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When does SEP IRA to 401(k) roll over make sense?


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Hi there!

I am soon 50, and pay into a 401(k). I am not very good at all this investing & saving knowledge.

I have a old well performing SEP IRA at vanguard. I was advised to roll it into my current 401(k).

I can't figure out why I would want to do it. I get good returns on that SEP.

thank you for your thoughts -

Mike

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Are you having to pay any type of account maintenance fees on the IRA? Sometimes 401k plan fees are paid by the employer.

And there is the advantage of just having all your money in one place. We had 4 different accounts that in the end we have either rolled into the current 401k OR have in an IRA with the same large recordkeeper in an individual account.

Some disadvantages are that you might lose investment options, there might be a distribution fee, etc. You should definitely check into what your distribution options would be out of a rollover account, etc.

So there are pros and cons and only you and someone who is looking at your whole portfolio could really make that choice.

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There could be some good reasons for doing what is suggested, but it doesn't sound like any of those reasons would apply to you based on your original post. If it was me, I'd leave it where it is.

disclaimer - this post is not meant to be construed as legal, tax or investment advice.

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Good advice above.

The advisor should be able to explain why it would be a good idea to do the rollover to the 401(k) in terms that you can understand. This isn't rocket surgery, and if the reasons are too complex to be explained (or they differ from your objectives), or if the "all in" cost differences cannot be compared using simple arithmetic on a piece of paper, then I'd leave things as they are, especially since you like what you have. It goes under the heading: If you like your retirement plan, you can keep your retirement plan. (disclaimer - I have no credentials as an advisor.)

and Go Badgers.

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