Rolling over old 401k into Vanguard @Amazon
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
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.
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
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