What should I do with my old 401K?

[Pointedstick]

Having left my job, I'm uncertain what to do with my old 401K, which is with Schwab and will start to incur maintenance fees next month. It is an all-ETF portfolio.

I'm considering transferring it to Vanguard to continue the process of consolidating my accounts under one trustworthy roof, but in what form? As a separate Rollover IRA? Or just dump it into my existing traditional IRA? What are the advantages and disadvantages to each?

[Mark Leavy]

PS - Any sort of retirement account is something that is far in the future for you. A huge unknown. Even though I am a bit older than you are, I assume that all of my retirement accounts are suspect - and I focus on my taxable accounts.

Personally, I just put all of my old 401K's into a rollover IRA and forgot about them. Focus on the money you can access.

That's just my 2 bits. I think it is easy to get lost in the minutiae of laws and regulations - while forgetting that none of what we believe today will be relevant in 20 years.

Mark

[Kriegsspiel]

I didn't have a traditional IRA when I rolled over my 401k, I created one at Vanguard when I did. If you already have a traditional IRA at Vanguard why don't you just add it to it? That's simpler in the long run. I have an i401k that I started at Vanguard, then rolled into my existing 401k, and I don't even like to look at the 0 balance. I just want to see like 3 things.

[WiseOne]

Definitely you want to get it out of that fee-laden company 401K plan, and as far as I'm aware you have two choices where to put it: in a solo 401K, or a rollover IRA. There are different protections and accessibility to those accounts and you need to research them thoroughly before deciding, but a big factor is your expected income level & source over the next few years.

High income with at least some self-employment income - go with the solo 401K:

- It makes backdoor Roth IRA contributions possible. The IRS will tax the conversion according to the ratio of the non-deductible to deductible money in all IRAs.
- You can make profit-sharing contributions to a solo 401K up to 20% of your net self-employment income. This is in addition to the annual limits on pre-tax contributions, and subject to the ~$50K total retirement contribution limit.

Low income, i.e. living off savings - go with the rollover IRA:

Use untaxed income space to convert the money to your Roth IRA - don't miss this opportunity! If you start earning significant self-employment income later, you can always open a solo 401K then and convert the rollover IRA to it. There is a waiting period of 1 year before you can do this.

Have fun researching and let us know what you decide!