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I am in the process of doing this. I was wondering if there is a best time? Like, if I rollover when the stocks are on a high.

I talked to Fidelity and they told me it's tax free as both my previous and current employers don't need any paper work.

I am told my current holdings in old 401k will be sold and reinvested in the default holding of the current 401k.

Chris W. Rea
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Ballelaka
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    I'd suggest NOT rolling it over to a new employer plan. Just roll it into an IRA. You will save a ton on fees and have a lot more investment choices. – JohnFx Nov 06 '20 at 22:06
  • Take a look at {this answer](https://money.stackexchange.com/a/22833/5760) before you jump the gun and roll over your old 401(k) into your current 401(k). – Dilip Sarwate Nov 06 '20 at 22:34
  • @JohnFx: And if you like your current 401k provider and the asset mix you have, you can just roll it over to an IRA with the same company. That way there is (or should be: I'm no expert) no selling and re-buying of assets, just a change in account status. – jamesqf Nov 07 '20 at 16:36

1 Answers1

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This sort of direct transfer involves zero tax issues. The selling of your investments within the retirement account, and the subsequent purchase of investments in the new account will not have any tax impacts.

There can be a gap where your money isn't invested in the market while the funds are being transferred, but the time frame should not be more than a few days. Ask the two 401k companies how long it will take.

If you are offered the option to have the funds sent to you and then you send the check to the new provider, pick another option. The direct transfer is faster, and you don't have to worry about deadlines, or who the check has to be made out to.

The new company should keep the flavor of the money. So Roth 401(k) funds should still be Roth 401(k) funds; pre-tax contributions should still be pre-tax contributions...

If you have invested in your old companies stock, you will probably not be able to keep that investment, unless the new plan allows you to pick individual stocks.

Sometimes the new company allows to to pick your investment options before the funds arrive, others put everything in the default fund, and then let you divvy it up after the transfer. Don't forget to do this step.

There is no reason to wait for a high or a low for most of you funds. You should be moving into similar funds so there is no time that is better than any other. The exception would be if you have a large amount of company stock and it would be viewed as a bad decision to sell now. That will depend on the company. Otherwise there is no reason to wait.

mhoran_psprep
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