Looking for some basics here. I still have at least 5 years probably but need to start thinking about


Sounds like most roll it into a Traditional Roth? I don't think the tax benefit for rolling it into a Roth IRA and paying the taxes will work for me.


When you roll it over to a Traditional IRA, does that mean you maintain control much like the 401K, in where thr money is allocated or does the broker take control and charge a fee? Or is either an option?

Again, I'm just starting to look at this stuff so talk to me like I'm a teenager

What's a fair price for them to have control?

Do most people go the do it yourself route? I'm a novice at this stuff so hard to know I'd it's vest to get then handle it, use whatever formulas they got and pay for it or not. Is it worth it? Hard to say


I have a financial advisor brokerage taxable account with some savings we're investing. I opted to let them have control and right now I pay right at 1%. This was after I did not do well handling my 401K for a few years so I thought I need something that someone else handles, see how that goes

Of course this year I'm doing better in my 401K than the broker is doing woth my savings but in a down year or when the S&P isn't just ripping like it has been, I'm sure they'd outperform what I'm doing. They have my money is a diversity of funds and ETFs I'd have to study up on to really know why this or that fund. As I understand it they have a formula that determines when they rebalance. I do not have such a formula

Old Tom Morris said:

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I plan to roll it into a traditional IRA with Vanguard and trust that my index funds and their .03-.04% expense ratios will beat the choices of active fund managers charging 1%

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I guess that's exactly the question.


Though, I believe I can get that 1% down to .5% to .75% when I have more money

Who's handling your 401k?
If you are happy with how it's been, why would you change?

If you don't know if you should change, probably go interview some financial planners and pick one who's aligned with your stance on risk/reward profile. Ask what they charge and compare it to your current 401k.

There is no magic to it. You can have more control and pay less using index funds, managed funds, or even individual stocks and bonds. Or you can pay someone else to take care of it for you, probably around 1% of assets under management but that depends on account value, might be a lower rate.

If none of that is helpful, I'm sure this has been discussed numerous times on this board, and the search function is your friend. Plenty of threads asking best books about investing. Tax planning is way to individual, if you need that help go see a professional for advice.

jamey said:

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Old Tom Morris said:

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I plan to roll it into a traditional IRA with Vanguard and trust that my index funds and their .03-.04% expense ratios will beat the choices of active fund managers charging 1%

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I guess that's exactly the question.


Though, I believe I can get that 1% down to .5% to .75% when I have more money

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Your fees should be correlated to your account balance with the amounts you are quoting being consistent with a seven figure account. You can do the index funds as suggested but there are people that struggle with doing it themselves because they panic when the market is down and sell and/or buy at the top of the market when the bullish case makes the most sense. Since struggled with your 401K and are smart enough to admit it, talk to advisors about what you are looking for and go for one that connects with your risk profile and has reasonable fees. The lowest fee guys isn't always the best.

Note: firms like Vanguard have low cost roboadvisors. I haven't looked into them in detail but I know some people that swear by them.

It keeps standing the test of time

https://www.marke****ch.com/amp/story/majority-of-active-u-s-large-cap-stocks-funds-fail-to-beat-s-p-500-in-2023-a-worse-year-for-underperformance-than-2022-89fad8a1

Also saw a WSJ article recently that the # of managers beating it in H1 2024 has dropped even further to 18%

1% is too high. You can find less expensive advisors that do not base their fee on asset balance.

If you have company stock/stock fund in your 401k, then look into NUA before you roll it over or make a withdrawal.

stu.pidarse said:

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If you have company stock/stock fund in your 401k, then look into NUA before you roll it over or make a withdrawal.

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I sell company stock and buy S&P or whatever every 6 months or so

I assume that nullifies an NUA

Trading within your 401k won't nullify it. If you don't have company stock that has appreciated, then there's no point in it.

Depends on your age... If you are taking advantage of the rule of 55 then you would want to leave it in the 401k

permabull said:

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Depends on your age... If you are taking advantage of the rule of 55 then you would want to leave it in the 401k

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I do plan on keeping it the 401K for a while just in case I need the rule of 55.

Wife is sick, long story so I'm trying to be liquid just in case

Highly recommend you stick it in vanguard funds and save the 1% from advisor fees

What is the rule of 55?

If you lose your job or retire at 55 but before 59.5, you can take 401k distributions without the 10% penalty

water turkey said:

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What is the rule of 55?

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Summarizing and I'd Google to check my facts

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Basically, if you leave your job for whatever reason in the year or after the year you turn 55, and leave your 401K with the company you left, you can get to it then without penalty, at 55, before age 59.5 like normal



I think its there because companies want you to leave your 401K with them, so they lobbied for it

these channels have several relevant videos I've been browsing with a similar FIRE timeline











does seem like a CPA advisor could be worthwhile to review withdrawal and Roth ladder conversion strategies to ensure optimizing tax efficiency between all accounts within the 0% tax rate threshold

hedge said:

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Highly recommend you stick it in vanguard funds and save the 1% from advisor fees

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How can there be a new account opened just a few months ago having the same username as the (in)famous hedge?

jwoodmd said:

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hedge said:

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Highly recommend you stick it in vanguard funds and save the 1% from advisor fees

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How can there be a new account opened just a few months ago having the same username as the (in)famous hedge?

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Because he opened the new account with the username "rolo", and then recently changed it back to hedge. You can go into your profile and change your username once per 6 months.

I will roll my smaller 401Ks over to gain more control

but my largest one I am keeping with Raytheon- they have a good program and they handle the portfolio for free

just another way to diversify

Because I've been on good behavior and have an understanding with staff, no more trolling on my end

Hookers and blow[/thezoo

fourth deck said:

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This is essentially the same question anyone has w.r.t. what to do with a 401k after leaving a job, retirement or not. A 401k full of pre-tax money can be rolled over into a traditional IRA at any of the big brokers such as Schwab or Fidelity and it opens the entire market of investment choices rather than just the ones you're limited to within the 401k.

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I've held off rolling my old 401Ks to traditional IRAs to avoid creating tax liability when making backdoor Roth IRA contributions. My understanding is that when you make a backdoor Roth IRA contribution, you have to pay prorated taxes on the balance of your pre-tax IRA.

Same here to the extent that I've turned away 5 figures in 3% trad IRA transfer bonus due to this

EliteZags,

Thank you for posting those videos. Some great stuff there.

Why so focused on expense ratios? Net return should be the metric to look at should it not?

Either way tho OP, rolling your 401k into an Ira is the right answer so you have the whole universe of investments available .

I am focused on net returns. But the fact of the matter is that an s&p 500 index is beating 82% of active managers and doing so for anywhere from 0.5-1% cheaper.

Old Tom Morris said:

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I am focused on net returns. But the fact of the matter is that an s&p 500 index is beating 82% of active managers and doing so for anywhere from 0.5-1% cheaper.

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Just for the record, the expense ratio may indeed be a big part of why the performance of the fund is better. It's already included in the rate of return. Just pointing this out so people don't think the lower expenses is additive on top of the better performance.

For the record, I agree with your premise - an index fund outperforms most active management strategies over time.

Certainly true. Just saying that some investment options ( with or without high expenses) may outperform options with low expenses on a net return basis. The expenses are baked into the net return either way. The net return is what should matter to you as an investor. I'd add that I;m not suggesting people should chase short term performance , that generally doesn't work out, but I'd rather have higher net returns on a long term performance basis with a higher expense investment option, than lower net returns with a lower expense option.

halfastros81 said:

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Certainly true. Just saying that some investment options ( with or without high expenses) may outperform options with low expenses on a net return basis. The expenses are baked into the net return either way. The net return is what should matter to you as an investor. I'd add that I;m not suggesting people should chase short term performance , that generally doesn't work out, but I'd rather have higher net returns on a long term performance basis with a higher expense investment option, than lower net returns with a lower expense option.

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Agree completely on net return being of prime importance.

However, the part I bolded makes sense only looking backward with 20/20 vision. Going forward, there is no way to tell with certainty which method will produce the best net return. The past is not necessarily a predictor of the future, even if you can produce the fanciest looking futuristic hieroglyphics charts to support your premise.