Gyroscopic Investing

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?

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

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.

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!