401k status after lay off?

Dell / Eng
💾Floppy💾

Go to company page Dell Eng

💾Floppy💾
Oct 6, 2018 20 Comments

I have recently got lay off. What happens to the 401k investments in sectors that are only offered by my [former] employer?

I have fidelity and picked low cost index funds when I was employee. I am not sure if fidelity moves my money to some other expensive target funds that I not interested in.

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TOP 20 Comments
  • Finale Inventory / Eng
    huHG50

    Finale Inventory Eng

    huHG50
    I think you can roll it over into an IRA wherever.
    Oct 6, 2018 4
    • New / Product
      Dukemon02

      New Product

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      Microsoft
      Dukemon02
      There’s no trouble. You can choose to keep whatever you had there or you need to send them a rollover for to move that money to Fidelity. I would suggest that -if you have low cost index funds as part of your Roth or IRA - to move it. The fees in a lot 401k funds are horrible
      Oct 6, 2018
    • Atlassian / Eng
      Luffy, M.D

      Go to company page Atlassian Eng

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      A prematurely grumpy somewhat old man
      Luffy, M.D
      TI, there's no 90 days at most companies. In most 401k plans as long as you meet a minimum balance you can't make contributions once you are out but you can keep your old investments and in some cases even rebalance.

      Usually if you are under some minimum balance you get a check which starts the clock on a forced rollover unless you want a nasty tax hit.
      Oct 6, 2018
  • Google
    rWKS54

    Go to company page Google

    rWKS54
    Depending on the amount that you have and status of any outstanding loans against the 401k, you may not have to roll over or take any immediate action. Although, I would argue that rolling to an IRA makes a lot of sense for most folks. Also - this is not usually a one way decision: One can usually roll one’s IRA back into a 401k in the future. There are pros and cons for each savings vehicle (e.g., protection from divorce, ability to pay college loans, and investment flexibility).

    Critical Note: If you do have a loan outstanding, the debt becomes automatically due in [about] 90 or so days else there will be tax consequences. Feel free to hit me up if you would like more pointed advice.
    Oct 6, 2018 3
    • Cisco
      Glasswall

      Go to company page Cisco

      Glasswall
      You work for a large company and so it is likely that they negotiated 401K fund fees well below what is available to the public. Before you move your money out compare the expense ratios of what you are invested in with what is available outside
      Oct 6, 2018
    • Google
      rWKS54

      Go to company page Google

      rWKS54
      Yeah - it kind of depends. Some people borrow against 401ks might find them useful. Also, for those looking for protection from divorces may favor 401ks because they’re better protected in US courts. In your case, it sounds like an IRA is probably a good choice to run with. The majority of my retirement funds are in an IRA and I’m pretty satisfied with the flexibility.

      Note: I’m neither a lawyer nor a financial planner. :)
      Oct 6, 2018
  • Atlassian / Eng
    Luffy, M.D

    Go to company page Atlassian Eng

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    A prematurely grumpy somewhat old man
    Luffy, M.D
    Once you're employed again, you may do better with your new 401k than with an IRA. The rollover rules are a little simpler direct 401k to 401k, so if you can leave the money invested in your current plan until you land somewhere else that's what I'd do and then decide between an IRA and the new employer's 401k based on the quality of the investment options in the new plan.
    Oct 6, 2018 2
    • Dell / Eng
      💾Floppy💾

      Go to company page Dell Eng

      💾Floppy💾
      OP
      I see. Make sense. Is there any fee associated with 401k roll over to IRA and vice versa?
      Oct 6, 2018
    • Atlassian / Eng
      Luffy, M.D

      Go to company page Atlassian Eng

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      Facebook
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      Luffy, M.D
      No fees at least that I've ever heard of for 401k to IRA or 401k to 401k unless it's right after you leave and you hit early redemption fees on a particular fund. Have seen fees to roll over out of an IRA with a cruddy bank IRA but it's relatively unusual there.

      As the Google person said above there are some other differences in legal treatment but the tax part is mostly the same. IRA has broadest range of investment options (unless the 401k offers a linked brokerage account - FB's does, the only place I've seen it) but a good 401k will as Google said often offer lower costs both on account fees (usually 0) and by having access to institutional fund offerings with lower costs at the fund level. OTOH not all 401ks are good and at smaller companies even if the funds are good there can often be a narrower range of them.
      Oct 6, 2018
  • Citibank / Eng
    TQtT37

    Go to company page Citibank Eng

    TQtT37
    Open an account at vanguard or another low cost index fund company if you don’t already have an account and do roll over 401k. They’ll run you through the process
    Oct 6, 2018 0
  • Dell / Eng
    💾Floppy💾

    Go to company page Dell Eng

    💾Floppy💾
    OP
    Thank you guys. Do you guys recommend Opening an IRA in the fidelity itself or somewhere else (e.g. vanguard)?
    Oct 6, 2018 2
    • Citibank / Eng
      TQtT37

      Go to company page Citibank Eng

      TQtT37
      Been with vanguard for 15+ years. No complaints
      Oct 6, 2018
    • Finale Inventory / Eng
      huHG50

      Finale Inventory Eng

      huHG50
      I just put mine all in wealth front. It automatically invests in a variety of index funds based on your level of risk. I have mine set to 9 which was recommended.
      Oct 6, 2018