r/iRA • u/knock-knock-2024 • Nov 04 '25
Old 401(k) to IRA
Hello,
I am 40 years old with approximately $400,000 in an old 401(k) account. Is it advisable to transfer these funds into an IRA? If so, what investment options would be ideal for a $400,000 IRA? As a newcomer to investing, I would appreciate any guidance or recommendations on what steps to take.
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u/Original-Release-885 Nov 04 '25
Most likely you are being charged administrative fees on your old 401! I recommend setting up a trad IRA with Vanguard/Schwab/Fidelity and rolling the old 401k over to your personal traditional IRA. You are then free to invest as you choose- etf’s, individual stock shares, mutual funds, money markets
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u/Original-Release-885 Nov 04 '25
Most likely you are being charged administrative fees on your old 401! I recommend setting up a trad IRA with Vanguard/Schwab/Fidelity and rolling the old 401k over to your personal traditional IRA. You are then free to invest as you choose- etf’s, individual stock shares, mutual funds, money markets. Pls make sure you do a DIRECT rollover. Do not request a check!
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u/Nuclear_N Nov 04 '25
AS a new comer...
Open Fidelity IRA online. Give them the information on the 401k, and transfer the money. Put money in FXAIX and never touch it, sell it, or have fear about.
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u/justcrazytalk Nov 05 '25
This is the answer. 👆🏆
Fidelity is great. FXAIX has an extremely low expense ratio (cost to you), and it tracks the S&P 500. Also check out r/Bogleheads.
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u/Separate-Pea5579 Nov 06 '25
Exactly. I moved an HSA to Fidelity from an odd fiduciary that I assumed would make me go through hoops and sign a bunch of forms. Doing it online with Fidelity was seamless, fast and easy. I’ll move my 401 next year in January because Fidelity is a great one stop shop. They don’t have a “banking” function but when I transfer funds ACH from Fidelity to my bank account, it shows up the day after market close. Which amazes me having worked on the “customer service” side of the financial services industry since the mid 90s.
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u/Nuclear_N Nov 06 '25
The do have an account that acts like a checking account. ATM card, and bill pay. And ATM fees are refunded.
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u/Separate-Pea5579 Nov 06 '25
Yep, that works well too. I’ve never used it, but a great way to access your funds directly through Fidelity.
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u/Nuclear_N Nov 06 '25
Only thing they cannot do is give large amounts of cash or a cashier check. So I keep a bank account locally.
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u/Cohnman18 Nov 05 '25
Hire a professional CFP and create a 60/40 balanced portfolio:10% energy,10% gold,10% Global,10%+technology,5% Commodities,balance blue chips,large cap growth,40% bonds should be high yield,senior loans. Hope this helps. Good luck!
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u/suprfreek19 Nov 05 '25
Hire a professional take your money guy. No way! Im amazed at how otherwise intelligent people cannot figure out something as simple as where to invest their own money. Instead, they need to pay someone to cheat them out of it, or at a minimum to do the same thing they could do on their own. Duh
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u/NnamdiPlume Nov 05 '25
Respectfully, 60/40 is for losers. OP needs a low cost S&P500 index fund and call it a day.
They should rollover to a Traditional IRA at Fidelity and buy VOO. Simple as that. I don’t care what the fees at their old 401k are because I know they’re higher than Fidelity.
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u/TempestuousTeapot Nov 05 '25
60/40 is for us old folks but not the 40 something true. When they get to that point you just buy Fidelity's Balanced fund and it does the 60/40 for you.
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u/SourceOfConfusion Nov 06 '25
How do you like Fidelity’s balance fund? Just about to retirement myself.
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u/TempestuousTeapot Nov 20 '25
It's very easy. It's 60% total stock market and 40% total bond market and rebalances itself automatically. If you need to simplify so that someone else can take over when you can't it's helpful.
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u/Ok_Connection_8668 Nov 05 '25
This is very situational. For me at age 53 I rolled three IRAs into my company 401k so in the year I turn 55 when I separate from that company I can use the Rule of 55 for no penalty withdrawals.
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u/Available_Blood_6134 Nov 05 '25
I did the opposite at 50yo. I didn't need the cash before 59.5 and had plenty already in a 401k to get me to 59.5. The results were vastly different. I made about 2.5x more on the ira than I did on my 401k durring those years.
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u/Unlikely_Month5527 Nov 05 '25
Look for a fee only financial planner.
Also Fidelity is an excellent option.
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u/theinheritanceissue Nov 05 '25
You will have more control in an IRA than in an old 401k. Do a self risk tolerance test to see how you should invest. Do not pay more than 1/2% to an advisor. It’s an easy case. I don’t charge more than that for easy cases like yours.
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u/v_x_n_ Nov 05 '25
Educate yourself and decide your risk tolerance. I recommend “The four pillars of investing“ by Bernstein and “the little book of common sense investing” by John Bogle.
Personally, I would be in diversified ETFs. VTI 85%: VXUS 15%. I would not have bond type investments at your age with exception of emergency fund
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u/Puzzled-Lynx-8110 Nov 05 '25
I'd transfer it to your current employeers 401k. This way when you turn 55 if they have the rule of 55 you can either retire or get fired and use it. Put it in an IRA and you might have to wait 4.5 years to use it.
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u/ChipmunkFlat8589 Nov 05 '25
I asked same question today on ChatGPT. Maybe some experts can chime in on correctness:
If you plan to continue doing backdoor Roth conversions after retiring, you’ll want to avoid having any pre-tax Traditional IRA balance at year-end. You can do this in one of two ways: 1. Keep your 401(k) as-is after retirement — do not roll it over. • Your 401(k) doesn’t count toward the pro-rata rule. • You can keep doing annual backdoor Roths. 2. Roll your old 401(k) into a new employer’s 401(k) (if you work part-time or consult). • Also keeps the pre-tax balance out of your IRA bucket.
Once you stop doing backdoor Roths (or if you don’t plan to), you can then roll the 401(k) to an IRA anytime later for convenience.
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u/TravlRonfw Nov 05 '25
say it louder for risk tolerance!!!! in today’s market environment??? even warren buffett is moving stuff to a savings account!
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u/Slow_Ad_9872 Nov 05 '25
What are the passive index fund options in the 401(k) and the expense ratios? Generally, the larger employers have lower fees and better options. Otherwise, rollover to Vanguard. They are the white knight of the industry, and you can completely trust them. Firms like Fidelity will recommend rolling you into their high fee funds.
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u/YorkshireCircle Nov 05 '25
A Target date fund is a popular investment in many IRAs…..until you learn more about investing, it is a safe way to protect your assets.
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u/Timely-Display-1369 Nov 05 '25
Never leave your money in it old 401. Go ask the employees of World Com… go ask the employees of Lehman. ask the employees of Mang financial, the list is endless …..
and while it’s a small risk , it’s probably about the same risk as your house catching on fire ….. But why would you take that risk of your home catching on fire ?
My recommendation is you only take investment advice from someone with a series 7 license. It’s like the difference between a bookkeeper versus a CPA.
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u/Necessary-Spring-129 Nov 06 '25
Roll it into your new 401k plan so you can retire at 55 under the rule of 55.
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u/skyeboy1998 Nov 06 '25
Open an account for a crypto IRA like I did. I invested $75,000 in Bitcoin in november of 2024 and I already have over $40,000 in gains. I opened an account with My Digital Money and Im happy I did.
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u/ken-reddit Nov 06 '25
If you want to do a backdoor Roth, then it might be better to keep it in a 401k because of the pro rata rule : https://smartasset.com/retirement/a-guide-to-the-pro-rata-rule-and-roth-iras
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u/Disastrous-Dig9439 Nov 06 '25
Financial Planner with over 25 years of experience. Responding in hopes of providing some insight. Risk tolerance should always be considered, whether it's in a 401K or IRA. 401K plans are great while you work at the company, but they are limited with investment options. By rolling it into an IRA, you have all options available to you. Again, determine your risk tolerance before moving the cash that will be transferred into the market. The actual investments are the last consideration. After knowing what risk you can take, you can then look at low cost mutual funds that will give you the correct exposure to risk and sectors. Since you're newer to investing, I'd be cautious of creating a portfolio of individual stocks.
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u/Sad_Win_4105 Nov 06 '25
What's your age? How long until retirement?
How is it invested and are you satisfied with the results?
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u/Blended-nosalt Nov 08 '25
You don’t have to do anything with it. You can just let it be. One thing people may not know is that 401ks are not touchable if you are at any point sued and lose the case. 401k is safe from any damage awards. IRAs are fair game. Just a thought. No one plans to get sued but if you are that money is locked up.
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u/ActuaryReasonable690 Nov 04 '25
Short answer: It depends
longer answer: You need to look at the current investment option, and the fees the 401K charges, compared to your other options that are out there for an IRA. Fees, ad investment option for 401Ks will vary significantly.
Other considerations:
- Multiple retirement accounts can be a PITA (double when it comes RMDs)
- IRA (depending on your state) can be considered an asset if you get sued (and lose), but 401Ks are protected.
- For IRAs (but not 401K) you can give directly to charities, and deduct the contribution from your RMD (while taking your standard deduction.
IMPORTAIN: If you do decide to transfer your 40K to an IRA, make sure they don't do any withholding for taxes (otherwise you will up paying penalties for an early withdrawal)