Jinks

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re: 401k advice when swapping jobs ???

Posted by Jinks on 12/16/25 at 7:31 pm to H2A2

Here is a ChatGPT answer to your question.

This is a very common and very reasonable concern, and the good news is: you’re not actually losing money or future growth just by rolling over. What you’re thinking about (buying back in at higher prices and having fewer shares) feels like a loss, but economically it isn’t. Let’s break it down carefully.

The core misconception (totally normal)

“I bought these funds at lower prices. If I sell and rebuy now, I’ll have fewer shares, so I’m losing future growth.”

Key truth:
?? What matters is the dollar value invested and the future return, not how many shares you own.

If you have:
$200,000 invested
And the market goes up 10%
You end up with $220,000, whether that $200,000 is:
2,000 shares at $100, or
1,000 shares at $200

Shares are just units of measurement.

What actually happens in a 401(k) rollover
Step-by-step reality:
Your Fidelity 401(k) investments are sold
The money moves tax-free (if done as a direct rollover)
You reinvest the full dollar amount in the ADP plan

If:
You had $180,000 at Fidelity
You roll it over
You reinvest $180,000 at ADP
?? You still have $180,000 working for you in the market

No value disappears.

Why future growth is NOT lost

Let’s use an example:
Before rollover
1,500 shares of Fund A
Price = $100
Total value = $150,000
After rollover
Fund B (very similar index)
Price = $150

You buy 1,000 shares
Total value = $150,000

Now suppose both funds grow 8% per year.

Scenario Value in 10 years
Stay at Fidelity ~$323,000
Roll to ADP ~$323,000

Same math. Same growth.

When rolling over can actually hurt (real risks)

This is where your intuition is smart — but for different reasons.

?? Potential downsides:

Higher expense ratios
Some employer plans have expensive funds
A 0.75% fee vs 0.05% fee is a real drag over time
Poor fund choices
Limited index options
Heavy use of actively managed funds
Being out of the market too long
If the rollover sits in cash for weeks during a rally
(This is avoidable with proper timing)

Often the best option people overlook
? Leave the money at Fidelity (if allowed)

If:
Fidelity plan has low-cost index funds
No maintenance fees for ex-employees
You like the investment options
Then you can:
Leave it exactly where it is
Keep all your current investments
Roll it later into:
An IRA
A future employer plan with better options
No rule says you must move it now.

Another strong option (often best long-term)
? Roll Fidelity 401(k) ? Fidelity Rollover IRA

Benefits:
No taxes
No forced fund changes
Full control (VTI, SCHG, VXUS, etc. — aligns with how you already invest)
Usually lower fees than employer plans

Downside:
If you plan backdoor Roth conversions later, this can complicate things
(happy to explain if relevant)

How to decide (simple checklist)

Ask these questions:
Fidelity plan
What are the expense ratios?
Any admin fees after leaving?
Good index options?

ADP plan
Cheapest S&P 500 / Total Market fund?
Expense ratios?
Any employer match vesting rules?
?? Fees and fund quality matter far more than share count.

Bottom line (important)
You are not wrong to be cautious — but the fear about “losing future growth due to fewer shares” is a mental accounting trap, not a real loss.
You only lose money if:
You pay higher fees
You’re forced into worse investments
You’re out of the market too long

Jinks

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