Where to Invest Money Right Now?

[frorider]

Seems legit

[riser4]

Buy Rubles.

[gravitylover]

Wait a few more days (weeks?)

[dannynoonan]

Buy Rubles.

Like they say over in the bitcoins thread, buy the dip, eh comrade?

[jm2e]

I bought more I-Bonds today.

[riser4]

Like they say over in the bitcoins thread, buy the dip, eh comrade?

Yup.

[statesidepl]

I-bonds are a good move right now but you're limited with a max contribution.

I think some of the tech stocks have sold off too far, but who knows. I like META, I think they're R&D in Oculus and VR will go a long way.

[Dantheman]

New job: Roll existing 401k into new company's 401k, or into an IRA and start the new 401k from scratch?

[Harry]

New job: Roll existing 401k into new company's 401k, or into an IRA and start the new 401k from scratch?

I see zero upside to give your existing 401K money to your new employer. Same for leaving it with your old employer.

Roll it into an IRA so that YOU control it.


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[El Chupacabra]

I see zero upside to give your existing 401K money to your new employer. Same for leaving it with your old employer.

Roll it into an IRA so that YOU control it.


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Generally, that's probably the right move.

Couple things to consider: whether your old employer's 401k has lower fee offerings vs new/IRA (eg institutional funds) - and same Q for new employer's 401k. Also whether old employer's 401k allows you to continue to hold your $ there without charging you for the maintenance fees. Also what the choice of funds are in new vs old employer 401k. Also whether new employer's 401k even allows you to do roll-in contributions. Also there are withdrawal rules that are beneficial to a 401k vs IRA (eg, if you leave the employer during the year you turn age 55, you can withdraw from that employer's 401k without penalty - but only that employer you just left, and not earlier 401k - and for future planning, IRAs have age 70 minimal withdrawal requirements).

Most likely the IRA rollover will be the best suited choice. But not an absolute.

[MiddleOfNight]

New job: Roll existing 401k into new company's 401k, or into an IRA and start the new 401k from scratch?

My job pays all the fees for fund administration and offers free consulting and investment help. I dunno what it'd cost otherwise, but I tell myself that it all adds up. Not sure if you'd have a vesting schedule, but that'd prob only be for the funds they contributed.
In my case it was worth transferring it to new job, but ymmv.

[Mazderati]

Chup makes good points and I'll add one. Rolling into your new company's 401k is relevant if you take it in the backdoor (NTTIAWWT). Rollover IRAs complicate taxes in backdoor moves.

[Name Redacted]

Generally, that's probably the right move.

Couple things to consider: whether your old employer's 401k has lower fee offerings vs new/IRA (eg institutional funds) - and same Q for new employer's 401k. Also whether old employer's 401k allows you to continue to hold your $ there without charging you for the maintenance fees. Also what the choice of funds are in new vs old employer 401k. Also whether new employer's 401k even allows you to do roll-in contributions. Also there are withdrawal rules that are beneficial to a 401k vs IRA (eg, if you leave the employer during the year you turn age 55, you can withdraw from that employer's 401k without penalty - but only that employer you just left, and not earlier 401k - and for future planning, IRAs have age 70 minimal withdrawal requirements).

Most likely the IRA rollover will be the best suited choice. But not an absolute.

Good info. Also, I think that there is a waiting period before you can transfer those funds out of the 401K to a new account 401k/or IRA. I remember that when I had to do it once. Ended up returning to the first job anyway so never transferred the money.

[sirbumpsalot]

New job: Roll existing 401k into new company's 401k, or into an IRA and start the new 401k from scratch?

FYI

If you play or plan to play the backdoor roth conversions money in a self-directed IRA go againtst tax calculations whereas 401K doesn't. If everything is in 401K, then an immediate conversion is essentially $0 tax bill.

[AK47bp]

One upside to a rollover is the 401k loan or hardship withdrawals. In most cases you can borrow 50% of your vested balance. All rollover funds are immediately vested. Used a 401k loan to help put a down payment on my new house, then paid it off after I sold my old house.

Nice option to have if needed.


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[Mazderati]

One upside to a rollover is the 401k loan or hardship withdrawals. In most cases you can borrow 50% of your vested balance. All rollover funds are immediately vested. Used a 401k loan to help put a down payment on my new house, then paid it off after I sold my old house.

Quite risky but works out in some cases. Was the interest rate you paid roughly the same as market rates for similar loans? Did the interest you paid go into your account (paying yourself interest) or did the interest paid go to a third party (administrator, bank, etc.)?

[AK47bp]

Quite risky but works out in some cases. Was the interest rate you paid roughly the same as market rates for similar loans? Did the interest you paid go into your account (paying yourself interest) or did the interest paid go to a third party (administrator, bank, etc.)?

401k loan interest goes back to the participant. So you essentially pay yourself back. All this is easily setup with payroll deductions from your employer.

The 401k record keeper likely charges a small loan application fee ($25-$50) but they don’t receive interest. At least the plans I’ve been on.

I can’t recall the rate I paid but it was right around prime at the time. (3%-5%)

Great option to have access to your own money in a pinch.


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[Dantheman]

Generally, that's probably the right move.

Couple things to consider: whether your old employer's 401k has lower fee offerings vs new/IRA (eg institutional funds) - and same Q for new employer's 401k. Also whether old employer's 401k allows you to continue to hold your $ there without charging you for the maintenance fees. Also what the choice of funds are in new vs old employer 401k. Also whether new employer's 401k even allows you to do roll-in contributions. Also there are withdrawal rules that are beneficial to a 401k vs IRA (eg, if you leave the employer during the year you turn age 55, you can withdraw from that employer's 401k without penalty - but only that employer you just left, and not earlier 401k - and for future planning, IRAs have age 70 minimal withdrawal requirements).

Most likely the IRA rollover will be the best suited choice. But not an absolute.

Awesome, thanks. Haven't signed up for benefits yet so I don't know how fees compare or if roll-in is allowed. Good to know that IRA conversion is usually the best option.

[Dantheman]

Chup makes good points and I'll add one. Rolling into your new company's 401k is relevant if you take it in the backdoor (NTTIAWWT). Rollover IRAs complicate taxes in backdoor moves.

What's the back door?

[Mazderati]

What's the back door?

Traditional to Roth IRA backdoor conversion. Useful in some circumstances. Existence of a rollover IRA has (negative for you) tax implications. If you don't plan to complete a backdoor conversion none of this matters.

[Kevo]

^Backdoor Roth IRA is a way to get money into a Roth IRA for people who have income too high for a regular Roth IRA and often for people who have income high enough to not benefit from tax advantages of a traditional IRA.

You have to put money into a traditional IRA, then roll it over into a Roth IRA. The issue is that the the traditional IRA needs to be a zero balance before and after the rollover or it complicates things from a tax standpoint.

TLDR- a backdoor Roth IRA is a way to get $6k per year into a Roth IRA if your income is otherwise too high for a regular Roth IRA.

I utilize a backdoor Roth IRA, so instead of rolling old 401Ks into an IRA or rolling them into my employer's 401k, I created a self directed 401k and rolled into that. It was pretty easy to set up.


I really wish my employer allowed mega backdoor Roth conversions out of the 401k. That's my personal finance white whale. It is a huge benefit if you are already maxing 401k, IRA and HSA contributions and then continuing to invest in a taxable brokerage account.

[Mazderati]

401k loan interest goes back to the participant. So you essentially pay yourself back. All this is easily setup with payroll deductions from your employer.

The 401k record keeper likely charges a small loan application fee ($25-$50) but they don’t receive interest. At least the plans I’ve been on.

I can’t recall the rate I paid but it was right around prime at the time. (3%-5%)

Great option to have access to your own money in a pinch.

Good to know about the process and payback.

My comment about risk relates to the potential for a called loan at what could be a very inopportune time; leaving a job or being fired from it. Options are good. I'm sure there is nuance.

[AK47bp]

Good to know about the process and payback.

My comment about risk relates to the potential for a called loan at what could be a very inopportune time; leaving a job or being fired from it. Options are good. I'm sure there is nuance.

Oh yea. If you’re fired or quit the option is to pay it back in full immediately or it becomes a taxable distribution with possible penalties depending on your age.


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[AK47bp]

^Backdoor Roth IRA is a way to get money into a Roth IRA for people who have income too high for a regular Roth IRA and often for people who have income high enough to not benefit from tax advantages of a traditional IRA.

You have to put money into a traditional IRA, then roll it over into a Roth IRA. The issue is that the the traditional IRA needs to be a zero balance before and after the rollover or it complicates things from a tax standpoint.

TLDR- a backdoor Roth IRA is a way to get $6k per year into a Roth IRA if your income is otherwise too high for a regular Roth IRA.

I utilize a backdoor Roth IRA, so instead of rolling old 401Ks into an IRA or rolling them into my employer's 401k, I created a self directed 401k and rolled into that. It was pretty easy to set up.


I really wish my employer allowed mega backdoor Roth conversions out of the 401k. That's my personal finance white whale. It is a huge benefit if you are already maxing 401k, IRA and HSA contributions and then continuing to invest in a taxable brokerage account.

I know some people using the turbo Roth options combined with being 50+ and maxing out all the contributions can actually get $64,500 in their 401k accounts. At least back in 2021


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[Kevo]

I know some people using the turbo Roth options combined with being 50+ and maxing out all the contributions can actually get $64,500 in their 401k accounts. At least back in 2021


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Yep. That's the dream.

My company has everything set up to allow this except a few payroll people who do not understand how to allow for after-tax contributions. Everything else is in place and it is so frustrating.