The other side of the coin is to not buy managed funds that charge high expense ratios and instead stick to indexed funds with low expense ratios. Don't be concerned about these fear mongers and do more research for yourself.
For all the 30 somethings who just got laid off and are trying to figure out what to do with their 401K, don't listen to Kerry Hannon. You need to rollover that money into a ROTH. The initial tax hit will be discouraging, but that money will grow unhindered by future taxes upon withdrawal. Plus, if you invest in funds or indexes with expense rations below 0.5% per year, you don't need to worry about the management costs at all.
Gotta be careful if you’re rolling over a traditional 401k to a roth IRA since the trad is tax deferred and Roth is money already taxed. You will enable a taxable event converting the trad funds over to Roth.
The point that she is trying to make is that large companies can buy lower cost fees than an individual. Compare Vanguard VFFSX (SP500 Institutional) at 0.01% and 5M minimum to VFIAX (500 Admiral) at 0.04%. Assuming that you work at a company smart enough to chose these funds and keep the admin fee < 0.03%, then she is correct. Those companies are very rare.
No. The fund fees are honestly the same. Except the 401k has maintenance fees. Rollover the 401k into an IRA. A Roth IRA if you can pay the taxes even better.
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
The other side of the coin is to not buy managed funds that charge high expense ratios and instead stick to indexed funds with low expense ratios. Don't be concerned about these fear mongers and do more research for yourself.
Yep.
For all the 30 somethings who just got laid off and are trying to figure out what to do with their 401K, don't listen to Kerry Hannon. You need to rollover that money into a ROTH. The initial tax hit will be discouraging, but that money will grow unhindered by future taxes upon withdrawal. Plus, if you invest in funds or indexes with expense rations below 0.5% per year, you don't need to worry about the management costs at all.
Gotta be careful if you’re rolling over a traditional 401k to a roth IRA since the trad is tax deferred and Roth is money already taxed. You will enable a taxable event converting the trad funds over to Roth.
The point that she is trying to make is that large companies can buy lower cost fees than an individual. Compare Vanguard VFFSX (SP500 Institutional) at 0.01% and 5M minimum to VFIAX (500 Admiral) at 0.04%. Assuming that you work at a company smart enough to chose these funds and keep the admin fee < 0.03%, then she is correct. Those companies are very rare.
No. The fund fees are honestly the same. Except the 401k has maintenance fees. Rollover the 401k into an IRA. A Roth IRA if you can pay the taxes even better.
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
Also, if you role over to an IRA, you will not be able to access the funds in the IRA under Rule 55 if you want to retire early.
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
Not as many investment options in 401K