Got laid off in January, but already found a better job and got a $40k raise!

I have $500k in Roth 401k from the old job I need to do something with. Is it worth paying an advisor to roll it or should I do it myself?

What brokerages for old emplorer plan & new employer plan?

Old is Fidelity. New company is a startup so no 401k but I do have the option to buy 9800 shares of pre IPO stock (not sure what the strike price is yet).

Just keep it where it is. No need to rollover if you don't even have a 401k at your new employer.

It will roll over as cash, unless you have some company stock in it, so you'll need to know what to buy when it arrives wherever it arrives. Old firm most likely has a time frame on how long it can stay there so if it were me I'd just call Fidelity (where it is now) and ask them to convert it to a Roth IRA. They'll for sure offer to help with the investments for a fee, either accept their offer or buy what you already own again. You can always change your mind later.

As others mentioned you might not want to do this. Most Fidelity 401k plans I have seen usually have pretty low cost investment options so it is probably fine to leave it there. Also if you don't have any other pre tax IRAs, rolling this over to a rollover IRA would suddenly give you a large pre tax IRA and might prevent your ability to make back door Roth contributions without owing taxes. If you want to roll it over you can open the IRA with fidelity and roll it over yourself then transfer the newly created account in kind to any other broker that uses ACATS.

OldArmyCT said:

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It will roll over as cash, unless you have some company stock in it, so you'll need to know what to buy when it arrives wherever it arrives. Old firm most likely has a time frame on how long it can stay there so if it were me I'd just call Fidelity (where it is now) and ask them to convert it to a Roth IRA. They'll for sure offer to help with the investments for a fee, either accept their offer or buy what you already own again. You can always change your mind later.

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OP would need to have over $150k in cash outside the 401k to pay the tax bill on this conversation

You can 100% roll a Roth 401k funds into a Roth IRA funds with no tax hit. Only question would be how much of your Roth 401k funds are the company match, because the company match funds are still pre-tax in my experience so they cant be moved to a Roth IRA without paying taxes on that portion.

All of this can be done without an advisor. I've also noticed most company 401Ks don't have great investment options (I guess this aspect all depends on your experience or interest in picking different investment options) so I'd move to Schwab, etc to have more options (or can even move to a different Fidelity account if you like Fidelity)

Find out if the options are ISOs or NSOs as there is a difference.

If it's already at Fidelity then you probably have some decent fund options via the 401k. If you are achieving good returns at a low cost that already meet your overall allocation strategy then there is really no need to roll them out.

I would need to review everything again but I'm pretty sure the Fidelity account has been doing fine.

If I do decide to enlist the help of the advisor, is it better to pay them the 2-3% one time fee up front of pay them a .75% annual management fee?

ReloadAg said:

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Got laid off in January, but already found a better job and got a $40k raise!

I have $500k in Roth 401k from the old job I need to do something with. Is it worth paying an advisor to roll it or should I do it myself?

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My previous companies 401k was also with Fidelity. When I left, I simply opened up another account with Fidelity and rolled it over. I believe there was one ticker not available outside of the company plan, so that had to convert to the FX cash reserve, but it allowed me the freedom to invest in whatever stocks I wanted to.

ReloadAg said:

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I would need to review everything again but I'm pretty sure the Fidelity account has been doing fine.

If I do decide to enlist the help of the advisor, is it better to pay them the 2-3% one time fee up front of pay them a .75% annual management fee?

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Two different scenarios?

You don't need an advisor to do the rollover. Fidelity would do it for you especially if you keep it within their ecosystem but even if you don't.

Regarding financial advisors, a flat fee is better than paying a percentage on Assets Under Management (AUM) but I've never seen a one-time up front fee. Is that for the life of the relationship or are you paying 2-3% up front and they are doing a one-time financial assessment?

YouBet said:

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ReloadAg said:

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I would need to review everything again but I'm pretty sure the Fidelity account has been doing fine.

If I do decide to enlist the help of the advisor, is it better to pay them the 2-3% one time fee up front of pay them a .75% annual management fee?

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Two different scenarios?

You don't need an advisor to do the rollover. Fidelity would do it for you especially if you keep it within their ecosystem but even if you don't.

Regarding financial advisors, a flat fee is better than paying a percentage on Assets Under Management (AUM) but I've never seen a one-time up front fee. Is that for the life of the relationship or are you paying 2-3% up front and they are doing a one-time financial assessment?

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Bingo. You're talking the difference between a Financial Advisor and a Financial Planner.

Have fidelity roll it to an IRA. Allocate it to FXAIX (S&P), FSKAX (Total market), FXNAX ( bond index) to match your risk tolerance and time horizon. Those funds are very low expense ratio.

Alr3111 said:

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Have fidelity roll it to an IRA. Allocate it to FXAIX (S&P), FSKAX (Total market), FXNAX ( bond index) to match your risk tolerance and time horizon. Those funds are very low expense ratio.

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OP, I would ignore advice on here from anyone giving you advice without understanding your circumstances, like recommending two funds with 90% dollar-weighted overlap.

I agree. OP spend a little time to educate yourself. The rollover process is not complicated.

I never suggested buying both equity indexes. consider your risk tolerance and time horizon.

If you roll to Fidelity and decide to pay for advice you're going to get some new guy who is using some standard program to recommend an allocation for you. The upsides are it will be cheap and probably decent advice, the downside is you're no different from most other Fidelity customers with a similar sized portfolio. If you went with a higher priced FA from a big firm it will cost you more and you'll end up with a much different portfolio. Both paths will most liikely yield similar results, one will just cost you more.
One solution would be to go with the big firm and after 3 months or so transfer the portfolio intact to someplace cheaper and drop the fee.
Honestly the easiest is to just roll to Fidelity and buy the S&P Index.

I always rolled them over into Fidelity IRAs. Complete control is best. I don't remember it ever being more than a few minute task in the Fidelity app.

Target funds are pretty much what an adviser would do. Our advisor has done slightly better due to international investments in a target fund type strategy.

Here are the two options he presented to me:

Option 1: Commission-Based (One-Time)

• Upfront commission: ~2.00%2.50% (assume ~2.25%)
• Ongoing internal fund expenses: ~0.75% annually
• No ongoing advisory fee

Option 2: Managed Account

• Upfront cost: 0%
• Advisory fee: 0.78% annually
• Internal expenses: ~0.12%
• Total annual cost: ~0.90%

OldArmyCT said:

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If you roll to Fidelity and decide to pay for advice you're going to get some new guy who is using some standard program to recommend an allocation for you. The upsides are it will be cheap and probably decent advice, the downside is you're no different from most other Fidelity customers with a similar sized portfolio. If you went with a higher priced FA from a big firm it will cost you more and you'll end up with a much different portfolio. Both paths will most liikely yield similar results, one will just cost you more.
One solution would be to go with the big firm and after 3 months or so transfer the portfolio intact to someplace cheaper and drop the fee.
Honestly the easiest is to just roll to Fidelity and buy the S&P Index.

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I have three traditional 401k's, two of them with fidelity. I've taken this route for the most part - excepting ~8% recently moved to an FTSE/Japan stock etf. S&P 500 has historically been the best bet for most investors and it's easy to track just by looking at the headlines.

My wife is a Wells Fargo retiree, and she likes the WF Advisors advisor she's been working with for decades. He's a great guy...I've used him to get me into some other investments that would otherwise be unavailable to me. But they take 1% annually off the top, and I always get the feeling that a) he works in the bank's best interest, (which he does), and b) I feel like I have to ask him permission to access my own GD money.

ReloadAg said:

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Here are the two options he presented to me:

Option 1: Commission-Based (One-Time)

• Upfront commission: ~2.00%2.50% (assume ~2.25%)
• Ongoing internal fund expenses: ~0.75% annually
• No ongoing advisory fee

Option 2: Managed Account

• Upfront cost: 0%
• Advisory fee: 0.78% annually
• Internal expenses: ~0.12%
• Total annual cost: ~0.90%

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Option 1:

I'm assuming this upfront 2.25% is a one-time advisement of your total portfolio and not just the $500K? I like the idea of this option and it's actually a somewhat frequent question on here by people who just want a one-time assessment to give them a plan they can walk away with. I just haven't actually seen anyone post an example of it before with numbers. What you posted seems expensive but my only context on this is what I can infer from option 2 which is more the norm. And option 2 as presented is expensive so that automatically tells me option 1 is as well.

Option 2:

0.90% is high. Does that drop over time or is it static regardless of AUM? For context, our advisement fee is 0.1%. That percentage has steadily lowered over time because we pay a flat fee and while that flat fee has increased slightly over time it hasn't increased remotely at the same % as our portfolio growth. If it had, I would have let them go long ago. Ha. Any funds I have them actively manage are 0.4% which is roughly 10-12% of our total portfolio so a smaller portion of it.