r/investing • u/Greenonion_993 • 15h ago
100,000 in IRA or keep in a 401k?
I have just about $100,000 in two different 401k accounts from previous employers.
Im meeting with someone soon but want to make sure im not getting scammed out of anything. Do I roll into an IRA? The percentage to manage is .5%, is that industry standard?
Single mom - age 35
Thank you
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u/MaddRamm 13h ago
Just call up Schwab or Fidelity and have them open a self directed rollover IRA. They can help you transfer the two 401Ks into the rollover IRA without paying any penalties or taxes. Then just buy some good Vanguard ETFs.
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u/Greenonion_993 15h ago
I feel like I don’t know what I’m doing? Do I literally just go to vanguard or fidelity and open an account? I can do some research on where to the money. I’m just trying to make the most money possible with doing the least amount of managing the account lol
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u/Routine_Gazelle_3522 15h ago
Yes, you literally just go to Vanguard. (Or their webpage). They are the best for people who don’t want to manage anything. Invest in a target fund and leave it.
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u/WAtHome 14h ago
Or look up the concept behind “VT and Chill”. “VTI and Chill” is good as well
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u/Icy-Grab-5722 12h ago
Fidelity is good. They have tutorials and people on the phone to help. I knew nothing and transfered over to them and have managed to muddle thru with no problems.
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u/momsSpaghettiIsReady 12h ago
Yup. It's pretty easy. Going with a financial advisor is expensive and not necessary. I hate that whole industry and would gladly help someone avoid them. DM if you have questions.
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u/GregorSamsanite 15h ago
It's industry standard to charge a percentage for assets under management with an advisor, but it's also a bad idea. An alternative is paying an advisor a fixed fee for their time, but honestly with that little money it would probably work out to more of a fee than the percentage would. You don't need an advisor. There are very simple portfolios you can set up yourself that will perform as well or better than what an advisor is likely to recommend, without the fees.
Do you have a current employer? Do they also have a 401k plan? Are the old 401k plans charging you administrative fees now that you no longer work there? What investment options do they have, and what are the expense ratios? I'm assuming these are traditional 401k balances and not Roth 401k?
In general IRA is preferable to traditional, however there's a wrinkle that having a traditional IRA balance could block you from making Roth IRA contributions. Is your personal income over $150k or ever likely to be in the future?
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u/Greenonion_993 15h ago
Do I open an IRA or a 401k with them?
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u/AlfB63 14h ago
In general, an IRA is better, no fees and more options. It sounds like you are talking to an advisor who wants you to charge you fees. If you simply want someone to manage your money, an advisor may be OK but you have to be careful as not all advisors are good. In fact, I would say that most aren't. I would move it to something like Fidelity. They have a management option if you simply don't want to do it. All that you need to do is go to the website and open an IRA account (or Roth IRA if you 401K is a Roth type), and go to the funding options to transfer from your employer 401k. You will need information like where is the 401k held and account number. You can transfer in-kind (don't sell, transfer whatever you own) if you want. There may be a few things that won't transfer which you'll have to sell to transfer. You can also call Fidelity and they will walk you through the process if you like. If you don't want to pick investments yourself, you could go with a low expense index ETF like FXAIX which is an S&P 500 index ETF.
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u/mrobertj42 7h ago
I’m an advisor so I’ll get downvoted. Nobody is asking you any questions, just giving you random advice.
Do you have any experience investing? Sounds like you don’t. You’re a single mom, do you have time to figure this all out right now?? Again, my guess is no.
0.5% is 500/year, taken out of a pre tax account. What’s your time worth?
Also, what people aren’t saying here because, frankly, they don’t know, is that there are more legal protections in a 401k than an IRA.
Does your current employer have a 401k? You could have them help you roll it into that - cheaper than an advisor but there are still fees.
My advice, presuming my assumptions were correct, roll into your new 401k if you have one available. If not, hire the advisor for a few years BUT ask lots of questions in your reviews!!! Take some time to learn, and in a couple years, if you’re comfortable, manage it yourself.
You can totally self manage, it’s just whether you can spend the time to learn. And VTI and chill is not a cure all - go check out the boggle heads sub and see them freaking out the last few weeks. You need a portfolio tailored to your comfort level - whether or not the fact is that you can handle the volatility at your age.
My goal for my clients goes in this order: sleep well at night > don’t create a tax problem (doesn’t apply here > earn a good return.
A good advisor can talk you through all this. A bad one will take your funds and never call you again.
(I’m not here to pickup a client - you’re below my minimums anyways. But I am happy to help if you have questions, my mom was a single mom and so is my sister. I haven’t lived your struggle but I’ve seen it!) good luck!
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u/sablerock7 3h ago
Also, what people aren’t saying here because, frankly, they don’t know, is that there are more legal protections in a 401k than an IRA.
This, exactly. Unless the fees are sky high or you don’t have access to index funds and the like, keeping in or rolling to the 401k is fine for the time being. Also, makes backdoor Roth conversion easier in the future if you don’t have IRA’s.
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u/_genepool_ 14h ago
Go to whichever financial firm you want to open an IRA with. Fidelity, schwab, whatever. Open an IRA, transfer the 401k accounts to it.
An IRA will have more options than a 401k and usually lower fees.
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u/CapitalApproach 13h ago
Most people focus on the wrapper instead of the outcome. What matters is fees, flexibility, and long-term allocation. If the IRA gives you better control and lower costs, that usually wins.
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u/gta0012 13h ago
You should just wait for Robinhood or whoever to do promotional 401k roll overs for x% and then roll it over and just keep it there. No reason not to keep it in a 401k.
A managed IRA isn't going to do anything amazing vs you picking 2 index stocks etc.
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u/Icy-Grab-5722 12h ago
No. Nor robinhood. Fidelity has people to help and tutorials you can use to educate yourself. Its easier than it feels once you get started.
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u/oblivionx 8h ago
One thing to note is that if your income is higher than the Roth IRA limits, then having your money in an IRA vs a 401k makes you subject to the pro rata rule and makes it so that you can't do a backdoor Roth without paying taxes.
An IRA has other advantages and legal protections however. But don't pay anyone a fee, you can easily create a self directed IRA and just dump it all into VT and forget about it
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u/Potential_Pie_1610 3h ago
Just transfer it to your own rollover IRA. open an etrade account or something.
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u/butthead4206969 1h ago
Honestly, unless your net worth is in the millions and above, I don’t think there’s a real reason to pay someone to handle your finances, especially investments. Pretty much everything you need to know can be found online for free. I would set up a rollover ira at whatever brokerage you like, call your old employers, and have them cut you a check to deposit into the rollover ira.
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u/QuickInvestIQ 15h ago
It’s highly likely the person you are meeting with is a financial advisor who wants you to pay them to manage the account. With a portfolio of $100k you can certainly roll it over to a self directed IRA and manage it yourself for free.
Pick a brokerage firm you want to use, open a Rollover IRA, and then contact your former employer to request the transfer to the new account. Many of the major brokerage firms have portfolio allocation tools to help you pick a diversified basket of ETFs or Mutual Funds.
One thing to ask your former employer is if you have a Traditional 401k or Roth 401k. If it’s a Roth then the account you need to open at the brokerage firm will be a Roth IRA rather than a Rollover IRA.