We moved [to a new job in a new state]. Although I continue to have access to TIAA-CREF in my new job and matching contributions that are comparable, the fund selections aren’t identical. For instance, I have access to a small cap index fund with a slightly (.06% vs .05%) lower fee structure at my prior job (and with similar 5-10 year returns). Obviously new contributions have to follow my new employers plan. But what about the previous contributions? Should I roll over and combine funds, even though the fund isn’t QUITE AS good as before (but very close)? Or not? Why or why not?
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You actually have three options, not two.
- You can keep things as they are
- You can rollover into your new employer’s 403(b)
- You can rollover into an IRA
All of these have pros and cons (but probably not major pros and cons).
Keeping things as they are (option 1) means that you’ll have more accounts, more clutter, more chances of losing paperwork or having your loved ones deal with hassle later on in your life should you cede financial decision-making prior to emptying the account. But the fees are lower, which makes it more attractive than your new employer. And if you make the switch now, you’re the one who will have to deal with hassle. Make sure that they don’t have additional fees for people who are no longer working at the company– if they do, then definitely don’t choose the first option.
Rolling over into the new employer’s 403(b) (option 2): The sole benefit to doing this is that you would have less clutter. Everything would be in one place. If you die suddenly, nobody has to go looking for passwords to a second account. If you hate having multiple accounts, then go ahead and consolidate. You’ll be paying for the privilege, but not that much. (Less, in fact, than I pay to use Target Date funds instead of rebalancing manually.)
Rolling over to an IRA (option 3) means you could just put everything in Vanguard along with any taxable funds and IRAs/IRA-Roths you already own. Your fees would be low. However, having a large traditional IRA could cause complications should you ever want to convert some of your traditional IRA to a ROTH or if you want to start making contributions to a backdoor Roth.
Grumpy Nation, what would you do in Amanda’s case?