Roll law firm 401k into fed TSP?
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Anonymous
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Left a law firm a little while ago and have about $250k in my 401k plan. It's with Fidelity and I've been pretty happy with the fund selection there.
Will now be opening a TSP account and am wondering if I should roll my 401k into the TSP. I've heard good things about TSP fund options and I also wonder -- wouldn't my money be safer in a TSP vs a law firm 401k in the (hopefully unlikely) event the firm goes bankrupt? Any thoughts? |
Anonymous
| Convert the old 401K into a personal IRA. Start anew with the TSP. |
Anonymous
But then I would owe substantial taxes on the conversion -- what would be the benefit of the IRA in that situation? Thanks in advance. |
Anonymous
| A rollover for sure. If not to TSP then to vanguard or t Rowe price. Fidelity has high fees |
Anonymous
| Are there fees associated with rollover to TSP? I've been wondering the same thing as OP. I have two 401ks from previous jobs. |
Anonymous
| I have tried and tried to do this to no avail. If anyone figures out how to do it - please post here! |
Anonymous
| Yes. It is easy to do. I did it a couple years ago. Probably a total of 15 minutes work. |
Anonymous
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If you have any interest in doing a Backdoor Roth at some point in the near future (if you are above the income threshold for Roth ira contributions), then roll the 401k into the TSP. Otherwise roll the 401k into a traditional IRA at fidelity or vanguard. Both will give you plenty of low cost funds and a lot of different options. There should be no fees to rollover a 401k from a former employer plan to either the tsp or traditional Ira.
In order to transfer into the tsp you would fill out form TSP-60. |
Anonymous
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https://www.tsp.gov/PDF/formspubs/tsp-60.pdf
The TSP's fees are lower than at any brokerage. |
Anonymous
What do you mean? Follow the TSP's instructions. |
Anonymous
What? I rolled over more than one old 401K into personal IRAs, these are qualified rollovers, so no tax consequences. |
Anonymous
You would only owe taxes if you converted/rollover to a Roth IRA. If it's a traditional IRA you rollover to there will be no tax consequences. The advantage would be you can pick any financial institution in the entire US that handles IRAs to rollover too. And once you have the funds there you are free to move them later to a different financial institution. So the main advantage is freedom to change/move whenever you want. |
Anonymous
I vaguely recall during the Dewey bankruptcy people were getting hit with fees on their 401k accounts. I think, but am not sure, that it was like a 1% charge. |
Anonymous
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Thanks for all the helpful input. I think I will probably end up rolling into the fed TSP, but will take a closer look at IRA options before I do so.
Fidelity has some very good low fee index funds, but I don't want to leave my money in an account associated with my former law firm. You never know! |
Anonymous
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1. it doesn't matter if the law firm goes under. that money will not be affected by that.
2. you will not incur any tax penalties if you roll over your 401k balance into an IRA. 3. I may be wrong about this, but I don't think you can do a backdoor roth conversion if you roll the balance into an IRA. I think you would incur tax penalties because of the amount. (again, I could be wrong about this.) |