Roll old employer 401k into new employer 401k or Self directed IRA?

[SamuraiJack]

I'm finally paying off the last of a loan from my old 401k (yeah yeah I know, but it actually protected me from the drop long term).. I have my current employer 401k with Vanguard set for the 2035 retirement plan.

 

I'm trying to decide if I should leave it in Chase for a bit longer and wait until the market hopefully goes over 11k, go ahead and roll it over to my new 401k, or roll it over to a self managed account.

 

I dont anticipate changing employers any time soon (new employer has never laid anyone off, I do software QA which is the fastest growing part of the company, and two people just retired with 37 and 43 years of experience which is the norm rather than the exception here).

 

SJ

[Kevin20]

I'm finally paying off the last of a loan from my old 401k (yeah yeah I know, but it actually protected me from the drop long term).. I have my current employer 401k with Vanguard set for the 2035 retirement plan.

 

I'm trying to decide if I should leave it in Chase for a bit longer and wait until the market hopefully goes over 11k, go ahead and roll it over to my new 401k, or roll it over to a self managed account.

 

I dont anticipate changing employers any time soon (new employer has never laid anyone off, I do software QA which is the fastest growing part of the company, and two people just retired with 37 and 43 years of experience which is the norm rather than the exception here).

 

If you DO want to roll it over, I don't see any point in waiting for the market to hit Dow 11,000, which it may or may not do any time soon -- that's completely unpredictable, so I wouldn't make it the basis for your timing.

 

Personally I'd prefer to roll it into an individual IRA, using a discount broker. An individual IRA gives you far more investing options than a 401k, with its limited menu of funds and retirement year-based allocation choices. A brokerage IRA allows you to find cheaper investments (i.e., investment choices with a low cost of investing, low expense ratios, etc) and better diversification and a smarter portfolio, if you put some thought into it.

 

Of course if you want to keep things simple and not deal with the choices and plenitude of a brokerage account, you might prefer the current 401k.

 

There are various circumstances where the 401k and the IRA each have their own advantages. But you'll HAVE a 401k going and continue to fund it anyway... so that's taken care of. It's good also to have an IRA in your life -- if you do not already have one, this is a good time to start it.

Edited January 26, 2010 by Kevin20

[TroyP]

What Kevin said.

 

Also, the fees in a 401(k) can often be fairly high, where a discount broker can be much more affordable.

 

I generally stay away from target date funds, their fees tend to be too high, but that's me.

[hegemony]

99% of what I've read from financial advisers is you never roll into a new employer's plan. an IRA roll allows you the greatest control of how the money is invested and the costs involved. check out vanguard or fidelity for low cost options.

[SamuraiJack]

Thanks for the advice... I think I'll look at the Vanguard IRA since my current employer 401k is there.. now to send the check to finish paying off the loan and get the ball rolling