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401(k) rollover decision to be made
Old 05-23-2014, 08:46 AM   #1
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401(k) rollover decision to be made

Looking to clear my head about current 401(k) which is managed by ING. I just signed severance papers with employer. It was expected (for a year or two) and was not voluntary. It is a life milestone that is recorded now, and we will go forward.

I need to decide:

Should I leave the 401(k) with ING for the near future, or rollover to Vanguard or another institution?

My thinking may be incomplete, so I ask for any comments that may relate to this decision.

Factors in favor of leaving 401(k) with ING
  • We are already Voyager Select at Vanguard (VG), and a rollover would not put us into Flagship status.
  • Fees are very low in the 401(k). Probably as low as VG institutional.
  • Age is beyond 59.5 and can take withdrawals
  • Additional asset protection
  • Access to Stable Value Fund (but it is not a good performer)
  • No additional decisions to make at this time
  • Could possibly rollover to another employer's 401(k) in the future (not likely at this time).
Factors in favor of rollover to Vanguard (or other)
  • Easier to balance/integrate asset allocation choices
  • Establish brokerage account with low trading fees
  • Access to greater selection of investments
  • Free ETF and funds (VG)
  • Already established bank transfers
For now, I have no need to tap the 401(k). The assets in the 401(k) and how they are part of the overall allocation are pictured below. I don't need feedback on the allocations at this time, as I am comfortable with what is. There is no company stock in my 401(k) account.

Not shown in the picture is additional 7% cash in a taxable account that we have to pay expenses for 2-3 years. We have no debt, own a house and a few cars.

Should I leave the 401(k) with ING, or rollover to an IRA brokerage at another institution?
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Old 05-23-2014, 08:53 AM   #2
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I don't see a compelling reason to roll it over. Other factors are that you can withdraw from a 401(k) with no penalty at age 55 and it may be more secure in a lawsuit. Is the stable value fund paying more than CDs?

I'd consolidate some of your investments - that current list is just too scattered for me.
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Old 05-23-2014, 08:54 AM   #3
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While I'm a fan of Vanguard, from what you have described, I see no rush to convert at this time. My fund choices were not very good and fees were higher than a Vanguard IRA and no stable value fund, so I did convert.

You may want to rund your data throuhg M* Instant XRay for a AA analysis.
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Old 05-23-2014, 12:02 PM   #4
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Originally Posted by travelover View Post
I don't see a compelling reason to roll it over. Other factors are that you can withdraw from a 401(k) with no penalty at age 55 and it may be more secure in a lawsuit. Is the stable value fund paying more than CDs?

I'd consolidate some of your investments - that current list is just too scattered for me.
Thank you for pointing those things out. I'm past 59.5 as mentioned, and not bound by possible distribution penalties. I can tap this account very soon if necessary.

The stable value fund is 1.1% performance for 1 year, .25% for 3 months. So, better than bank interest, but not as good as some CDs. I recall a thread back where people discussed there SV funds, and I felt mine was not a good performer in comparison.
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Old 05-23-2014, 12:10 PM   #5
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Originally Posted by pb4uski View Post
While I'm a fan of Vanguard, from what you have described, I see no rush to convert at this time. My fund choices were not very good and fees were higher than a Vanguard IRA and no stable value fund, so I did convert.

You may want to rund your data throuhg M* Instant XRay for a AA analysis.
It also makes me feel there is no rush. I don't feel there is a compelling reason to do anything at this time, but wanted to make sure I am not overlooking something.

I do have instant xray from last few years. I track the AA by asset class monthly. Maybe in a future thread I will get into that. Works out to about 60/40 Equity/Fixed.

Thanks for your comments.
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Old 05-23-2014, 02:42 PM   #6
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I will be retiring in June and plan to leave my 401K with my employer for the following reasons:

Plan administrative expenses are paid by the employer
Good selection of Fidelity and Vanguard index funds
Don't need the money for at least 6 years or more
Additional liability protection
Fidelity is the plan administrator where we have most of our investments
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Old 05-23-2014, 02:56 PM   #7
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One consideration is the ages when those assets are free from the 10 percent penalty: 401k 55 (the year in which you turn 55) IRA: 59.5 . At some point you will be re-employed, most employers allow roll overs from 401k some not all allow roll overs from IRA. I just rolled over some money from my IRA to my current employers 401k as my employer allowed it. (learned of this possibility on this forum)
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Old 05-23-2014, 03:13 PM   #8
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One consideration is the ages when those assets are free from the 10 percent penalty: 401k 55 (the year in which you turn 55) IRA: 59.5 . At some point you will be re-employed, most employers allow roll overs from 401k some not all allow roll overs from IRA. I just rolled over some money from my IRA to my current employers 401k as my employer allowed it. (learned of this possibility on this forum)
OP age is over 59.5

Also not all employers allow distribution at 55 and my employer is one that only allows it after 59.5. The employer's plan summary explains the rules.
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Old 05-23-2014, 03:45 PM   #9
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Quote:
Originally Posted by travelover View Post
I don't see a compelling reason to roll it over. Other factors are that you can withdraw from a 401(k) with no penalty at age 55 and it may be more secure in a lawsuit. Is the stable value fund paying more than CDs?

I'd consolidate some of your investments - that current list is just too scattered for me.

Retired last year at 55 and went through the same "should I, shouldn't I" question regarding mine and DH's 401K. I really wanted to move everything to Vanguard simply to have everything in one place.

But in the end, I decided to keep the 401Ks - purely for the reason I bolded above. I don't plan on being sued - but in today's world - one never knows..... With everything else being equal, why put the money at risk.
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Old 05-23-2014, 05:17 PM   #10
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Originally Posted by KM View Post
Retired last year at 55 and went through the same "should I, shouldn't I" question regarding mine and DH's 401K. I really wanted to move everything to Vanguard simply to have everything in one place.

But in the end, I decided to keep the 401Ks - purely for the reason I bolded above. I don't plan on being sued - but in today's world - one never knows..... With everything else being equal, why put the money at risk.
I decided that the convenience of having it consolidated at Vanguard and the better investment choices offered by Vanguard was worth the minimal risk since in my state IRAs are protected and I bought a $2m umbrella just in case. Have never been sued and doubt I ever will be but you never know.
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Old 05-23-2014, 11:12 PM   #11
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My MegaCorp 401K was with Fidelity. When I retired I rolled it over to a Fidelity IRA, which has a vastly better selection of funds and (did I mention?) I got it away from MegaCorp.

I rolled my lump sum pension to a Vanguard IRA. We already had our ROTH IRA's with Vanguard.

We will keep the two IRA's for diversity. They are about the same size. I also like like to keep the former 401K IRA separate from the lump sum pension IRA. I may eventually convert the lump sum pension IRA to a managed payout fund or an annuity.
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Old 05-24-2014, 06:39 AM   #12
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Originally Posted by Corporateburnout View Post
I will be retiring in June and plan to leave my 401K with my employer for the following reasons:

Plan administrative expenses are paid by the employer
Good selection of Fidelity and Vanguard index funds
Don't need the money for at least 6 years or more
Additional liability protection
Fidelity is the plan administrator where we have most of our investments
Thanks for your input. Your #1 and #4 reasons are applicable to my situation.

In our case we have the 401K with ING, but are able to have VG update the funds and totals in a summary page. There isn't much analysis of the assets, though (in VG), and that is why I keep a general asset chart, as seen in the first post.

I have Fidelity, Schwab and Vanguard on my list of potential brokerages. Based on the comments and my research, I think the decision to rollover will be made when I am much closer to the time when I need the funds. That's an unknown now. Ideally it would be 2-3 years from now, but it could be as early as next year, or as late as 4-5 years from now.
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Old 05-24-2014, 06:43 AM   #13
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Originally Posted by Olbidness View Post
One consideration is the ages when those assets are free from the 10 percent penalty: 401k 55 (the year in which you turn 55) IRA: 59.5 . At some point you will be re-employed, most employers allow roll overs from 401k some not all allow roll overs from IRA. I just rolled over some money from my IRA to my current employers 401k as my employer allowed it. (learned of this possibility on this forum)
Fortunately I am past of the age where penalties apply to either 401k or IRA withdrawals.

At this time I suspect that re-employment in a similar job will not happen. My best prospects seem to be of a temporary duration, and based on project work. But, who knows? Maybe there is another job around the corner.
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Old 05-24-2014, 07:06 AM   #14
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My MegaCorp 401K was with Fidelity. When I retired I rolled it over to a Fidelity IRA, which has a vastly better selection of funds and (did I mention?) I got it away from MegaCorp.

I rolled my lump sum pension to a Vanguard IRA. We already had our ROTH IRA's with Vanguard.

We will keep the two IRA's for diversity. They are about the same size. I also like like to keep the former 401K IRA separate from the lump sum pension IRA. I may eventually convert the lump sum pension IRA to a managed payout fund or an annuity.
As the work situation deteriorated (for many, just not me), I had an increasing desire to get the 401k out of company influence. That probably has some affect, and may be the reason why I am asking the question. I want to make sure I am doing what's best for us.

We have five pillars, and that is why the posted chart may seem too complex for some. There is TSA (spouse), 401k (self), SEP-IRA (self), Pension (spouse), Roth-IRAs (spouse and self).

Converting a pillar or two to payout is a possibility down the road. Can't really see that far right now.
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Old 05-29-2014, 10:33 PM   #15
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Just going through the severance situation right now too. I turned 59.5 last month but have decided to roll the 401 from JP Morgan to a brokerage IRA account for better fund choices. I also carry an umbrella as mentioned in post 10.

I'll get a DB (not large) but the plan was to wait for age 62 to maximize it. My department was blindsided and I'm still lying on the canvas with birds chirping round' my head. But I got a whiff of smelling salts today and started thinking about using the DB to build my FIRE. We'll see.

So for now I ain't ninetofivin no mo'.

Back to ING - One of my sons recently left a job and the 401 was with ING. When he rolled it they put a fee on the process. First time I've heard of that.
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Old 05-30-2014, 09:46 AM   #16
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I did not want my my husband's employer to have any control over his 401k when he retired last month. I want him o(r us) to have control. I trust us.
BTW, I started reading this forum and he RETIRED!
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Old 06-03-2014, 06:48 PM   #17
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I did not want my my husband's employer to have any control over his 401k when he retired last month. I want him o(r us) to have control. I trust us.
BTW, I started reading this forum and he RETIRED!
For the remainder of this year I'll leave the 401(k) with employer. It's low cost, and I set up a money transfer option to our checking just in case we need to draw down. But that's highly unlikely, as we have sufficient cash for 2 years or more.

I may withdraw enough from the 401(k) to cover 2014 Roth contribution. We'll be in the 15% bracket again this year. Have to give that some more thought, as we also have the cash available for a contribution.
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Old 06-03-2014, 06:52 PM   #18
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I did not want my my husband's employer to have any control over his 401k when he retired last month. I want him o(r us) to have control. I trust us.
BTW, I started reading this forum and he RETIRED!
While I understand your reasoning, don't be short sighted - there can be some situations where it is better to leave the 401k with the employer - for example, if the employer 401k happens to offer a good stable value fund or access to other good funds not available to retail investors.
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Old 06-03-2014, 07:51 PM   #19
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Originally Posted by KM View Post
Retired last year at 55 and went through the same "should I, shouldn't I" question regarding mine and DH's 401K. I really wanted to move everything to Vanguard simply to have everything in one place.

But in the end, I decided to keep the 401Ks - purely for the reason I bolded above. I don't plan on being sued - but in today's world - one never knows..... With everything else being equal, why put the money at risk.

We have an umbrella policy with our insurance "just in case" we are ever sued. Very cheap for what you get.
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Old 06-04-2014, 03:52 AM   #20
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the op made up quite a comprehensive list of pro's and con's but missed the number one reason for not leaving money with an ex employer.


having had my 401k trapped in the maze of procedures and paper work when my company fell on hard times and closed the 401k i would say never leave money in a 401k with an ex employer if you do not have to.


we were lucky and it took only 8 months. for 8 months all access is cut off , the money is moved into cash by the state while the state assigns a custodian to break it up.
this wasn't a bankruptsey, the company just was closing down and stopped paying the custodian while closing the plan.

the custodian stops acting as the custodian and the state takes over until they assign a state appointed custodian.

there are ex employees that have to be tracked down so spousal concent forms can be signed as well.

folks who had a plan closed on them have waited years sometimes to get their money out.

no money can be sent out until all forms are back signed. it is a very long process .


this is something you do not even think about when you leave money with an ex employer until it happens to you.
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