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Retired ... but my 401(K) still with last employer...
Old 12-29-2012, 06:04 PM   #1
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Retired ... but my 401(K) still with last employer...

Hi All ~ I'm brand new to earlyretirement.org. Retired 1 yr ago @ age 62. Hoping to get advice/opinions. I'll try to be brief. My 401K ($190,000) is still with my employer---Why? Because I've got to find a financial advisor I can trust and whose fees won't cost me more than the return on my investment. Plus, investing is not my forte, so I need to trust whomever/wherever I leave my hard-earned money to treat me like a daughter! Sometimes I wonder if I'm better off just laddering the $ in CDs. However, I believe I can do better. In addition to the $190,000 in the 401K, I have about $235K in a couple of CDs and savings (I "chase" the highest interest rates), and $12K in savings bonds (don't mature until 2022 or thereabouts). I currently rent an apt. for $800/month (I'm fortunate). My pension and social security (SS starts in Feb) net about $3,140/month. Oh ya, and I may need to move from my apt, and would like to buy a small house.......................................
Thank you,
Suzi
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Old 12-29-2012, 06:26 PM   #2
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It is advisable, and easy enough to roll the 401k over to your own IRA in anyone of the reputable mutual fund companies like Vanguard, Fidelity, T Rowe Price etc, where you can choose from a wide variety of mutual funds ( index fund, all in one fund retirement fund, balanced fund, asset allocation fund, pure equity or bond funds). While the company will generally not act as a direct financial adviser and pick the fund for you, they can point you to the general area where you can do your research and pick the funds that suit your investment objectives and risk tolerance level. There are fund screening tool on many of the company's website as well. I am not sure you need to wait until you find a financial adviser first and they don't necessarily do better than a reasonably well diversified mutual fund portfolio anyway. Those companies can also help you find an independent financial adviser as well, general a one time session for a fee, and I can tell you from experience that it was not very helpful. I only did it because it was free in my case, but if you feel that you do not have much experience and want to have someone look through your WHOLE financial situation, it may be worth it for you.
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Old 12-29-2012, 08:08 PM   #3
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What funds do you use in your 401k? Can you find the same funds at one of the brokerages that bondi688 listed? If not, do you think you could find an index fund that matches your current funds pretty closely? If you are happy with what you have, that's at least a good way to start.

Look at this thread for a bunch of sample portfolios:

How complex is your portfolio?
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Old 12-29-2012, 08:08 PM   #4
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Suzi, you don't need a financial adviser. I would suggest that you talk with Vanguard about rolling the 401k into an IRA and then consider Vanguard's Wellesley Income fund.
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Old 12-29-2012, 08:24 PM   #5
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Originally Posted by suzi-c View Post
Hi All ~ I'm brand new to earlyretirement.org. Retired 1 yr ago @ age 62. Hoping to get advice/opinions. I'll try to be brief. My 401K ($190,000) is still with my employer---Why? Because I've got to find a financial advisor I can trust and whose fees won't cost me more than the return on my investment. Plus, investing is not my forte, so I need to trust whomever/wherever I leave my hard-earned money to treat me like a daughter! Sometimes I wonder if I'm better off just laddering the $ in CDs. However, I believe I can do better. In addition to the $190,000 in the 401K, I have about $235K in a couple of CDs and savings (I "chase" the highest interest rates), and $12K in savings bonds (don't mature until 2022 or thereabouts). I currently rent an apt. for $800/month (I'm fortunate). My pension and social security (SS starts in Feb) net about $3,140/month. Oh ya, and I may need to move from my apt, and would like to buy a small house.......................................
Thank you,
Suzi
i am turning 62 in feb. I had an old401k from a former employer. I moved it to trowe price 2020 fund. it's easy. just go on line to troweprice to get primary info.
then call their toll free phone number and with some info can get it into an IRA=works just like 401k but you have control.
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Old 12-29-2012, 08:46 PM   #6
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Suzi's 401 k is likely already in one of the big mutual fund companies, and invested in some of its mutual funds. Even in that case, you should still roll the 401k over to your own IRA. You can keep the money in the same funds, but your own IRA usually opens up a lot more choice for funds you can invest in. You can review the performance of the funds you hold and assess whether you want to switch to some others available funds, depending on the performance, your objectives and risk tolerance .
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Old 12-30-2012, 08:56 AM   #7
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Ditto against a financial adviser. $$ down the drain, in this instance.

Wherever you choose to transfer the funds will handle it, and should be no charge.

We chose Vanguard for inexpensive index funds. They wre extremely helpful and charged no fees.
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Old 12-30-2012, 09:19 AM   #8
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Your old 401K isn't necessarily a bad place to be. You might want to check on your costs to be there. Sometimes employers pick up most of the costs, even for ex-employees and you might possibly have access to institutional funds w/ lower ER costs that you could get in an IRA. You'd have to do some work to investigate. Often you have less flexibility in making withdrawals from 401Ks.......sometimes it might be all or nothing....depends on your plan.

What the 401K does have (may vary w/ state) is better creditor protection, esp. in non-bankruptcy situations.
Protecting 401(k)s, IRAs From Creditors - WSJ.com
IRAs Could Be Fair Game in Lawsuits - latimes.com

You should balance all the factors before deciding.
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Old 12-30-2012, 10:10 AM   #9
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You could just leave it in the 401K, could you not? 401k is safer than IRA (depends on state, as previous poster said). No muss, no fuss, no worries about what to invest in in a new IRA. I have two 401k's from previous employers, and am happy to leave the money there. The fees are annoying, but only about $50 a year total for everything.
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Old 12-30-2012, 10:16 AM   #10
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Quote:
Originally Posted by suzi-c View Post
...My 401K is still with my employer---Why? Because I've got to find a financial adviser I can trust and whose fees won't cost me more than the return on my investment. Plus, investing is not my forte, so I need to trust whomever/wherever I leave my hard-earned money to treat me like a daughter!...
Suzi,
No financial adviser is going to 'treat you like a daughter'. Investing is not hard, you can learn what you need to know. Take some time to learn some basics. I would suggest you check out the bogleheads website. Here's a link to their Retirement Planning Start-up Kit: Bogleheads® retirement planning start-up kit - Bogleheads

There are smart folks there who will help you design a retirement portfolio for free if you give them some info on your current holdings and your desires, like this: Bogleheads • View topic - Asking Portfolio Questions
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Many thanks!!
Old 12-30-2012, 11:05 AM   #11
Confused about dryer sheets
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Many thanks!!

So happy I stumbled upon this site! Thanks so much to all who replied to my post. I'm compiling all of your excellent advice and will use it well. No doubt I'll be staying in touch - I can see there's a wealth of good information out there via the early-retirement.org followers.
.... Happy Prosperous New Year !
Suzi
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Old 12-30-2012, 11:15 AM   #12
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Interesting ... I understand from a very reputable financial advisor (via a radio money show here in MA) that one should not keep 401K funds with a former employer. Reason why is that if that former employer should 'go bust', your 401K funds could be held up during bankruptcy proceedings .... sometimes for very long periods of time, i.e. 4 years! That's what has made me a bit nervous about keeping my funds there ... I recognize that this is a personal decision, based upon one's confidence in his/her former employer's status. Thanks again!
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Old 12-30-2012, 11:42 AM   #13
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Save yourself a boatload of money. Move it to Vanguard, all you need is the Total Stock Market Index, Total International Stock Market Index and the Total Bond Market index. Decide what percentages you want in equity and fixed income then rebalance when the percentages are 5-10% above or below that point. You can check every month or quarter or 2x a year or at year end. Easy peasy lemon squeazy.
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Old 12-30-2012, 11:54 AM   #14
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The only reasons for leaving a 401k with a former employer are: 1. some investment available in that plan that you cannot duplicate anywhere else (rare) 2. You are under 59 years old and plan to use the 55 year age limit to access the funds 3. You plan to do some backdoor Roth and don't want the funds in your IRA to make the conversions partly taxable.

I don't see any of these being applicable in your case, so moving to a low cost provider like Vanguard (or Fidelity, or ...) can give you better costs and better investment options. Simple 3 fund mix as others have suggested or just a single target date fund are probably superior to most employer 401k plans. Vanguard even has some telephone reps who will help with the whole process.
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Old 12-30-2012, 01:30 PM   #15
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The only reasons for leaving a 401k with a former employer are: 1. some investment available in that plan that you cannot duplicate anywhere else (rare) 2. You are under 59 years old and plan to use the 55 year age limit to access the funds 3. You plan to do some backdoor Roth and don't want the funds in your IRA to make the conversions partly taxable.

I don't see any of these being applicable in your case, so moving to a low cost provider like Vanguard (or Fidelity, or ...) can give you better costs and better investment options. Simple 3 fund mix as others have suggested or just a single target date fund are probably superior to most employer 401k plans. Vanguard even has some telephone reps who will help with the whole process.

there are other reasons. my old 401 k was also with trowprice in the same fund. however the rules of the 401k said i had to take all or none out.

so i took it out and put it in the same fund as an IRA.i also found out when i did this my former employer was charging a maintenance fee i no longer have to pay.
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Old 12-30-2012, 11:20 PM   #16
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Your old 401K isn't necessarily a bad place to be. You might want to check on your costs to be there. Sometimes employers pick up most of the costs, even for ex-employees and you might possibly have access to institutional funds w/ lower ER costs that you could get in an IRA. You'd have to do some work to investigate. Often you have less flexibility in making withdrawals from 401Ks.......sometimes it might be all or nothing....depends on your plan.

What the 401K does have (may vary w/ state) is better creditor protection, esp. in non-bankruptcy situations.
Protecting 401(k)s, IRAs From Creditors - WSJ.com
IRAs Could Be Fair Game in Lawsuits - latimes.com

You should balance all the factors before deciding.
+1
DW and I are leaving our funds on our 401K which offer good selections of institutional funds. On a 40/60 AA, the weighted expense ratio is 0.19%. In addition, one employer offers an in-plan Roth conversion and flexible withdrawal. The other employer though offers the all or nothing withdrawal. Consider also the credit protection mentioned above.
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Old 12-31-2012, 04:31 AM   #17
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A lot of it does come down to how generous your former employer is to former employees in this regard. My current employer 401(k) is not-so-good, so I'll probably roll it into my next employer's 401(k) if I ever have another job change, but I still have a good amount of money with a previous employer 401(k) because they offer some really decent low ER options and I hate my current 401(k) options so much that I have no intention of consolidating the two 401(k)s by rolling the old into the new. I do need to leave the Roth conversion door open for me, so rolling any of this into an IRA is a non-starter.
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