401K Rollovers

When you left Merck did you rollover your 401K into an individual IRA? And do you open a new IRA or add it to an existing IRA?

If you keep the IRA segregated you can move it to your new employer. But if you keep it and not move it to the new employer you have more investment options than those in the company plans.

 

When I left Lilly, I rolled most of my 401k into a separate IRA. However, because I was 55 when I left, I kept some in my Lilly 401k because there is an exception to the early withdrawal penalty for 401k if you are 55 or over.

In general, I think it is better to move out of your former company's 401k.

 

I rolled it directly over into a Retirement IRA when I retired from Merck.

 

I just did this. If you roll it into a new employer 401k, you are limited to what they offer. If you choose an IRA, you can shop every fund on the market and choose the best performing one that suits your needs. What the new employer has to offer my not be the best available to you in an IRA.

 

Valuable Info...Thanks!!

 

I recommend you do it with Fidelity. BUT YOU MUST DO THIS - I was thinking of rolling over my 401k to a Fidelity IRA. Some other companies are offering incentives, does Fidelity offer cash rewards for rollovers? (Yes BUT ONLY IF YOU ASK THEM FOR IT THEY WILL NOT TELL YOU PROACTIVELY.) $1200 on 500-1,000,000 and 24000 on >1,000,00. You get your cash after holding your IRA for 3 months. Their also is smaller incentives for less. I did it!

 

Pardon my exuberance while typing it is 2400 on $1M not 24 K.

 

Rolled it over into an existing IRA. Fidelity's fees are expensive. I suggest Vanguard index funds.

 

NEVER rollover a 401k into your current employer.

Best move is to take that money and move it into a personal IRA, where you have more options where to invest and more control of your money.

 

Spot on advice...and fees are usually cheaper!

 

Not true. Either an exaggeration or a typo....

 

I received several of those offers from Fidelity. They were for opening a new investment account and parking the money there for so many months. Not true for a IRA.

 

OK, I will follow up on my Fidelity post. I transitioned my 401k to a Fidelity IRA Self Directed Brokerage account. If you ask for cash rewards they will direct you to a web page that shows 500-999K you get 1200 cash reward, >1 Million 2400 cash reward. They park your money in a FDIC cash sweep that pays little or no interest. THEN IT IS UP TO YOU to invest in individual stock, bonds, mutual funds, ETF's or Bond Funds etc. The cost to buy or sell a stock is under $10. Fidelity offers you thousands on fund choices. In general I like the Fidelity Spartan funds. Little cost great upside performance. The trick is going from cash to investments you do not want to go hard into speculative stocks right from the start. Its up to you to do your homework and decide what funds or other investments you want. There are very good funds some with management fees of 0.2% per year. Vanguard has some better funds yes, but not that much better to make up for the 2400 cash reward in my opinion. By the way, if you transition your 401K to Fidelity you might consider sending your pension lump sum to Vanguard and then let them fight for your business. You are in the catbird seat they need you. You always can move an IRA from one place to another with little trouble. I hope this helps.

 

Some very good points as it is time for me to re-balance my portfolio. Thanks.

 

I have met several times with an advisor at my local Fidelity office. I am leaning towards keeping the 401K in tact for now. This is what I was told......if you put it into an IRA you do get more investment choices. However, if you need money, you have to file a 72T and have to take all that money out in 4 equal distributions. I can keep the 401K and if you are over 55 you have access to the money with no penalty, you just have to pay the taxes. My worry is, if there is an emergency, I want to know I can get to some money and not have to wipe out my IRA.

 

How long after a payroll statement does it take for your 401k deduction to show up as transaction/contribution on your Fielity 401k? I am having a hard time matching up my contributions and am wondering what the typical lag-time is. Thanks

 

To those stating it's not true on cash incentive for moving Merck 401K to an individual IRA account, it is true! I did it last year. All I did was call up my local Fidelity office and told them I was retiring in 6 months so needed to think about what to do. I explained other houses have incentives, so what is Fidelity offering to roll that over into a Fidelity account? They said no problem and the incentive was deposited the month the money was transferred from the Merck Fidelity account to my new Fidelity account

 

Good for you. I was too ready to retire and forgot to ask for cash incentive.

 

If you do not roll it over, they charge $60 fee per year. I did not know about the incentive so I rolled it over to my existing Fidelity IRA.

 

There are so many funds offered with the Fidelity IRA. I will spend some time doing my homework and analysis. In the meantime, do you have any equity funds that you recommend I concentrate on within the Fidelity umbrella? Thanks.