So I just got a notice from great west that my old company's 401k is being cancelled. If I don't move it somewhere else they'll move it to a fund of their choosing.
I've already have a Roth IRA at vanguard but want to move the money somewhere I can start contributing again.
Thanks Dan
Talk to Vanguard about a rollover IRA? Unless you can afford the tax hit, you probably don't want to roll over the 401k into anything that has the word "Roth" in it.
Vanguard should also be able to advise you on a custodian-to-custodian transfer (I think that's the correct name). Basically you don't want the 401k company to send you a check and do a direct transfer to the rollover IRA instead.
I use an Edward Jones guy who I trust very much. My guy is in Michigan, though, but I'm sure you could find a guy in your area just as helpful. I've rolled over a few 401k's to this guy, and my wife and I both have other investments and life insurance with him. Find a good one and ask him.
What do you mean you "want to move the money somewhere I can start contributing again"... Or more specifically, why does that not match a Vanguard description?
I'm not saying I can't contribute to funds I roll over to vanguard. I do think its best to not have all my money with one firm in case the firm goes under.
dankspeed wrote: I'm not saying I can't contribute to funds I roll over to vanguard. I do think its best to not have all my money with one firm in case the firm goes under.
The firm could go under, but the funds would remain funded--with Vanguard, you'd only have to worry about if pretty much every company goes under. Notice how you still have the money from your old 401k even though it has gone under? Same thing would happen.
And the point of Vanguard is that it is all index funds. So it is by nature diversified. If the value of [Insert just about any Vanguard fund] has dropped to zero, then the value of the underlying assets must also have dropped to zero.
If the underlying assets in a total market index has dropped to zero, then the US economy has collapsed overnight.
If the US economy has collapsed overnight, then the global economy will also have collapsed overnight.
If the worldwide economy has collapsed overnight, then my chief concern won’t be the value of my retirement portfolio, but finding fresh water, ammunition, and batteries so that I might survive another day against hordes of brain-eating zombies which have taken over the world.
Put it all in Vanguard.
In reply to mtn:
I mean if vanguard goes under.
I rolled my 401's over to a Vanguard IRA and have been very pleased with its performance. The fund symbol is VWIAX, check its performance.
Anything can go under, but Vanguard's been around so long I sorta doubt they are going anywhere. Whatever you do, do NOT let the current company choose a fund for you!
Keep in mind Roth and traditional IRA's are governed by different rules, Roth is after tax money and a traditional is pre tax. To avoid getting hit with penalties you will need to roll the 401 into a traditional IRA.
You can also do your own IRA contributions.
Vanguard is one of the more highly rated companies out there (at least from my research)
grab a copy of USA today and in their financial section it has a box of how some of the better known funds are doing year to date…
if you're wanting to use another fund than Vanguard, I'd recommend American Funds … several choices … all well run and doing well by their customers
another thought is an index fund … the S&P 500 has done extremely well this yr (and most yrs) maint. fees are usually extremely low compared to hands on run funds
dankspeed wrote: In reply to mtn: I mean if vanguard goes under.
Once again, if vanguard goes under, your money is still safe. Vanguard is actually a group of company's. Each Vanguard fund is its own company, so there is nearly zero chance of the entire thing going under.
For the sake of argument though, lets say that one of the funds does go under. You're still ok, because Vanguard doesn't actually own any of that. They manage it, JP Morgan holds it, and you own it. So saying that all of Vanguard goes under (fat chance, seeing as there are probably at least 10 different "too big to fail" compaanies that utilize them for their 401k's), the only issue you have is how to get that money. It would probably take a month or two to figure that out, but in that situation you'd be relying on your emergancy fund anyways.
But by all means go to other companies if it makes you feel better. I recommend you do vigorous research on it first, and as great as this forum is, a car forum probably isn't the best place to do it (hint: no forum likely is).
wbjones wrote: another thought is an index fund … the S&P 500 has done extremely well this yr (and most yrs) maint. fees are usually extremely low compared to hands on run funds
Whatever you do, do an index fund--whether it is with Fidelity or Vanguard or whatever. Index funds have beat managed funds on the whole for a long, long time.
Hey guys! Thanks for all the help. Spent the day doing research and I"M 99% sure I'm going to roll my 401K into a vanguard ira. Now I just have to decide what funds to choose.
I could play it safe and choose one of their target funds or break in up between a few different ones. I have checked out a few of their index funds. I checked out my roth ira I have with them. I have that money in an extended market index and it's done quite well. I am also debating dabbling with a healthcare or energy fund.
Thanks again,
DanK
Keep in mind that the stock market is about at peak stupidity right now and that retirement accounts are safe until they are not. I figure at some point in the future our accounts will be taken (or a portion of them will be taken) as a way to 'fix' social security. May sound far fetched, but ask the folks in Cyprus or Poland about it. And don't even get me started on MF Global. In short, once you give the banksters your money it is not really ever safe.
Send the money to me and I will deposit it and cut you a check for 110% of the original value. My address is in Nigeria...
In reply to pinchvalve:
T.J. wrote: Keep in mind that the stock market is about at peak stupidity right now and that retirement accounts are safe until they are not. I figure at some point in the future our accounts will be taken (or a portion of them will be taken) as a way to 'fix' social security. May sound far fetched, but ask the folks in Cyprus or Poland about it. And don't even get me started on MF Global. In short, once you give the banksters your money it is not really ever safe.
Wasn't the Poland one only taking all the government bonds? i.e. all stocks would be "safe"?
Not that that makes me any more comfortable, but very little of my portfolio is in any bonds.
My understanding is that the critical step in this is having your current (closing) account make the check to your new brokerage firm for your use. Do not have them cut the check directly to you and then go and deposit it and buy your retirement stuff. If they cut the check to you they are required to withhold taxes from it. Which means that in order to not pay taxes you would have to pony up the difference between your total and your check and invest all of that in retirement, at which point you would have the withholding added back into your next years tax return. I'm not a pro, YMMV.
In reply to mtn:
Yes, Poland only 'took' the government bonds out of folk's retirement accounts. What about the missing billion from the MF Global fiasco? I guess it ok to steal a billion if you are politically connected and make enough campaign contributions and host enough fund raisers. I don't mean to steer the OP away from rolling over his 401k or investing in general, but just to be aware that the game is rigged against us and that even the safest investment is only safe until it is not.
What is the MF Global fiasco? Not familiar with that one.
And yeah, really nothing is safe if the government decides to become Stalinesque on us. If that happens here, I can tell you that I, saving 50% of my paycheck since I don't trust SS or my company pension to be around in 20-40 years, will... Well, I'm not sure what I'd do. Probably something to end up in prison.
In reply to mtn:
There is a Wikipedia page on MF Global, but in a nutshell they were a brokerage firm that ran into financial problems and stole their customer's deposits to pay the company's bills. There was something around a billion dollars that 'disappeared'. That was money that was in various retirement and pension plans and now is who knows where, but I suspect John Corzine either walked away with a chunk of it or at least knows what happened to it. He apparently, will not be made to answer and will not be charged with anything.
IIRC MF Global comingled client funds and their own and used the client funds to cover operational costs. A lot of those clients were/are farmers in the mid west that used derivatives to hedge their costs and they're still waiting for the money to be "found"[1] and returned to them.
That said, unless you're a professional derivatives trader (or a manufacturer/farmer etc who needs to hedge), your retirement money doesn't belong anywhere near any sort of derivatives, so mentioning MF Global really isn't relevant to anything the OP is planning to do.
[1] It's not like people don't know/can't guess where it is, but there appears to be a lack of enforcement.
Eeek! All the more reason to go with Vanguard. From what I have seen, they are the most transparent of the firms, and therefore (in my opinion) the least likely to go all pull a Bernie Madoff on us.
That, and the fact that they probably are audited by the CFPB, the SEC, OCC, IRS, and countless large organizations (employers who use them) every year if not quarter.
Well, some of us don't have the highest opinion on how well the SEC enforces rules and regulations when it comes to the big players, but I digress...
I would not worry that any one of the big discount investment brokers (like Vanguard, Fidelity, Schwab) doing a Bernie with their funds. For starters, they're transparent in their holdings (just look at the prospectus), and they don't go around telling people that they have the secret sauce that will allow them to beat the market consistently and nudgenudgewinkwink you have to be special to get in. They're out in the open, and their investment strategies tend to be fairly simple and thus easy to understand. I've worked for investment banks so I may have a little more insight and I'm happy to have my money with any of them - actually, I've got money parked with all three of them for various reasons.
Madoff's supposed strategy could not work at the scale he purpoted to apply it (mainly because he would have ended up moving the market) plus with some types of well known (but admittedly somewhat underused) investment analysis, it was actually fairly easy to figure out that he wasn't kosher. Actually, you didn't even need to go that far, when the investment strategy is "trust me", it's time to light up the rear tires and get out of Dodge.
I wouldn't call myself a sophisticated investor (far from it) and my rule has always been, if you can't explain your investment strategy to me in two sentences or less and have to use a lot of fancy gobbledegook to explain it, I'm taking my dosh elsewhere.
About rolling it over: when mine were done the checks were made out to Vanguard and to me. I endorsed and forwarded them. As long as you do NOT cash the check or let it touch your checking, savings etc accounts in any way you are good, I.E. don't deposit the check in your checking account then turn around and write another to Vanguard. That will bring the revenooers a' sniffin'.
When I did my investigating, I looked at the long term fund performance. The VWIAX did not have ginormous gains but nor did it have ginormous losses. It's been around since the 1970's and has steadily returned income each year. Since I was looking for long term performance I went with it.
Do NOT use any of the 'investor tools' on ANYBODY'S site to determine where your money will go! I did that and the fund it recommended had LOST money five years in a row. I was born at night but it wasn't last night... 
Look at the various fund's long term performance, use that as your guide.
EDIT: I mentioned not letting them move the money for you, here's one reason why: if they do and then you try to move it again on your own you might get zapped with early withdrawal fees not by the IRS but by the investment company. That happened to me with my Edward Jones, there's a $200 fee to close a friggin' account. Bastards. No, I don't recommend Edward Jones.
listen to Curmudgeon and BoxheadTim … the only thing I have to add is when looking at long term gains I would pay particular attention to how a fund did in '08 … that "crash" is a pretty good indicator of how A) aware the manager is … and B) how conservative said manager is … if they lost badly in '08, but have great returns otherwise, you can bet (assuming they have the same manager and investment strategy) they'll have problems when the inevitable correction happens …
and as for how you do the check … what my brokerage house told me to do was get the check made to them, FTBO (for the benefit of) … that way it's still "yours" but it doesn't touch your personal accounts, so no penalties/taxes
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