With my soon to happen career shift, those of you that are up on things, what would you suggest doing with my 401k? I can leave it, I can roll it over into an IRA, I think I can move it to my new place that has a 403b? I think. What are the pros and cons of each, what other options are available, can I still take loans against or is that only on the one I currently am employed by at the time? Give me a learning because I need to make my move soon. Thank you!
I believe you can only take loans while still employed at the company that is holding the 401k. That is because you pay back the loan by paycheck withholdings. And I think (although I could be wrong) that if you still have an outstanding loan when you change jobs, the payback is due immediately (or within 30-90 days anyway), or you get taxed as an early withdrawal - with associated penalties. If your plan has done well overall, you may want to think about leaving it in there for a while. Especially with the downturn to the market - everything will be sold at today's prices and then there will also most likely be fees taken out. Also, you don't get a choice on "when" it is sold once you give the order to rollover, so you can't time the market (if you are inclined to try that). You can always roll over later - it's not a decide now and forever be stuck there. However, if it hasn't done well (overall), you may want to establish a Rollover IRA with a company that you will have more/better choices for investing. Yes, you will most likely lose money in the short term, but long term you may do better. That is all I think I know about 401k's and I'm sure others have much more learned advice than I have.
I had a 403b at one time. I was able to move it into an IRA at my brokers. This give you the opportunity to control what assets are in it. If you have a 401k from a company, how much of that company's stock is in it. You still need a bit of diversification in an IRA.
Do a direct transfer to a rollover IRA. You'll have better investment options than 401K or 403B. As for loans from your retirement plan, don't do that.
Back in the late 2000's, I rolled my 401K over into my IRA. As I remember, it took them about 2 months to take care of it....I believe they have to comply no later than 2 months of your request so they wait as long as they can. But, the rollover included all necessary paperwork showing what was done (rolling it into a "qualified" plan) so I just included that with the annual taxes.
I just rolled over a small 401k from a former employer to my rollover IRA 5-6 weeks ago (I had left it in there for about 3 years because it was doing well). I don't know if it was that company's policy or new regulations are in effect, but they had something like 10 business days once they received the online "paperwork". They had it done in 5 (including the weekend as I did it on a Saturday). I had an existing IRA so it was easy to do everything online, so maybe my experience wasn't typical. If you chose to do it by mail, it would take longer (and they tell you the time frame). I managed to do that at the beginning of the market turmoil, so although the value had decreased a little bit, it wasn't too bad. I've been buying slowly and still have about 1/2 of it left to invest.
The current company pays administrative costs for the 401. They may want you to move it. Otoh, if they are using your money to generate more (perhaps they benefit from that?), they might not be in a rush for you to move it. We talked to our credit union, they had sound advice. Sca
Agree that you probably can’t take a loan against a 401k unless you are working with a sponsored plan. I think loans agains 401k aren’t as bad as they made out to be. At least from an interest rate perspective, since you are paying interest to your own account the loss is taxes that you pay on the interest. So 30% of 6% would be 2%loss. Way better than paying credit card rates, or even mortgage rates. It can put you in a spot when you change jobs or retire however. But paying off a higher interest loan is usually a good plan.
