Hoping you could shed some light or guidance. I have to rollover a 401k from a previous employer. There is 40k in this one. Should I roll it over to an actively managed traditional ira I have that has a .86 operating expenses that I already have 75k in, roll it into the new employers 401k or set up a vanguard traditional ira. I’m unsure if it’s better to have one bigger account and the new 401k or if I should rip the band aid off now and do the vanguard account. Background on me I’m 31 and salary is 140k and the next three years I will also get about a 30k retention bonus every year so this next three years my salary will be 170k. Any input or guidance is greatly appreciated.
IF IT’S ME, I’m rolling over your old 401(k) AND the actively managed IRA to a IRA that offers low fee index funds. None of that should be a taxable event (direct transfer rollovers, no conversions). And the lower fees should put you in a better position for higher long term growth. Here’s an article on why I roll over to a low fee IRA and not your current 401(k)
The only reason I WOULD roll to the new 401(k) is if you’re doing a backdoor Roth IRA every year and you want to keep your individual accounts free of any pre-tax retirement money to make that backdoor rollover cleaner and avoid the pro-rata rule. BUT with your income, nothing wrong with keeping it simple and just filling up the accounts you’re eligible for
Thanks Jeremy, would you recommend a target date index fund through Fidelity or the 70/30 split in Fidelity index funds like you have stated in a different article?