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Why I’m Rolling Over My 401(k)

I’ve decided to rollover my 401(k) from my former employer into a Rollover IRA at Vanguard. I started my new job almost six months ago, so you might be asking why I didn’t roll it over immediately? The reason why was because I didn’t want to do it while I was transitioning into a new job and because I wanted some time to evaluate how much I liked the new 401k plan. So far, I’ve surmised that the new 401k plan is nice but not better than Vanguard so I’m going to rollover my funds into the Vanguard. I think that when you’re making a big change in your life, it’s important not to try to juggle too many things at once because you’re liable to miss things and on a relatively time insensitive issue like a 401(k), considering it’s been in the other plan for over three years, it’s better to put it off a few months until everything has settled down. Now… onto why I’m rolling it over.

The web interface sucked, the benefits department sucked
Dealing with the benefits department of my old employer was ridiculously complex and annoying. You had to jump through hoops in their voice menu system to talk to someone and even then that person was usually not educated about the company’s plans and was wholly unqualified to give any advice whatsoever. I’ve had friends try to figure out how the pension worked and each of them received totally different answers! Add to that the fact that the web interface is a mess and it came down to me basically not wanting to deal with them anymore.

To give you an idea of how difficult they’ve been, I was able to log into my account on a Tuesday and then was locked out on Wednesday for three days. I logged in to try to initiate the rollover process but I discovered I was unable to roll over funds in my self-directed account until I pulled them into one of the core funds. So, I liquidated my assets in the self-directed account and was going to login to transfer it back into a core fund … until I was denied access. After an hour on the phone with someone, she told me that they were experiencing problems with the website and that I should try later. My friend (who was still with the company) was able to log on immediately. I’m not saying there’s a conspiracy (I’m not even hinting at it), but it really is a pain to have to deal with that level of incompetency (an hour on the phone and then she tells me there’s a website problem?).

Investment options were limited
I do give them props for offering Lifecycle/Target Retirement type funds recently but the rest of the funds were only so-so. The fees weren’t too high but there wasn’t much transparency in what the fund was doing and who was in charge. I did enjoy the option of having a self-directed component but outside of that the plan had no standout reason for me to stay. The 401k wasn’t bad such that it pushed me out, it just didn’t have a real reason to stay.

Keeping everything in one place
I have my SEP-IRA with Vanguard and so cutting down the number of accounts I would need by one is something that is worth the effort. Additionally, by having my 401K rolled in, I exceed the minimum account requirements and get to waive some $50/mo fee, so rolling it over does have a tangible financial effect.

Why Vanguard?
Many people have asked if I’m secretly on the Vanguard payroll because I write about how much I like Vanguard so much and so often. The reason I do so is because I’ve had good experiences with them and I’ve become very familiar with their interface. They treated me well even back when I had my Roth IRA with them and had an account balance of around $2,000. They’re frequently at the top of the class when mutual funds are rated and so my loyalty, which is hard for a company to earn, is well-founded financially and not based on emotions.

If you recently rolled over an IRA, what were your reasons? Are there reasons why I should stay that I’m missing?