BiggerPockets

Speak with your HR people or the custodian about how to do it. In most cases, its quite simple. Quit your job. Then you can roll it over to an IRA, and you'll have more flexibility. Most plans do not allow you to move the money out as long as you're working there.

An unmatched 401(k)? What's the point?

As Jon noted, the only way to roll is to quit. Borrowing is allowed, but must be repaid, I think, in 2 years, so you won't borrow much.

I would shun a non-matching 401(k). Unless someone else can point out an advantage I'm not aware of, it's just a traditional IRA with limited investment opportunities (contribution limits and other minor differences aside).

Ralph

the main reason it's not matched is that i'm part time. it was just offered to me and i figured what the hell, its money that is automatically taken from my check so i don't really miss it, and it's hard to get at so unlike a savings account, i won't tap into it the first time i need cash for something.

when i finish school in a month circumstances will change a bit. i was just curious.

if i did leave the job, how does it work?

You would contact a new trustee or custodian and they will handle getting the money out for you. If you're wanting to invest in real estate, though, you'll need one of only a handful of companies. Fidelity or Vanguard won't let you buy real estate.

If you're just starting, and only have a few thousand, its not really worth it. Just put it in stocks, bonds or whatever and hope for the best. The fees on the more flexible IRAs will be too much.

I was thinking about doing a roth IRA because if I start investing in RE and making a lot of money my tax bracket may be HIGHER in the future...

You can put more $, a lot more each year into a 401K than you can a traditional or even ROTH IRA.

Taz

True, as has been mentioned. But, contribution is only one part of the retirement equation. I've worked for companies that matched 8% (fully vested), 3% and no matching. Compare those three over 10 years, without consideration for ROI and see where you get. Then throw in a modest return and witness the compounding.

I would still avoid a long term un-matched 401, simply due to the limited investment options. Any match, though, even if you have to wait to vest, is an overpowering incentive, and enhanced even more with the larger contributions. If Corey decides to stay with the company after finishing school, and gets some matching, that's just too hard to beat, long term.

Either way, the goal remains the same; what do you think will give you the biggest after tax bucket of money in the end and that involves considering both rate of contributions and ROI.

@Corey -

You can't roll a 401k into a ROTH without paying taxes on the rollover amount. You can, of course, start a new roth!

I would suggest you call American Pension Service (801) 571-0667 or someone similar.

Well, we are going to definitely have to agree to disagree on this one.

I'm not sure how much we disagree. Everything you've posted is factually correct, only our point of view and conclusions are different.

Your focus is on rate of savings, mine is on long term return. 401(k)s, and perhaps my three experiences are extreme, are by design very conservative investment options on broad measures. You can't invest in emerging markets, the only option is "Intl Large Cap Growth." I currently have about 10 mutual funds as investment options, and each can be generally described as US or International, large or small cap, growth or income, stock, bond or treasury (cash). No opportunities to to focus on industries, sectors, indexes, company stock, ETF, etc. No way to take advantage of shorter term market moves, etc.

If the 401 is matched, even at a small percent, we certainly agree. A 10% contribution with a 3% match is instantly a 30% gain on every dollar invested. Compounding over the long term, you just can't expect to beat it, even at general market returns. But, unmatched, with the wide range of options available today, it then becomes as individual as the plan, you're own tolerance for risk, investment knowledge, time to retirement, yada yada yada.

But the biggest leverage is that it is tax deferred.

As is a traditional IRA. But is the tax deferred contribution as good as a Roth, where the post tax contribution results in tax free distribution at retirement? Again, as individual as, well, the individual.

But, if you run the numbers of someone contributing 15% of their income in an unmatched 401k verses someone who doesn't, the numbers are striking over ANY ten year period.

Sure. 15% is more than would be allowed in an IRA, I think. Not sure how many can or are doing that. In general, though my position is based on an unmatched 401 vs IRA, which is based upon equal contributions over time. Again, rate of investment versus rate of return. You can invest more in a 401, but get many more investment options (and potentially) greater returns in am IRA.

The other thing to remember is your possible IRA contributions are severely limited if you are eligible for any kind of employer sponsored retirement plan, whether you participate or not.

Check. And another of the individual situations that would weigh in the decision. Perhaps off point, but those pensions are rapidly going the way of the dinosaurs. I refer to GM's troubles with their pension liability as a major drag on cost. Even the company I will be getting pension from (an S&P500 company) is now billions underfunded due to their investment losses, and they stopped the company funded pension several years ago. Companies are going to remember this market for a long time.

I think, Taz, while we've diverted from Corey's OP, my point is limited to a comparison between unmatched 401 vs IRA. Both deferred and we share the value of this. I just think that other than that, it's a purely personal and individual, based on too many other factors. If I didn't think I could leverage the vast array of investment options available in an IRA and not in a 401, to beat, at best, the market averages of the mutual funds offered in my 401, I would be in your camp (401k, only 401k, nothing but a 401k, and all you can in the 401k) :wink:

Ralph

lol a lot of people on here aren't using real pictures. there is another guy who is using a pic of tony soprano (james gandolfini)