Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 10-02-2019, 07:41 AM   #21
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Elyria, OH
Posts: 1,937
Quote:
Originally Posted by kaneohe View Post
My impression is that generally creditor protection of the 401K is better than IRA protection which depends on your state law
https://www.thetaxadviser.com/conten...teirachart.pdf

401K creditor protection in my mind is like a battleship.....works almost always, in bankruptcy or not, except against the IRS and QDRO (divorce rules).
The IRA protection, like in the linked table, I believe , is for bankruptcy situations. GA appears to have protection like CA which is regarded as fairly weak , although I believe that if you can show that the IRA came from a retirement plan w/ ERISA protection like a 401K, creditor protection is like the ERISA protection (but only in bankruptcy?).
The protection in the chart isn't necessarily limited to just bankruptcy protections. In my state, IRAs are fully protected, regardless. I agree that Georgia offers weak protection. Who wants to haggle over what amount is necessary for support? That's the biggest con to rolling over to an IRA, under the circumstances. I'm not advising against it. Just be aware of the risk.

If you do decide to roll over to an IRA, Fidelity is an excellent choice. Also note yesterday's announcement by Charles Schwab about eliminating commissions on stocks and ETFs, effective next Monday.
gwraigty is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-02-2019, 07:45 AM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
IMO creditor protection is so far down on the list of things to be considered as to be negligible.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 10-02-2019, 08:04 AM   #23
Thinks s/he gets paid by the post
iloveyoga's Avatar
 
Join Date: Jan 2017
Location: Des Moines
Posts: 1,375
You have more flexibility with federal tax withholding with the IRA. 20% withholding is mandatory for 401(k) retirement/termination withdrawals.
__________________
Retired in 2013 and we are living the dream!
iloveyoga is offline   Reply With Quote
Old 10-02-2019, 08:22 AM   #24
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Elyria, OH
Posts: 1,937
P.S. Thanks to another topic here, I just learned that TD Ameritrade has matched Schwab's new no commission policy, with TDA's policy starting tomorrow. It may be prudent for anyone considering rolling over to an IRA to wait for the dust to settle on these rapid changes before choosing a firm.
gwraigty is offline   Reply With Quote
Old 10-02-2019, 09:09 AM   #25
Administrator
Alan's Avatar
 
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,054
OP might also look up how the company 401k ranks among its peers.

https://www.brightscope.com/ratings/
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
Alan is offline   Reply With Quote
Old 10-02-2019, 10:02 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
tough to get a decent stable value fund outside of a 401k
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 10-02-2019, 10:27 AM   #27
Thinks s/he gets paid by the post
USGrant1962's Avatar
 
Join Date: Dec 2016
Location: DC area
Posts: 2,479
Quote:
Originally Posted by Alan View Post
OP might also look up how the company 401k ranks among its peers.

https://www.brightscope.com/ratings/
Thanks for that link. I found out that my 401(k) is the "Top Plan" in its peer group , I think I'll keep it.
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged

"All models are wrong, some are useful." - George Box
There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
USGrant1962 is online now   Reply With Quote
Old 10-02-2019, 10:34 AM   #28
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,594
Another advantage - IRS allows unlimited 60 rollovers from 401(k) to IRA, but it only allows one 60 rollover from an IRA to another IRA per year.

This may be advantageous if one wishes to add some "tax withholding" near the end of the year after realizing an underwithholding penalty may apply and/or estimated payments have not been sent in in all 4 quarters.

I have posted elsewhere about a variety of advantages of 401k over IRA. The biggest issue that you are up against is no new people can make money on you if you leave the funds in the 401k, so folks are rarely going to recommend it to you. That old (lack of) fiduciary thing raising its head again.

-gauss
gauss is offline   Reply With Quote
Old 10-02-2019, 10:39 AM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
Someone posted on here a while back about keeping a 401K as that and not rolled into an IRA because it changes the basis of your taxation for rollovers to a Roth. I may have that completely wrong. Does anyone know what I am talking about?
COcheesehead is offline   Reply With Quote
Old 10-02-2019, 10:39 AM   #30
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,594
Quote:
Originally Posted by pb4uski View Post
IMO creditor protection is so far down on the list of things to be considered as to be negligible.
Hmm..

Are you paying for liability insurance every year to guard the money that could be at risk? I'd rather be 'uncollectable' under Federal law with the funds in retirement accounts.

Remember a lawsuit against you that you loose or choose not to defend is then a creditor protection issue.

Perhaps less of an issue if folks have the majority of their wealth in non-retirement funds/assets.

-gauss
gauss is offline   Reply With Quote
Old 10-02-2019, 11:32 AM   #31
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
Quote:
Originally Posted by COcheesehead View Post
Someone posted on here a while back about keeping a 401K as that and not rolled into an IRA because it changes the basis of your taxation for rollovers to a Roth. I may have that completely wrong. Does anyone know what I am talking about?
sounds like you are talking about backdoor Roth contributions/conversions.
If you leave the 401K alone, your conversions may be tax free. If you roll a
large 401K into your TIRA, that could make the Roth conversions of non-deductible contributions, almost fully taxable. A good reminder for those who plan to do it.
kaneohe is offline   Reply With Quote
Old 10-02-2019, 11:35 AM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
Quote:
Originally Posted by Big_Hitter View Post
tough to get a decent stable value fund outside of a 401k
Tough? I thought it was impossible. Got tickers?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 10-02-2019, 11:39 AM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
Quote:
Originally Posted by gauss View Post
Hmm..

Are you paying for liability insurance every year to guard the money that could be at risk? I'd rather be 'uncollectable' under Federal law with the funds in retirement accounts.

Remember a lawsuit against you that you loose or choose not to defend is then a creditor protection issue.

Perhaps less of an issue if folks have the majority of their wealth in non-retirement funds/assets.

-gauss
I've never beeen sued (I've also never sued anyone). I have $2m in umbrella coverage that I would carry irrespective of whether or not my IRA is available to creditors. Therefore, risk is negligible.

I don't see what your point is.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 10-02-2019, 12:44 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
Quote:
Originally Posted by kaneohe View Post
sounds like you are talking about backdoor Roth contributions/conversions.
If you leave the 401K alone, your conversions may be tax free. If you roll a
large 401K into your TIRA, that could make the Roth conversions of non-deductible contributions, almost fully taxable. A good reminder for those who plan to do it.
I think you have it right. Thanks for helping out with my sketchy memory of the post.
COcheesehead is offline   Reply With Quote
Old 10-02-2019, 01:36 PM   #35
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,594
Quote:
Originally Posted by pb4uski View Post
I've never beeen sued (I've also never sued anyone). I have $2m in umbrella coverage that I would carry irrespective of whethr or not my IRA is available to creditors. Therefore, risk is negligible.

I don't see what your point is.
I was trying to point out that if the majority of one's wealth is in a 401k plan (currently off limits to creditors under Federal law), and they were thinking of rolling over to an IRA in a state which has less generous protections, then the increased yearly cost of insurance to protect the assets may not be trivial.

Thanks for clarifying your situation.

-gauss
gauss is offline   Reply With Quote
Old 10-02-2019, 01:40 PM   #36
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,594
Quote:
Originally Posted by COcheesehead View Post
Someone posted on here a while back about keeping a 401K as that and not rolled into an IRA because it changes the basis of your taxation for rollovers to a Roth. I may have that completely wrong. Does anyone know what I am talking about?
I have posted in the past that for a 401k plan, the plan administrator is responsible for tracking and reporting any after tax basis in the account.

Once the funds are transferred to an IRA, the responsibility falls to the individual.

The transactions that make up this tax basis often take place decades in the past. I see this all the time at our volunteer tax site. The widows often have no idea if there is any taxable basis in the IRA so 100% of their withdrawals are taxed. This is not an issue with 401k/DB pension plans.

-gauss
gauss is offline   Reply With Quote
Old 10-02-2019, 03:47 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by pb4uski View Post
Tough? I thought it was impossible. Got tickers?
okay impossible lol
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 10-02-2019, 03:50 PM   #38
Thinks s/he gets paid by the post
 
Join Date: May 2019
Posts: 2,726
I didn't see anyone mention this...

but I have a government 457B plan, and you don't have to worry about being 59 1/2 or the rule of 55, either one, to withdraw. I can take distributions at any age penalty free. If I were to move that into a regular traditional IRA, I couldn't take penalty free distributions until age 59 1/2, except under certain conditions like 72(t).

Another advantage of my work retirement account is that they have a NO FEE Fixed Interest Fund that pays 3% (has paid 4% at times in the past as well). It has no expense ratio associated with it nor does any investment in it require the plan administration fee. For the regular equity bond and stock funds, the management fee is over 0.3% and expense ratios of around 0.5% on the low end (many are over 1%). The fixed interest fund has neither.

The con of the work retirement account would be the expenses and management fee that apply to the bond and equity funds, which are considerably higher than my Vanguard funds.
GenXguy is online now   Reply With Quote
Old 10-02-2019, 04:49 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by GenXguy View Post
Another advantage of my work retirement account is that they have a NO FEE Fixed Interest Fund that pays 3% (has paid 4% at times in the past as well). It has no expense ratio associated with it nor does any investment in it require the plan administration fee.
that's the stable value fund I mentioned above - basically nonexistent on the retail side
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 10-02-2019, 05:55 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
Quote:
Originally Posted by GenXguy View Post
I didn't see anyone mention this...

but I have a government 457B plan, and you don't have to worry about being 59 1/2 or the rule of 55, either one, to withdraw. I can take distributions at any age penalty free. If I were to move that into a regular traditional IRA, I couldn't take penalty free distributions until age 59 1/2, except under certain conditions like 72(t). ...
Perhaps nobody mentioned that because the OP and title of the thread refers to pros/cos of keeping 401k.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
401k to IRA rollover while working, Pros and Cons conversationalphrase FIRE and Money 16 04-02-2018 05:59 AM
Pros & Cons: Rolling over 401K/403B to an IRA ? cyber888 FIRE and Money 52 05-16-2016 08:12 AM
Pros and Cons of After Tax 401K Contributions TooFrugal FIRE and Money 25 12-16-2009 06:28 PM
Motorhome purchase? Pros/Cons! greenhm Life after FIRE 223 07-27-2008 03:49 PM
after-tax contributions to 401K - pros/cons? simple girl FIRE and Money 14 10-12-2006 01:27 PM

» Quick Links

 
All times are GMT -6. The time now is 11:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.