Rolling 401K into an IRA

I have a Fidelity Brokerage account and Fidelity also manages or is the custodian of my 401K. I was talking to my Fidelity guy today and he was asking me what is keeping you from rolling over your 401K into an IRA with us. I have also been retired for over 7 years. I told him I always thought my money was protected from law suits better if it was in a 401K compared to an IRA. He told me if I rolled it over it would be protected just the same as if it were still in the 401K since I live in CA. Any advantage of doing a roll over or should I leave it where it is? I don’t plan on doing any roth conversions either. Thanks.

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Well, it will help your Fidelity guy increase the amount of assets under his care.

I haven’t looked into California bankruptcy laws, but if I were tempted to move it to an IRA, I’d make sure he’s right before doing a rollover (plus look at other states’ laws if you’re considering moving).

An advantage might be lower expense ratio index funds in the IRA compared to what your 401k plan offers.

In general the federal ERISA protections for 401Ks are better than state IRA protections.
When I retired I had umbrella coverage which helped me feel comfortable about rolling out of my more expensive 401k plan.

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Potential lower expenses in an IRA would of course need to be weighed against the Fidelity management fees.

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Thanks for the info. I do feel I have a good 401K plan thru Continental / United Airlines and can’t really see any benefit from rolling it into an IRA.

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It’s only up to $1.3 million I believe for bankruptcy

quote=“c200ns, post:5, topic:4385, full:true”]
Thanks for the info. I do feel I have a good 401K plan thru Continental / United Airlines and can’t really see any benefit from rolling it into an IRA.

That’s a fine strategy. What matters is you saved

When I was “retired” from my job at Multinational Hitech (as I call 'em) I did not wait one day to extract my 401k there into an IRA at the institution of my choosing. That is because of the s**t treatment that I got as a client: The real client was MHT, not the owner of the dough. First we fought over “gimme an account number” where Fidelity declared that my Socialist number was my account. Then we fought for quite some time over their refusal to send a periodic statement (like quarterly), even after an Act of Congress went into Law on such practice. They were doing what sponsor agreed to: Treat the real customer like dirt.

Even if Fidelity was decent, you get a lot better flexibility in an IRA, and out from your sponsor’s stipulations you likely get better treatment.

I live in Georgia and I’m wanting to consolidate some of my investments. Is it true that rolling over a Voya 401K into my Vanguard IRA would require me to LIQUIDATE the mutual funds to make the rollover, as opposed to the simple TRANSFER of my TD Ameritrade securities into Vanguard (non-retirement Accounts).

Yes, but then you change the subject here:

Voya will sell your holdings and send a check for the amount of the rollover to Vanguard. Vanguard will then invest it as you direct. None of those things are taxable events.

If you start mixing in non-retirement accounts, then all bets are off. I hope you mean that you already did a transfer of non-retirement accounts, and you are comparing that process to this one.

I was just comparing. I totally understand the distinctions between non-retirement and retirement accounts. I appreciate your confirmation about the necessity for a liquidation of the 401k. Thanks.

I live in CA. When I had PAS at Vanguard I asked this question regarding my 403b and was advised not to since it would have to be rolled into an IRA and would not have the same protections as with a 403b.

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Clark and others surgest doing the rollover. Is your 403b plan a relatively low cost plan?

You may have already researched this further but here is what the Nolo website has to say about this for California.

If I remember correctly, I believe the issue comes when you apply for government programs like Medicare. The government may require you to exhaust your funding before they will assist. 403s and probably 401s, are exempt. IRAs are not. After reading the attached article, I view it as yet another slap in teachers’ faces that not only do they only have access to inferior 403 b accounts, but those accounts are not protected as ERISA qualified accounts like 401s are.

You’re saying opposite things here. Which is it?

If you read the posted article, it says 401s and pensions are ERISA protected but not 403bs, except on a case by case basis if a judge decides so. Is the article incorrect?