I have my 401K Account through my Employer. However, I don't have Employer Contribution. So I am trying hard to reach the maximum limit of 401K.

I just noticed that there are fees charged by my Financial Institute.

I don't know.. what is TPA or Asset Based Fees ?

Source : Employee Salary Deferral  / Type : TPA Fee 
Source : Employee RollOver   / Type : TPA Fee 
Source : Roth / Type : TPA Fee
Source : Employee Salary Deferral  / Type : Assest Based Fee 
Source : Employee RollOver   / Type : Assest Based Fee  
Source : Roth / Type : Asset Based Fee 

Whether transferring 401K to Roth IRA will save this Fees ? Whether I am allowed to contribute Max limitation set by 401K & IRA (or) Only 401K Limit Contribution in IRA ? Whether this transfer will save all those charges accumulated on my 401K Account ?

  • Are you employed (get a W2) or a consultant (get a 1099-MISC)? What "Financial" Institute are talking about? – Dilip Sarwate Nov 5 '16 at 16:39
  • Can you describe the hidden fee you discovered? – quid Nov 5 '16 at 17:34
  • Hidden Fees are such as Third Party Admin Fees .. etc.. I dont have complete list of Fees... – goofyui Nov 6 '16 at 3:22
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    This schedule of fees doesn't look like stuff you are currently paying. I think before figuring out how to get out of these fees you should first evaluate whether you are being charged. Things like "rollover fees" only apply when you are taking money out of the account to put it into an IRA or other 401(k). Ask HR to refer you to the representative from your 401(k) provider and ask that person which fees you are actually paying. – farnsy Nov 6 '16 at 18:17
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    Damn you , autocorrect!! – JoeTaxpayer Nov 6 '16 at 20:38

Your employment status is not 100% clear from the question. Normally, consultants are sole-proprietors or LLC's and are paid with 1099's. They take care of their own taxes, often with schedule C, and they sometimes can but generally do not use "employer" company 401(k). If this is your situation, you can contact any provider you want and set up your own solo 401(k), which will have great investment options and no fees. I do this, through Fidelity.

If you are paid with a W2, you are not a consultant. You are an employee and must use your employer's 401(k).

Figure out what you are. If you are a consultant, open a solo 401(k) at the provider of your choice. Make sure beforehand that they allow incoming rollovers. Roll all of your previous 401(k)s and IRA's into it. When you have moved your 401(k) to a better provider, you won't be paying any extra fees, but you will not recoup any fees your original provider charged.

I'm not sure why you mention a Roth IRA. If you try to roll your 401(k) into a Roth instead of a traditional IRA or 401(k), be aware that you will be taxed on everything you roll.

---- Edit: a little info about IRA's in response to your comment ----

Tax advantaged retirement accounts come in two flavors: one is managed by your company and the money is taken out of your paycheck. This is usually a 401(k) or 403(b). You can contribute up to $18K per year and your company can also contribute to it. The other flavor is an IRA. You can contribute $5,500 per year to this for you and $5,500 for your spouse. These are outside of your company and you make the deposits yourself. You choose your own provider, so competition has driven prices way down. You can have both a 401(k) and an IRA and contribute the max to both (though at high incomes you lose the ability to deduct IRA contributions).

These accounts are tax advantaged because you only pay taxes once. With a regular brokerage account, you pay income tax in the year in which you earn money, then you pay tax every year on dividends and any capital gains that have been realized by selling. There are two types of tax-advantaged accounts:

  • Traditional IRA or Traditional 401(k). You do not pay income tax on this money in the year you earn it, nor do you pay capital gains tax. Instead you pay tax only in the year in which you take the money out (in retirement).

  • Roth IRA or Roth 401(k). You do pay income tax on money on this money in the year in which you earn it. But then you don't pay tax on any gains or withdrawals ever again.

When you leave your job (and sometimes at other times) you can move your money out of a 401(k) into your IRA, where you can do a better job managing it. You can also move money from your IRA into a 401(k) if your 401(k) provider will allow you to.

Whether traditional or Roth is better depends on your tax rate now and your tax rate at retirement. However, if you choose to move money from a traditional account into a Roth account, you must pay tax on it in that year as if it was income because traditional and Roth accounts are taxed at different times. For that reason, if you are just trying to move money out of your 401(k) to save on fees, the logical place to put it is in a traditional IRA.

Moving money from a traditional to a Roth may make sense, for example, if your tax rate is temporarily low this year, but that would be a separate decision from the one you are looking at. You can always roll your traditional IRA into a Roth later if that does become the case. Otherwise, there's no reason to think your traditional 401(k) should be rolled into a Roth IRA according to what you have described.

  • I am sorry. I should have mentioned more clear. I work as a Consultant at clients location. I am getting paid from my Employer. – goofyui Nov 6 '16 at 3:23
  • I am not familiar with IRA. Some one who is not from financial background suggested me to transfer the fund to roth ira.. – goofyui Nov 6 '16 at 3:25
  • Thank @farnsy..!! Your brief explanation helps a lot ..!! – goofyui Nov 7 '16 at 0:56

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