As part of job change process, I need guidance on dealing with 401k. I have a total of 80K in 401K and I am moving to a new job that also offers 401k with employer match. How should I handle existing 401K. I understand I have following options 1. Rollover to new employee 401K 2. Rollover to IRA (Roth or traditional) 3. Leave existing account as it is (both existing and new ones will be with fidelity) 4. Cash out 401K for my first house purchase Which is better option and how to calculate the losses if any. #investments
Compare what invest options they offer
Id probably roll over to a IRA but it depends if you want your 401ks in one place. I also like the IRA option because you have more flexibility in what funds you want to invest it. Would not recommend cashing out. Even for your first home I think the maximum you can take out without penalty is $10k. If you cash out beyond that it’ll be subject to early withdrawal penalties and not a smart move.
If you leave the existing account as is, I would confirm if there are fees that normally the employer would cover that you’re now responsible for. If so, probably better to roll into new employer 401k or an IRA
don't cash out. keep it in same 401k or roll it over to your new company's 401k if you want to consolidate everything and have everything at same place. IRA gives you more options but it will give problem in future if you want to do backdoor
Plus one on this, most people don't realize the implications of rolling over traditional 401k to Traditional IRA. Once that is done, backdoor IRA no longer an option unless they pay tax on the money to move from traditional IRA to Roth IRA. The best option is to move to the new company 401k if that option is available.
there is actually an option if you have done this. you can do a reverse rollover from IRA back to 401k to avoid having issues while doing backdoor. I rolled over to IRA in past without knowing this but was able to do reverse rollover last year
#2 Traditional IRA. You get full freedom to invest the money. Most company sponsored plans have limited options. Later at your convenience you can do #2 Roth IRA(pay taxes) #4 Cash out(pay taxes and penalty)
What are the restrictions on new employers 401K? Can you buy individual stocks or are you restricted to mutual funds and ETFs
IRA, usually 401k does not have sufficient options unless they have brokerage link.
Rollover to ira
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