​Should I move my personal 401(k) to a traditional IRA or to my new work’s 401(k)? 

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receivecompensation for actions taken through them. For many couples, making decisions about whether to put their existing personal 401(k) funds into a new job’s 401(k) plan can be an interesting one to dive into. For one Reddit user who sold their company and is now grappling with a similar choice, the path forward is paved with some uncertainty.For one, this couple (a 39-year-old male and a 36-year-old female) are looking to retire early. Taking a page out of the “FIRE” (financially independent retire early) movement, this couple is looking to choose the early retirement route, and presumably spend the rest of their lives enjoying the capital they’ve built up thus far in their lives.Now, this couple is far from the median American household, having amassed a total net worth of around $4.5 million (excluding their home). Thus, this is a couple that does appear to have the ability to live off their retirement income moving forward. But with around $700,000 in a personal IRA, the question this user has posed to the Reddit community is whether to port the $700,000 over to a Traditional 401(k) now or wait the 15 months until retirement (their target FIRE age).Let’s dive into what to make of this question, and where this couple may choose to go from here.Key Points About This Article:For young investors looking to become part of the “FIRE” (financially independent retire early) crowd, there can often be more questions than answers.
Let’s dive into one couple’s journey and see if we can make sense of which direction may be best for these two to move in.
Retiring early is possible, and may be easier than you think. Click here now to see if you’re ahead, or behind. (Sponsor)
Understanding the Two OptionsDenizce / Shutterstock.comA visual with the word “options”When it comes to deciding between a Traditional IRA and a new employer’s 401(k), there are a few key differences this couple may want to take into consideration. For one, there’s the level of control and investment options this couple may have at their disposal with putting these funds into an employer’s 401(k) plan.As the user notes, there are more restrictions within the new employer’s plan. Whereas this couple may want to invest in SPY or other simple index funds, some 401(k) plans only offer a small subset of similar index funds, often with higher fees. So, for a couple like this who presumably has many more decades ahead of them to enjoy the compounding effects of investing, even small percentages can mean a big deal when it comes time to start taking required distributions.That said, having the funds within a 401(k) plan can come with some advantages, such as simplified management and higher creditor protections under ERISA laws. The temptation is to keep one’s funds in one place with the added simplicity, but the tradeoffs with potentially higher fees and limite