Should I rollover 401K to IRA?
Currently not working (my decision), 50 Years old, single, no children.
I have an existing 401k from a prior company managed by Fidelity Investments, they seem to be pressuring me to covert to an IRA. Citing that I should take advantage of the IRA law that allows a non-spouse beneficiary to stretch out withdrawals over his or her lifetime. If I leave it in the 401K they do not have that option.
Is this the best decision?
If I do convert to IRA, is there anything from the 401K rules that I may lose out on?
What are other pros and cons?
Permalink Submitted by Al Fry on Tue, 2007-10-09 18:24
You might suggest you are considering an IRA with another custodian, and see if the pressure is still on. The current 401(k) may not allow a direct rollover by a non-spouse bene, however there is pending legislation that would make it mandatory to allow this. What you may be giving up by going to an IRA is loan privileges and/or hardship withdrawals. The other things to weigh are expenses and investment choices.
Permalink Submitted by Alan Spross on Tue, 2007-10-09 20:10
In addition, if that 401k holds highly appreciated employer stock shares, the potential for NUA is lost if the shares are rolled to an IRA regardless of the custodian.
As Al pointed out, the advantage that Fidelity cites is very likely to disappear in a matter of months, so any pressure being applied is most likely motivated by Fidelity’s desire to retain the assets. If they wait until the plan holder acts independently to roll over the plan, their chances of being that IRA custodian are substantially reduced.
To check out the potential of NUA, get a cost basis quote from Fidelity for the employer shares. If you accumulated the shares prior to the mid 90s stock market boom, the chances for large gains are better.
Permalink Submitted by Jake Scott on Wed, 2007-10-10 12:39
All 401K investments are in mutual funds
Fid Growth Co-FDGRX (Management Fee 0.73%),
Fid Gro & Inc-FGRIX (Management Fee 0.46% )
Spartan US Eq Indx.-FUSEX (Management Fee 0.07%)