401K rollover

[SoonerTexan]

I'm going to have to do something with my current 401K in a couple of months and I'm not really sure where to start. The great news is I'm vested and I've put away 8% for 6 years. Any thoughts on where to start?

Also, how many of you contributed to 401Ks during residency when the resident's salary was it? I need to look again, but I don't think we get anything matched. I'm sort of inclined to say screw it, because we are going to need every penny and we will come out of residency with my 401k and some sizable housing equity, but it feels wrong not to be doing something during that four years.

Also thoughts on financial advisors? The guy who sold us the life insurance and disability wants to meet with us, but I'm sort of like, "why?" Other than figuring out my 401K, I'm not really sure what we would get out of it at this point in life that I couldn't figure out on my own. I dunno.


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[Thirteen]

We did a rollover IRA with our old 401k -- I chose Schwab over Vanguard or Fidelity because I can get someone on the phone, day or night, 24/7.



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[oceanchild]

I rolled my thrift savings plan (equivalent of a 401K for federal employees) into a Roth IRA.

During residency we maxed out annual contributions (somewhere around $5000) to a Roth IRA for each of us, and I kept up with my work retirement plans, but we didn't do anything else for DH. Our Roths are through Fidelity, but I couldn't tell you why we picked them, and they're either all or almost all invested in target date funds. Because we don't like to think about this stuff much.

[spotty_dog]

The first question for me is usually, why does it need to go anywhere? I still have my 403(b) right where it was when I left my job over 10 years ago. If you really don't like where it is now, then start by pressing the easy button. Push that puppy over to Vanguard, drop it into a Target Retirement Fund, and forget about it until you are ready to be more hands-on.

We even contributed to retirement when DH was in medical school, and I was supporting us both on my secretary salary of less than $30k per year. It was only a few hundred dollars, but that habit of paying yourself first is SO important. During the residency years, we put a few hundred dollars in an IRA the first year, and then once he was moonlighting he opened a solo 401(k) and put the majority of his moonlighting income in there. We also scraped up enough to max out a Roth for each of us during the last year of residency, as we knew we wouldn't be in that tax bracket again for a long time!

Do you have the White Coat Investor book? He has some good stuff about financial considerations during the residency years, and about how to choose an advisor.

[SoonerTexan]

The first question for me is usually, why does it need to go anywhere? I still have my 403(b) right where it was when I left my job over 10 years ago. If you really don't like where it is now, then start by pressing the easy button. Push that puppy over to Vanguard, drop it into a Target Retirement Fund, and forget about it until you are ready to be more hands-on.

We even contributed to retirement when DH was in medical school, and I was supporting us both on my secretary salary of less than $30k per year. It was only a few hundred dollars, but that habit of paying yourself first is SO important. During the residency years, we put a few hundred dollars in an IRA the first year, and then once he was moonlighting he opened a solo 401(k) and put the majority of his moonlighting income in there. We also scraped up enough to max out a Roth for each of us during the last year of residency, as we knew we wouldn't be in that tax bracket again for a long time!


Do you have the White Coat Investor book? He has some good stuff about financial considerations during the residency years, and about how to choose an adviser.

I'm paying too much for the crappy management it has now--although I hadn't even considered I could just leave it.

I read the White Coat Investor book a few years ago. Might be worth looking over again. Basically, I don't want to pay anybody now because I don't feel it is worth it, but I'm wondering if I'm wrong? I know there are also free ones out there for residents, but I don't like the idea of being "beholden" to anyone either.

Yeah, we probably should just buckle down and contribute *something* but I always have this fear that we will need it and wont be able to access it. It's pretty unfounded, but based on the fact that we've had a spare income for 6 years and we have 4 long years of training left and three kids to boot.

[spotty_dog]

If you contribute to a Roth, you can access the principal any time, penalty-free.

So your current 401k has an account maintenance fee as well as the expenses on the investments? Yeah, that is probably not worth keeping it there then.

[SoonerTexan]

Good to know in the Roth!!! I need to do some research. If it is already there, we are less likely to touch it


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[civilspouse]

I rolled mine into a traditional IRA. I wanted to just lump it in with my Roth we had been contributing to but since we would have had to pay the taxes on it and the funds could not come out of that account with a penalty I just went with a traditional one. We didn't have the spare cash laying around after interviews, moving, etc. I didn't know that you could withdraw from the principal on a Roth without penalty. I probably would have done that if I'd known. During med school we tried to max out a Roth for each of us and I contributed to my 401k. During residency we aren't making any contributions because most months we are just breaking even as it is. I feel bad about it but we saved a good chunk when I was working and we have concrete plans for retirement to be the big priority at the end of residency.


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[SoonerTexan]

^I think we are on the same page


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[rufflesanddots]

Hijack, sorry ST!

Not sure you'd know the answer to this SD (or any of our other financial gurus), but I have a Roth 401K at work I'll need to roll over after I go part-time (not performing well since I've been there, but getting 3% from my employer so I want to leave it until I stop getting that $). Years ago it started as a traditional 401k, then they gave us the Roth option, so I switched. I also rolled my traditional 401k from another employer into the Roth 401k.

Can I roll that all into my Roth? Are there taxes that will need to be paid on the non-Roth contributions?

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[MAPPLEBUM]

Remind me, is this because you're phasing out your job?

I have to tell you, I maxed out our Roth's for 2014 at the suggestion of my accountant brother. I used our rainy day fund, because, according to him it's truly only for emergencies. We had a good bit in cash left over, but it was designated for expenses like fellowship interviews and that bow I'm apparently never going to buy. What I've learned since then is the thought of prematurely withdrawing from a retirement account is soul crushing. In the face of catastrophe I'm sure we'd be glad to have it, but the rainy day is most often used for an expensive month. You take from it and then give back on a better month. Of course, now I know if I want to challenge myself to save more I'll put the rainy day in a retirement account, rendering it inaccessible. My main takeaway however, is I like having the rainy day in cash, and periodically contributing to funds (also in cash) for big expenses. If I were making 8% on my stocks maybe I'd be singing a different tune, but for 2015 I started building back up the rainy day and didn't max out the Roths. Everyone's different but that was my experience.

If you're going to one income I wouldn't make any plans to save. If he's able to moonlight maybe you can arrange to never see that money. But you won't have much wiggle room on a resident's salary. My guess is if you had even a few hundred taken out of his paycheck each month you'd have to tap into the rainy day more regularly. He's got several years left of residency so maybe give it 6 months before deciding if / how much to save.

[scrub-jay]

401K rollover

Hijack, sorry ST!

Not sure you'd know the answer to this SD (or any of our other financial gurus), but I have a Roth 401K at work I'll need to roll over after I go part-time (not performing well since I've been there, but getting 3% from my employer so I want to leave it until I stop getting that $). Years ago it started as a traditional 401k, then they gave us the Roth option, so I switched. I also rolled my traditional 401k from another employer into the Roth 401k.

Can I roll that all into my Roth? Are there taxes that will need to be paid on the non-Roth contributions?

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ROTH 401k money is after-tax money so you should be able to roll that into your Roth IRA. When you rolled your traditional 401k money into the ROTH 401k, you should've included that on your taxes that year. Rule of thumb:
ROTH = After tax
Traditional = Pretax (taxed when you withdraw)
The reason ROTH IRAs are so awesome is that you don't pay tax on the EARNINGS. You'd pay tax on the principal before you put it into your Roth account, but never again. The earnings in that account are not taxed when you take the money out in retirement.

[rufflesanddots]

Thanks, [MENTION=1768]scrub-jay[/MENTION]!

[OrionGrad]

I've contributed to my Roth IRA since I graduated college, and DH contributed a very small amount to his 401k all throughout residency. (We rolled that over into a traditional IRA after graduation because the fees were high.) We had planned to NOT contribute to a 401k during fellowship because a) I'm not working as much, b) COL is higher here, and c) He'd only be contributing for one year anyway, but of course a wrench was thrown into our plans and DH's current institution REQUIRES that everyone contribute a certain percentage of their paychecks to the 401k. I was pissed at first (I even made DH call around to see if we could get out of it), but I'm sort of over it now. I assume we'll roll it over after we leave, but I haven't put much thought into it yet.

[ladymoreta]

I also just left mine in the 401k at my first job. It does better than anywhere else we have money, so I'm afraid to touch it.

We didn't contribute during residency after I quit working. I know you're not planning to move post-residency, but we weren't either. If you do, the magic number seems to be around $20k, so I'd kind of recommend putting any available savings into a savings account instead of a retirement fund. I know it's probably terrible advice, but it sucked having to take out that large of a loan right at the end.