401k rollover upon retirement

[Ronstar]

I've been retired 4 weeks now, but haven't touched my 401k. My plans are to transfer it to an IRA at some point. Maybe Vanguard, maybe somewhere else. My former bosses retired more than a year ago. One transferred his 401k out immediately upon retirement. I think my other boss still has his 401k intact.

Any thoughts/experiences as to best handle the transfer and when?

 

[youbet]

RE'd for 8 years, my 401k is still with my former employer. This allowed Roth conversions out of partially post-tax IRA's without the 401k dollars diluting the pre-tax/post-tax ratio. My employers 401k has a satisfactory selection of extremely low cost index funds, some even lower cost than Vanguard Admiral Shares. I don't plan to rollover to a IRA until just before RMD time.

What are you looking for in an IRA that isn't available with your 401k?

 

[travelover]

There are a couple of advantages to 401(k)s. You can withdraw from them at 55 instead of 59 1/2. Some have an interest fund that pays more that a bond, a money market fund or a CD. Some have super low expense ratios.

Would any of these pertain to you?

 

[Ronstar]

RE'd for 8 years, my 401k is still with my former employer. This allowed Roth conversions out of partially post-tax IRA's without the 401k dollars diluting the pre-tax/post-tax ratio. My employers 401k has a satisfactory selection of extremely low cost index funds, some even lower cost than Vanguard Admiral Shares. I don't plan to rollover to a IRA until just before RMD time.

What are you looking for in an IRA that isn't available with your 401k?

Nothing really. Seems like costs of my 401k are about the same as Vanguard. And my 401k seems to outperform my Vanguard account (probably due to different AA). Just thought it may be simple to bring everything under 1 roof.

But I panicked watching the news tonight, where they talked about a bill going through the state of Illinois where the state would control 401k's. I haven't researched it yet, but I want no part of that.

Proposal Would Make Illinois Small Businesses Give Retirement Accounts To Employees « CBS Chicago

 

[travelover]

..............
But I panicked watching the news tonight, where they talked about a bill going through the state of Illinois where the state would control 401k's. I haven't researched it yet, but I want no part of that.

Proposal Would Make Illinois Small Businesses Give Retirement Accounts To Employees « CBS Chicago

The way I read this article, they are trying to force employers to have a 401(k) available for employees. It is kind of unfair that you can contribute so much more to a 401(k) than to an IRA.

 

[Ronstar]

There are a couple of advantages to 401(k)s. You can withdraw from them at 55 instead of 59 1/2. Some have an interest fund that pays more that a bond, a money market fund or a CD. Some have super low expense ratios.

Would any of these pertain to you?

The withdrawal age difference is not an issue. I'm almost 59. My 401k does not have an interest fund that pays more than a bond, a money market or cd. And I believe our 401k has low expense ratios. So maybe its best to stay put for a while = I'll research it some more

 

[Ronstar]

The way I read this article, they are trying to force employers to have a 401(k) available for employees. It is kind of unfair that you can contribute so much more to a 401(k) than to an IRA.

I agree - yes it is unfair to allow a higher contribution to 401k's than IRA's. But I'm worried that the state's intentions are more than just requiring employers to make 401k's available

 

[heeyy_joe]

401K is a protected asset from legal judgement.

 

[Animorph]

DW's company will true up their company contribution in January of the next year. Since I've accelerated 401k contributions to max out at half-time in half a year the company contribution will end up lower than it should be, though probably not by much. I'll wait for the true up before rolling over into an IRA.

 

[pb4uski]

I went through this a couple years ago. See http://www.early-retirement.org/forums/f28/deliberating-401-k-ira-transfer-60083.html

 

[urn2bfree]

I just went thru this. I am puzzled by what happened.

I stopped working December 1. Since the firm managing the retirement funds only checks it once a year I could only learn my share of it at the end of February. At that, it only included what money was,there up to the end of 2013. So any gains from 12/31/13 til the time I got the money to rollover were not shared with me. (Also any losses were not borne by me). Then I filled out paperwork and waited and waited and FINALLY around mid April I got the money..essentially it was cash from Jan 1- until mid April. It ended up for me as not a huge deal, but neither my plans nor any sensible plan of investing have suggested that you sit on the sidelines for an entire quarter.. Probably missed out on paper gains of thousands of dollars..if the market had tanked as in 2009, I would be delighted getting in at a bottom....

Still seems ludicrous in this age of computers doing flash trades in microseconds- that it takes over 3 months to figure this out. This happened with the last two guys leaving for retirement, too.

 

[Corporateburnout]

I will be looking into this over the next few months as I will be retiring in June. I am leaning towards keeping it as is for the time being as my company pays the administrative fees and the plan is administered by Fidelity where I have all my other IRAs and brokerage accounts. The funds inside the 401K are invested in three fidelity and one Vanguard index funds. The liability protection of a 401K is a big plus also.

I plan to review my company's plan summary regarding withdrawal as this will be the only factor affecting my decision to roll it over to an IRA.

 

[martyb]

Retiring in 8 weeks. No plans to roll my TSP (401k) to an IRA. I do have a Vanguard IRA now, but it's a Roth only. My TSP costs me way less than even Vanguard, for one thing. Also, I'm satisfied with the investment avenues within the TSP, even though there aren't nearly as many as VG. I don't need more than the TSP offers. At some point, down the road, it's possible I might consider a rollover, if only for the sole reason that I can't take lump sums out of the TSP, only identical, automatic monthly amounts that I have to pre-plan and/or adjust once a year. Once I decide I want to withdraw x-amount each month for the following year, that's it, I'm stuck with that amount till the next year. I can't withdraw $5000 for a new air conditioner or $2000 for a vacation, or etc. Otherwise, that's the only down-side I can think of to keeping my money in the TSP. Wife's 401k however, will be rolled into her VG TIRA upon retirement.

 

[pb4uski]

I just went thru this. I am puzzled by what happened.

I stopped working December 1. Since the firm managing the retirement funds only checks it once a year I could only learn my share of it at the end of February. At that, it only included what money was,there up to the end of 2013. So any gains from 12/31/13 til the time I got the money to rollover were not shared with me. (Also any losses were not borne by me). Then I filled out paperwork and waited and waited and FINALLY around mid April I got the money..essentially it was cash from Jan 1- until mid April. It ended up for me as not a huge deal, but neither my plans nor any sensible plan of investing have suggested that you sit on the sidelines for an entire quarter.. Probably missed out on paper gains of thousands of dollars..if the market had tanked as in 2009, I would be delighted getting in at a bottom....

Still seems ludicrous in this age of computers doing flash trades in microseconds- that it takes over 3 months to figure this out. This happened with the last two guys leaving for retirement, too.

Never heard of anything like that. Outrageous. Are you sure it is a 401k? The ones I'm familiar with you can do transactions any workday.

 

[Ronstar]

Thanks to all of you for the info. It seems that transferring to an IRA is not something I need to do right away. I'm in somewhat of an unusual situation. Although I retired April 2, 2014, I'm still considered an employee. I still have my company phone and laptop. I still have a cube at the office. And I provide advice/consulting to the company when needed. But I have not done any work worthy of filling out a time card in the last month.

That said, our company plan calls for an employee to be an employee at the end of a calendar year to get the company match. So I'll probably wait until 2015 to make a move, although my company match on my 3 months of part time income will not be much

 

[RockyMtn]

Thanks to all of you for the info. It seems that transferring to an IRA is not something I need to do right away. I'm in somewhat of an unusual situation. Although I retired April 2, 2014, I'm still considered an employee. I still have my company phone and laptop. I still have a cube at the office. And I provide advice/consulting to the company when needed. But I have not done any work worthy of filling out a time card in the last month.

That said, our company plan calls for an employee to be an employee at the end of a calendar year to get the company match. So I'll probably wait until 2015 to make a move, although my company match on my 3 months of part time income will not be much

If you are still considered an employee are you sure you can even consider a rollover at this point?

 

[Ronstar]

Good point- I'm not sure. My boss didn't work in 2013, but I think he was considered an employee until 2014 and he rolled his in 2013. I'll look into this further. He's the one that suggested I roll it over now.

 

[Rustward]

Good point- I'm not sure. My boss didn't work in 2013, but I think he was considered an employee until 2014 and he rolled his in 2013. I'll look into this further. He's the one that suggested I roll it over now.

Did your boss's employer pay unemployment insurance premiums, workers comp premiums, and withhold SS and medicare taxes (and pay the employer portion if SS) on your boss in 2013?

I am having trouble with the word "considered". He was either an employee or he wasn't.

 

[urn2bfree]

Never heard of anything like that. Outrageous. Are you sure it is a 401k? The ones I'm familiar with you can do transactions any workday.

Actually I think it is one of the others. ?457? Maybe. It is all so ridiculous the way the lawyer/politicians treat these things. I think in some states your 401k is immune from collection like in a lawsuit but your IRA is not protected. Why should that be? It just is. Unfair.

http://www.forbes.com/sites/financi...asons-not-to-roll-your-orphan-401k-to-an-ira/

 

[Idnar7]

I rolled over my 401k to an IRA at 59 1/2. Then the last year I worked I put 100% of my 401k into Wellington as a future new car fund. Three years after retiring I bought a new car, but because financing was 2%, I rolled over my 401k worth about 40k into my Fidelity IRA. I planned to stay with Wellington, but by then it was closed through Fidelity and I invested in other comparable funds.

 

[jazz4cash]

Might want to check on the treatment of distributions in your state. In MD where we live there is an income exclusion for employee retirement account distributions like 401k, but not for IRA distributions. This would apply to distributions, not rollovers. It may not kick in till age 65, cant remember exact details.

 

[Ronstar]

Did your boss's employer pay unemployment insurance premiums, workers comp premiums, and withhold SS and medicare taxes (and pay the employer portion if SS) on your boss in 2013?

I am having trouble with the word "considered". He was either an employee or he wasn't.

Good point. Maybe "considered" isn't the right word. I believe the company paid all of the premiums and taxes for the boss because he was technically still receiving a salary but not coming into the office.