Rolling over old 401k into Vanguard @Amazon

Amazon / Data
kublakhan1

Amazon Data

PRE
EY
kublakhan1more
Apr 2, 2018 14 Comments

Hi guys! I have some money in a 401k from my first job in fidelity. It is currently invested in a target 2050 fund. Was wondering whether I should roll it over to Vanguard 401k? Also, will it be benefitial to move it to a Roth Ira? Thanks in advance!!

comments

Want to comment? LOG IN or SIGN UP
TOP 14 Comments
  • LinkedIn 1337c0d3
    I'm assuming this is a pre-tax/traditional 410k. If so, it doesn't make sense to convert it to a Roth IRA.

    You have 4 options:
    1) Withdraw & pay penalty: not recommended unless you are cash strapped
    2) keep it as is, with your previous employers custodian
    3) convert to traditional IRA
    4) rollover to Amazon 401k

    (2) is a good option if you are happy with the offering from your previous employer. It does mean you'll have one more account to manage though.

    (3) vs (4) is a question of whether you're happy with Amazon's offering. If yes, roll over to Amazon. If no, convert to tira where you can choose whatever you like.
    Apr 2, 2018 3
    • Amazon / Data
      kublakhan1

      Amazon Data

      PRE
      EY
      kublakhan1more
      OP
      Thank you so much for your response!! I am actually not keen on managing multiple accounts. Can you help me understand why it is beneficial to convert to a traditional Ira?
      Apr 2, 2018
    • Vanguard ATUu25
      If you convert to a IRA you'll be capped a $5,500 in contributions a year, 6,500 if you're over 50 but 401k's are $18,500 max, in 2018, contributions a year, just heads up if you try to go from 401k to IRA
      Apr 2, 2018
    • LinkedIn 1337c0d3
      This is not true. You can continue to contribute $18500 to your current 401k even after rolling over your previous 401k to IRA.

      There are no "one size fits all" benefits of converting to IRA. It all depends on your own personal situation, offering of previous & current employer. I'm assuming since you work for Amazon, you have a decent 401k plan since larger companies tends to have better 401k. In that case, your better off rolling over to the current 401k.

      If your current 401k offering is not good, converting to an IRA gives you access to all funds, which is beneficial.

      However rolling over to a 401k also has few disadvantages:
      1) 401k are subject to "required minimum distribution", whereas certain IRAs are not
      2) most 401k plans have a restricted set of available investment options, while IRA gives you access to a wider range of available investments
      Apr 2, 2018
  • Amazon 2nd best
    Employer 401k is usually better than individual traditional IRA. Employers negotiate to get better rates. You should rollover old funds to Amazon 401k
    Apr 2, 2018 1
    • Amazon / Mgmt BakBown
      IRAs give you far more options. Amazon’s 401K has a dozen options or so. An IRA is a brokerage account and gives you most every mutual fund as well as individual stocks. Heck, rolling it into a Vanguard IRA gives you access to most of their low cost mutual funds.
      Apr 2, 2018
  • LinkedIn FruSw3183
    Just leave it for diversification unless you’re that lazy to have two accounts. Fidelity is amazing
    Apr 2, 2018 1
    • Amazon 2nd best
      Fidelity is not amazing compared to Vanguard.
      Apr 2, 2018
  • Oracle Marx Herd
    Don't convert to an IRA. You will NOT be able to do a "backdoor Roth" if you do.
    Apr 2, 2018 2
    • Oracle Marx Herd
      Also, the "glide path" comment is a very good one if you're the set it and forget it type. Some of the target date funds have too conservative a mix, or, too much bonds in the portfolio. That will cost you in the long run as sub par performance lagging the market. Check out paulmerriman.com/amazon for his recommendation on the mix between funds at your 401k. Poke around the site. You will likely learn a lot.
      Apr 2, 2018
    • Oracle Marx Herd
      BTW, that website is not mobile friendly, so check it from a desktop.
      Apr 2, 2018
  • Amazon Xkmm52
    If I were you I would rollover that 401k to the vanguard ira. Then invest in their retirement fund as vanguard funds have extremely low fees in comparison to fidelity (.05% vs 1-3%).

    Are you sure you are allowed to rollover to your vanguard 401k? I thought usually there are restrictions so ira would be the best option.

    Iras also usually give you better investment choices so if you want to start investing in single companies there may be better brokerage options than vanguard.

    Some people mentioned above there are restrictions in rolling over to an ira. Not true if the money is pre tax 401k contributions
    Apr 3, 2018 0
  • Microsoft / Eng 20% raise
    in general, target date funds are terrible as they have fees + the underlying funds they hold also have fees.
    Apr 2, 2018 0
  • Vanguard ATUu25
    Its really hard and dangerous to give financial advice without knowing your full financial situation. Some things you need to consider are what the glide path of fidelity's 2050 fund looks like compared to Vanguard's 2050 and how it fits you risk appetite. One may have a higher allocation to stocks in 2050 and therefore be riskier while the other may have a higher allocation to low volatility products. More risk isn't always bad, its more a question of if you want to gamble with your retirement money and if you could stomach working longer than you planned because you lost your bet. There's also the tax bill of selling fidelity's and buying Vanguard's fund which honestly probably isn't worth it unless one fund is way above your risk appetite.

    As for a Roth you want to consider what the tax bill would be for rolling it over. There's a ton a material online about traditional vs Roth. Depending on the amount of money we're talking about you may want to seek professional financial advice before you make any decisions. Seeing you worked at fidelity I'm guessing you already know most of this, hope it wasn't too redundant.

    Also I'm not a financial advisor so take all of this advice at your own risk.
    Apr 2, 2018 0

Salary
Comparison

    Real time salary information from verified employees