moving a 401K

[ronn38]

I was notified on Wednesday that my University will be closing thd Dept I Chair at the end of this academic year. Which means I'll be a "free agent" ht Aug 2014 (I like free agent so much better than unemployed). Luckily, I'vs enough passive income and savings for an extended job search - which I hope wont be the case.

However, this leaves me with a sizable amountin MY TIAA/CRFT account that I can move if I so choice. I have this acount from my pre-investor days, so its asset allocation is distributed between their large, mid a d small cap funds and more generalize foreign and emurginv markets funds. The portfolio is doing fine, but isn't everything in this inflated market? I believe investing it more in lines with my taxable portfolio I have shared here will far better in the long run.

I have never rolled over an 401K before and would covet your thoughts. It would seem cashing out the account now, during this fully vaulted "plus" market, then moving the cash into short term insturments in a tax sheltered account, investing the casb only when vaule appears or a market correction happens.

Or does that side line my capitol to long? Should I simply build my portfolio now, reguardless of current valuations? Or would you imagion another alternative?

Thanks,

Ronn

[ChadR]

Depending on who you roll it over to, you might be able to roll the funds your currently have into the new IRA. I did an IRA rollover to E*Trade and they rolled all the mutual funds over so that I didn't have to cash them out then rollover. If I was you, I would find one that could do this and then sell the mutual funds that you don't want to keep and starting turning the IRA into a clone of you taxable account. This way you don't have to be out of the market and buy what is currently attractive instead of sittting all cash for a crash that might happen next week or 5 years down the road.

[Kerim]

Sorry to hear about the job news -- it sounded like you really enjoyed it. Absolutely great that you are in a position to take the change in stride, however.

I agree that you'd want to roll it into another tax-deferred account, but what to do with the proceeds is a tough call. Ultimately, it comes down to a question of whether you want to use this as a market timing opportunity. If you park all or most of it in cash for a while, you are betting that the market is frothy right now and will be giving you better opportunities in the future.

I keep seeing a smattering of headlines about people saying that the market is in another bubble now, which I personally think is nonsense. It has definitely been on a great run, but in my opinion prices are not in any way decoupled from fundamentals as you see in a proper bubble. I think people get freaked out about the market making new highs, thinking that a new high must mean a top. Of course that is silly, as the market has has an upward bias for the last 100 years or more, so it will continually make new highs.

But that said, it is just guessing in the short term. We could get a correction that gives you a better entry point, or it may just march upwards from here for another year or five.

I'd say choose a middle approach. Deploy a third or a half of it right away, and then use the rest to make regular monthly or quarterly buys as you find good ones over the next year or two or three.

[EricL]

Sorry to hear about your forced career change, hope everything goes well for you. I think it's a good idea to space investments a bit. Maybe pick a few of the cheaper stocks up now with 10% and then keep eyes open and do another 10% next month, etc. Over the course of a year you should be able to build a solid portfolio at decent entry points as the market ebbs and flows.