Not sure what to do w/ leftover 401K funds from old job...

[hood b. goode]

Hey yall, Im pretty financially illiterate (trying to learn the confusing world of investing, slow process).


I have $5.5K left over from an old employer’s 401K and trying to decide what to do with it. It’s in a Fidelity account. Im 31. Not a huge amount, but I want to put this money somewhere I can set & forget it (I dont have the technical knowledge or time to trade stocks).


My options are:


1. Invest the money in my new employer’s 401K. They dont provide employer match, so this option’s out.

2. Invest in an active mutual fund that I have going, geared for retirement. My dad turned this account with $5K over to me at age 25, and its grown to about $13K after a few years.

3 .Open a Roth IRA. This is what was recommended to me by HR from my previous job. Not familiar with these, but would be good to have this in retirement I guess.

4. Give it to a portfolio / investment manager (?) Someone proven at growing investments hopefully.


What would you do w/ the $$?


Thanks

 

[wenndigo]

I'd suggest throwing it into an IRA and just growing that with and extra funds. (I'm not a financial advisor). But it's what they all say to do.

 

[Rawtid]

Roll it over into an IRA

 

[Brolic]

Get a Roth IRA and invest an ETF that tracks the S&P 500.

 

[hood b. goode]

Get a Roth IRA and invest an ETF that tracks the S&P 500.

What is an etf?

 

[Brolic]

What is an etf?

ETFs - exchange traded funds - What are ETFs? | Vanguard

It's like a collection of stocks.

 

[Panther]

Get a Roth IRA and invest an ETF that tracks the S&P 500.

i agree with breh

S&P 500 etfs are pretty safe

by rolling that money over into an IRA it will grow tax free (which is what you want)

 

[tofuspeedstar]

Roll it all into an IRA and dump it into QQQ.

 

[princeofhaiti]

to follow up to OPs question, if i had a traditional 401k with my old employer am I able to roll it over into an existing roth IRA of my own? and if so will it count towards my contributions limits for the year?

 

[slikkp]

Do you think you'll ever earn over 135k?

If so you want to keep your traditional ira at a zero balance so you can do a backdoor roth contribution.

 

[CBSwagga]

If they'll get it to you quickly enough you could just cash it out. Trump took away that extra 10% penalty for early withdrawal. Build your own portfolio from there or do what you want with the money.

 

[JetFueledThoughts]

As others have said you’ll probably want to just put it in an IRA. If the account your dad opened for you is an IRA account as well then you can ‘roll over’ the account you’re asking about to consolidate them into 1 place. If not, still put it in an IRA or you can roll it over to your current employer’s account.

At your new employer you may want to switch to a Roth IRA. It taxes your contributions up front and not at retirement when we take the money out. It has benefits that somebody smarter than me can explain. I switched my 401k contributions to Roth when I was around 25 so I have a bit of both.

 

[JetFueledThoughts]

Do you think you'll ever earn over 135k?

If so you want to keep your traditional ira at a zero balance so you can do a backdoor roth contribution.

Can you explain more on this? I’ve wanted to be able to contribute to my Roth again but the limit has restricted me for a year or two now.

 

[slikkp]

Can you explain more on this? I’ve wanted to be able to contribute to my Roth again but the limit has restricted me for a year or two now.

This link explains way better than I can. Basically, if you make more than the roth salary cut off you can put money into a traditional IRA then fill out an IRS form to have the money switched into your roth ira.

Why Everyone Should Love The Roth IRA

 

[Kal El]

Get a Roth IRA and invest an ETF that tracks the S&P 500.

This.

That's the advice I give to friends/family or anyone I care about. Especially if you just want to be a hands off investor.

Throw it all into VTI, VTSAX, or VOO. All track the S&P 500.