Apr

1

Rolling Over My 401k

April 1, 2007 |

First thing I did this morning after I woke up was rolling over my previous employer 401k into a Rollover IRA. Fidelity allows it to be done on line in extremely simple steps. I hadn’t been able to do it before since I hadn’t been able to call Fidelity to re-establish my on line pin after an on line account security lock-up.The reason I did this first thing in the morning is because Fidelity – smart guys after all – have a default option of either converting your 401k into an annuity (managed by theirs truly, Fidelity Investments), or sending you a check with the balance (for which you will pay federal tax and early withdrawal penalties).

First of all I must say it was extremely simple to do a rollover from a 401k to a Fidelity Rollover IRA. It didn’t appeared to be so simple to transfer it to an existing IRA in another institution (I can imagine you can do it over the phone/mail, they just don’t want to make it so simple for you to stop doing business with them). Since time was running out (if it hasn’t ran out already, according to some of the letters from my previous employer) I tried the simplest option I could find.

The problem I am left out with now is my multitude of IRA accounts. I have a brokerage IRA account, a mutual fund IRA account, a mutual fund Roth IRA account, and now a new Rollover IRA account. Soon, I will have a 401k with a new employer, and a SEP-IRA from my own consulting business. Six different retirement accounts which I should try to consolidate in some way. An administrative nightmare.

I still have to decide how to simplify my administration issues. For now, I will just continue to invest the money I just rolled over in the Fidelity Spartan 500 fund, just as it was in the 401k. I will continue to do so to simplify my investment strategies in a “follow the market” approach. Most investors can’t beat the Standard & Poor’s 500 Index, even institutional investors can’t consistently do so. I tend to manage my retirement money with rather stable, proven strategies and leave my experimentation to other accounts that I intend to use before retirement age (before I am unable to work and recover it if I fail on the investment strategy).


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