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Old 02-24-2016, 11:29 AM   #21
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Originally Posted by tmm99 View Post
I don't get what you mean.... Can you elaborate?

Let's say I have 4 funds in my 401K - 40% VTI, 40% BND, 10% VXUS, 10% Stable Value funds. Let's say I want to rollover 10% of my 401K to an IRA. My 401K provider will take out 10% of VTI, 10% of BND and 10% of VXUS and 10% of Stable Value - I cannot tell them to just just take 100% of Stable Value funds (which is 10% of my 401K total) to my rollover IRA (which I wanted to do before I found out I couldn't).

...
THIS PARAGRAPH IS WRONG!____Assuming, for ease of discussion, that you withdrew $1000. Could you not, after the withdrawal, sell $400 VIT, $400 BND and $100 VXUS and put the $900 into the Stable value? (Maybe there are restrictions on stable value, which we don't have available to us in our plans??)___

Second try: Couldn't you sell 900 of the stable value after the withdrawal and use the proceeds internally to buy 400 VIT, 400 BND, and 100 VXUS?
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Old 02-24-2016, 11:51 AM   #22
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Originally Posted by tmm99 View Post
I don't get what you mean.... Can you elaborate?....
You have them take the $100k out and they do it proportionally. Then you rebalance to what it would have been if you took $100k out of SV as you wanted but could not do because of their policy by selling 90 of SV and buying 40 of VTI, 40 of BND and 10 of VXUS. My ex-employer plan allowed us to move between funds as we wanted just like an IRA.

 BegWithdrlRebalEnd
VTI 400 (40) 40 400
BND 400 (40) 40 400
VXUS 100 (10) 10 100
SV 100 (10) (90) -
Total 1,000 (100) - 900
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Old 02-24-2016, 06:43 PM   #23
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pb4uski and 2017ish,

I now know what you were trying to tell me - Thank you for your explanation.

Yes, I can rebalance without any issues. I could even rebalance every day if I wanted to - My 401K would let me. Sorry I was clear - my issue is more to do with all my funds (including equity funds) being dipped into when I take any money out of my 401K. I'd rather take out money only from SV. That's the flexibility my 401K lacks. I hate to sell low on funds that have lost a lot.

A part of me says theoretically, if I can move the money to IRA and can get like funds right away, there is no loss (that would be sell low and then buy low) which is true, but I had a bad experience moving money last time (it took too long to move) and ended up losing money so I am weary... The best scenario is the DJIA goes back up close to the 18,000 level and I move everything in 401K to SV and take 80% out to be moved to my rollover IRA (and rebalance my 401K once the money has been taken out) and put back the newly moved money in my IRA into the market gradually when I want to. (Even if the market goes up above 18,000 and I miss some opportunities because I am slow in moving the money back into the market, I am OK with it. From what I can see right now though, 18,000 seems to be some kind of resistance level and it may not go above that for a long time...)
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Old 02-24-2016, 11:17 PM   #24
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My 401k plan allows the penalty free withdrawals after leaving co. in the year turning 55 or older. Fidelity is the plan administrator, and there is a limit of two withdrawals per year. Withdrawals can be made online or with a phone rep, and execute in a day or two.

I don't understand the IRA transfer tactics discussed. The law does not allow penalty free withdrawals at age 55-59.5 from IRAs or other 401k plans. Perhaps the strategt is for rebalancing and all withdrawals are from the 401k plan from which employee left in year turning age 55.
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Old 02-25-2016, 07:38 AM   #25
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Hi all. Lurking for a while. Lots of great info. Thanks!

I will be 55 next year and hoping to FIRE at that time.
Before doing so, I wanted to look into 72(t)(2)(A)(v) ("the age 55 rule").
I called Vanguard and what the Vanguard representative told me is inconsistent with my understanding It is my understanding that you can withdraw from a company 401k without having to pay the penalty if you retire from the company in the year that you turn 55. In other words, no penalty for early withdrawal of funds from the company 401k at 55, 56, etc. as long as you left the company in the year you turned 55 or thereafter. It is also my understanding that if you move those funds out of that 401k, e.g., into an IRA that this will not work, i.e., you will have to pay the penalty. The Vanguard representative told me that you must cash out the entire account at once or rollover the entire account into an IRA.
Has anyone done this (withdraw some funds from company 401k between ages 55 and 59.5 after retiring during year turned 55 or later)? If so, did you have any issues/problems. I am guessing that the person at Vanguard does not understand and that I will be able to withdraw a portion of the 401k as long as I fill out the correct tax forms.
72t pertains to IRAs, right?
you are asking questions about a 401k

for a 401k check the plan documents. is the 401k with Vanguard? if not, talk to the plan administrator or custodian for the plan rules.

If you roll the 401k into an IRA, then rule 72t could apply
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Old 02-25-2016, 12:44 PM   #26
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pb4uski and 2017ish,

I now know what you were trying to tell me - Thank you for your explanation. ....
One thing to keep in mind is that if the SV fund in your 401k pays a decent rate of interest then that is a valuable option as part of your fixed income allocation since it has no interest rate risk... you cannot get in an IRA.
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Old 02-26-2016, 12:40 PM   #27
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DH retired last year and the mega corp would not allow him to take any out of the 401K using the 55 rule. We had to keep all of 401k in plan or roll over to IRA. We found a round about way to get money out to live on till he turns 59 1/2. We had quite a bit of company stock (which had to be in your account for a year) that we sold and took out to live on until 59 1/2. We did an NUA.(Net unrealized appreciation). We didn't have to pay a penalty and only had to pay capital gains tax on 2/3 of it at 15%. The NAU is a one time deal when you retire from a company and are 55 or older.

We checked in to the 72T but found it wouldn't allow us to get the amount of money we required to live on. They (Vanguard or your company) have a method of how much you can take out on a 72T. You don't get to decide how much you want to take out. The 72T rule is that you take out equal amounts until you turn 59 1/2 or 5 years, whichever is longer.

Good luck with your decisions.
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