401k related question

Aptiv
401kq

Go to company page Aptiv

401kq
Apr 7, 2021 6 Comments

Hi All,

I am planning on looking for a new job soon. What should I do with my current 401k? This is my first job so I don't know what typically happens when one changes their employers.

I know there are several options like roll it over into new employers 401k or roth IRA. Want some opinions. I will also talk to Fidelity to learn more.

#personalfinance #investments #401k

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TOP 6 Comments
  • StockX
    mwh8vehzz

    Go to company page StockX

    mwh8vehzz
    Tax-free rollover into an IRA. You can just ask your bank about it and they can point you in the right direction. Bonus points for using schwab, fidelity or vanguard.
    Apr 7, 2021 0
  • Rollover to IRA and Roth portion to IRA Roth. Why? You can withdraw money you put in from IRA Roth any time or 5 years after Roth conversion. You could even withdraw the earnings if you wanted to using substantially equal withdrawals over course of your lifetime.

    Now traditional IRA is good because at anytime you can covert the money to IRA Roth by paying tax on it. Let's say you know that for a particular year you will be traveling and not working you can convert large amount of that money and pay lesser tax due to the tax bracket you fall in. After 5 years you can withdraw that money.
    Apr 7, 2021 3
    • If all money was pre tax then you don't have to pay tax when moving to traditional IRA. However you pay tax when moving pre-tax money into Roth IRA. You can decide how much money every year you want to convert to Roth based on your tax situation. But that's the fastest way to actually withdraw the money without penalty before you're 55+
      Apr 7, 2021
    • My suggestions were based on ability to do an early withdrawal without paying penalties and minimizing tax implications. If you intend to keep the money in 401k till you retire I might make sense to leave it there, and maybe it will have additional protections when this money can be withdrawn and how. But at the same time it will be harder to get that money for yourself.
      Apr 7, 2021
  • Moveworks / Eng
    dCOw25

    Go to company page Moveworks Eng

    dCOw25
    Rollover IRA is the way to go. Fidelity is better if you like to trade individual stocks and options, but Vanguard is better if you like mutual funds (while you can buy some Vanguard funds at Fidelity, you must be a Vanguard customer to access the low-fee Admiral shares).
    Apr 8, 2021 0