Ok, last part, I promise. After doing a lot of research, mostly on ETFs, I’ve decided to choose option #1 and roll my 401k over to Vanguard and stick it in one fund, their Vanguard Target 2045 Fund (VTIVX). Here are my reasons:
1) It’s already my desired asset allocation, and if I split it up into multiple funds I’d be buying basically the same funds anyways, and paying more in fees.
2) After rolling it over to a Traditional IRA, I plan on converting to a Roth IRA gradually as the income limits allow. If I bought ETFs I’d have to pay commissions to buy each year as I fund my IRA, and again to sell when converting to Roth.
I’m sure everyone has their own way of doing stuff, I think keeping it simple (stupid) is my way for now.
It doesn’t sound like this will be a quick process, though. I wanted to have them send the check directly to Vanguard (a trustee-to-trustee transfer), since if I don’t transfer the money within 60 days after getting the check, I get to pay income taxes on it and a 10% early-withdrawal penalty.
But they don’t do that. The reason why the guy said I couldn’t just have the check sent directly to Vanguard is because supposedly once some guys wife transferred it to her own brokerage account or something. Whatever, I don’t see how sending a $16,000 check to my house is a better idea. And I have to wait 6-8 weeks for it?!? At least since I am making the check out directly to Vanguard, they don’t withhold any of the money in case I cash it and run to Mexico or something. Gotta keep an eye on this transfer.
By Jonathan Ping | Retirement | 8/6/05, 5:23pm