If I had had a shorter term CD, and gotten my money out afterwards, I guess I could have done decently. But still managed to make about $1,500/yr on it.
I have no idea what interest rates are now, but I doubt they are good enough to recommend you go the CD route.
My 401K was also with Fidelity. I had put alot of money into overseas funds. Some did good, some not so good, it was a wash some years and a small bonanza others.
The simplest thing is to roll it over into your new employer's 401k, assuming they have one. Otherwise you can leave it where it is, or move it to a new retirement fund elsewhere.
I think micromanaging the funds is not worth the effort, but you do want to review them a couple times per year and rearrange them to suit the present conditions. For the long term they should be well diversified.
I don't know enough about finance to make those decisions myself, so I go by what my finanical advisor recommends. So far she's done very well for me.
I'd recommend getting the funds into something like an IRA where you have a large number of investment options. One of the problems with most 401Ks is that you have limited investment options, and so rolling the money over into an IRA with a large company can expand your choices.
z31maniac wrote: ...it's basically 75% company stock.
Sell that E36 M3! Diversify! The reason so many Enron employees lost all of their money was because they were holding Enron stock.
I wouldn't have more than 10% of my portfolio in company stock.
z31maniac wrote: ^Yes, but our match, is only matched in the company stock. So, regardless of the company running it (Fidelity) it's basically 75% company stock.
Ouch. That's "shades of Enron" right there[1]. I'd look into diversifying this, but make sure you get some good advice first. 75% in a single stock is very problematic IMHO.
z31maniac wrote: Definitley, absolutely no plans to cash it out.
I'd say roll it over into the "new" 401k if that's possible and if they offer a decent choice of funds. I'd also look at rolling it into a (Roth) IRA but there might be tax implications (IIRC Roth IRAs are funded out of after-tax income, 401ks out of pre-tax income so you might incur a tax liabilty).
[1] Enron put some pressure on its employees to put a lot of their 401k money into Enron stock. That didn't work out so well, especially for long term employees. You really need a diversified portfolio rather than a monoculture like this. Unless you're planning on a second career working at Wally World in your 70s or 80s.
did my post get deleted, or did i hit backspace instead of enter?
Your choices are basically:
cash it out. This is stupid, you pay all the tax immediately, lose 10% on top of that, and then there's the whole "spending retirement money now" thing.
If you meet the minimum, you can keep it in the old 401(k). There's nothing intrinsically wrong with this, but there's really no advantage to doing it other than being lazy.
Roll it into the new 401(k). This has the advantage of simplicity, because you only have one account to manage. If you have a relatively small sum, then it might be beneficial in allowing you to invest in things that you wouldn't otherwise be able to meet the minimum for (although this is unusual in a 401(k)).
Roll it into an IRA (either an existing one or open a new one). This will give you two accounts, but the funds in the IRA will have a lot more investment options. You'll also gain the ability to pick the broker, rather than being forced to use the one your employer chose. If you're paranoid, this means you can diversify your retirement savings across multiple institutions, which provides some protection against bank/broker failure and/or theft by execs at that broker (both of which are, admittedly, unlikely). A more useful reason might be if you prefer the web UI offered by one company -- I hated the JP Morgan 401(k) web UI that my old company used, so I rolled the funds into an IRA with the same broker that I keep my regular investments at.
One other thing to consider is conversion of traditional IRAs into Roth IRAs and of 401(k)s into Roth 401(k)s. If you have a mixture of pre-tax and post-tax funds and are only converting some of your retirement savings, then you can't always split the pre and post-tax funds the way you would like. IRAs and 401(k)s are treated as different buckets of funds for this purpose, though, so there may be benefits to keeping stuff in one type or the other if this is something you want to do. It's pretty complex, though. :)
I also agree with the idea of diversifying any large percentage holding, especially if they happen to be in your employer's stock.
If you're going to roll it over, make sure that the disbursement of the funds goes directly into the new account. Any check needs to made out to the new broker, for benefit of your account, rather than being made out to you.
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