Thanks for replies–I might be getting it, but bear with me–I tend to get confused
about IRA, Roth IRA, self-managed IRA, self-directed IRA, rollover IRA, rollover Roth IRA, 401k, and a new one for me: Roth 401k.
To recap–I want to do two things:
1–Because I’m uncomfortable with stock-market valuations, I want to sell the stock mutual funds in this 401k and have cash instead of stock mutual funds. I can do this with no tax consequences, correct? That is, a person can buy/sell funds within a 401k or IRA with no tax consequences?
Yes. There are only penalties when you take it out prior to 59 1/2. After that age there will only be taxation issues.
2–Change/convert this 401k into a “rollover IRA.” This would eliminate the 401k management/admin firm used by my previous employer. After the 401k/IRA rollover, they would have nothing to do with me.
**
Correct. However, almost all mutual funds or other money managers charge a management fee, even if they’re place you into the funds themselves at no or little fee. Check the fine print.**
Am I correct in both of the above?
Or do I have the order reversed–that is, should I **first ** rollover the 401k into IRA, and then sell the funds and have cash?
It doesn’t matter. Though it often occurs that some mutual funds or other investments are only capable of being held at a specific firm. So to transfer they may be liquidated and the cash value sent instead.
Key thing–I had not considered this possibility:
I can do the above while still remaining with Fidelity–right? That is, **where ** I put the rollover IRA is a separate issue.
Yes. That should be do-able unless there’s something wonky in your 401k.
So, per Martin Hyde and psychobunny posts, I can do all this while remaining at Fidelity–dump the 401k and its management, rollover this 401k into an IRA at Fidelity. This way I’d be dealing **only ** w/Fidelity.
Correct. But there will still be some management fees almost certainly.
So might this be best?
Possibly. Honestly, there can be several moving parts and giving accurate advice over a message board is generally impossible. Call Fidelity and tell them to send you the paperwork on both the 401k and the option to transfer it (it’s not technically a rollover) to an IRA. Also, find some large firm and consult a broker there. Any good one should be willing to give you a half-hour or so at no charge (if they try to charge you they’re not good and you shouldn’t go) and give you an honest opinion. Yes, they’ll undoubtedly want you to switch it to them but they’re required to give you a full write up of fees and costs and you can compare to Fidelity directly instead of working around the edges.
1–Do **not ** buy/sell anything in 401k–instead, do the rollover first at Fidelity. So all my holdings remain the same; but they would now be in my IRA. I’d then have no 401k, thus never again any contact/dealings with the previous 401k manager.
2–Now that all my holdings are in IRA, **then ** sell the funds and put resulting cash into Fidelity money-market fund in the IRA.
Is this right?
Correct, in an IRA you can buy/sell and so forth. However, one attribute that an IRA doesn’t have that most (not all) 401ks have is that in an IRA you can’t borrow against your savings - for a house or whatnot - while in a 410k you usually can.
of your holdings and decide if you want to buy or sell anything, or convert anything to cash (or convert a regular IRA to a Roth)-but remember that you can keep your current investments if you are happy with them.