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Old 02-17-2013, 02:30 AM   #41
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Looking at DW's 401K (I didn't have access to a 401K for most of my working career):

Balance on January 2000: $0
Current balance: $301K

Contributions: $182K (maxed out every year since 2002)
401K match:$25K
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Old 02-17-2013, 06:43 AM   #42
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401k balances -1985 - high 4 figures ,1995 - mid 5 figures, currently low 7 figures. Simple AA of 60/40 declining to 45/40/15 with occasional rebalancing. Max contributions from 1994 until 2010.
DW was a reluctant participant during her 15 years of work from 1995 -2010. Even at that she put away a nice low to mid 6 figure stash.
I've said it before, but I'd rather have a GOOD 401k plan than a DB plan. Of course I'm a hands on control freak so it may not be for everybody
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Old 02-17-2013, 07:12 AM   #43
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Question: If you're retired, and if your 401k plan has limited investment choices, does anyone keep their savings in that 401k versus transferring it to an IRA where the investment choices are infinite? If so, why? Thanks.
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Old 02-17-2013, 07:26 AM   #44
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Question: If you're retired, and if your 401k plan has limited investment choices, does anyone keep their savings in that 401k versus transferring it to an IRA where the investment choices are infinite? If so, why? Thanks.
Yes, I am not 59 1/2 yet. If I put the money in an IRA I would be limited to a 72t withdrawal. Leaving it in the 401k allows me to make penalty free withdrawals once a year if necessary and I can have the dividends distributed to me from the company stock.

I may move to an IRA when I am old enough.
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Old 02-17-2013, 08:44 AM   #45
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Question: If you're retired, and if your 401k plan has limited investment choices, does anyone keep their savings in that 401k versus transferring it to an IRA where the investment choices are infinite? If so, why? Thanks.
1. Inertia.

2. The ability to withdraw starting in the year you turn 55 if you are retired, instead of 59 1/2 with an IRA.

3. If applicable, dividends from company stock can be paid directly to you outside the 401K for additional income, instead of reinvested (which can also be a negative depending on your perspective). This can be good as long as dividends are taxed at a lower rate, so you can pay dividend tax rates instead of ordinary rates when you withdraw later. (This is the same reason why high dividend stocks are often better in a taxable account than in a 401K or traditional IRA.)

If none of these circumstances apply to someone, a rollover IRA with more (and better) investment options would likely be superior.
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Old 02-17-2013, 08:56 AM   #46
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The % of folks that would and could contribute 15k/yr is extremely low. Also, I believe the contribution limit was far below $15k 10 yrs ago.
I always thought everybody just maxed out their contributions but when it's come up in casual conversation I've been surprised that many do not. Even when coworkers are making over 100k/year and they have math/stats/physics degrees etc.


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Question: If you're retired, and if your 401k plan has limited investment choices, does anyone keep their savings in that 401k versus transferring it to an IRA where the investment choices are infinite? If so, why? Thanks.
One difference is that in a 401k plan you might have access to the institutional versions of a mutual fund with lower expense ratios. If your 401k is already at a decent provider (like vanguard) this might be a reason to stay (in addition to inertia -- probably the biggest reason of all).
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Old 02-17-2013, 09:25 AM   #47
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One difference is that in a 401k plan you might have access to the institutional versions of a mutual fund with lower expense ratios. If your 401k is already at a decent provider (like vanguard) this might be a reason to stay (in addition to inertia -- probably the biggest reason of all).
This is true. If these are institutional versions of very good funds with very low expenses, that might be a reason to stay put. My 401K is with Fidelity and most of the funds are institutional, usually requiring a million dollar minimum for "individuals" to access. The expenses are slightly higher than most of their Vanguard equivalents, but still quite acceptable.
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Old 02-17-2013, 09:26 AM   #48
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Question: If you're retired, and if your 401k plan has limited investment choices, does anyone keep their savings in that 401k versus transferring it to an IRA where the investment choices are infinite? If so, why? Thanks.
I'm 60, so penalty free withdrawals between age 55 and 59 1/2 doesn't apply to me. But I have no immediate plans to transfer any of my 457 into an IRA. I can think of two main reasons:

1. The stable value fund in my 457 is not available elsewhere and has a current yield of 2.43%. In my view that makes it a superior alternative for a portion of the bond allocation in my portfolio.
2. I hold VIIIX in my 457 and VFIAX in my IRA. I'm highly satisfied with both and would probably just move VIIIX into VFIAX if I rolled my 457 into an IRA. But when I check expense ratios, I see that VIIIX charges .02% vs .05% for VFIAX. Admittedly both expense ratios are tiny, but .05% is two and a half times .02%. What's the point of going to the trouble to transfer one S&P 500 index fund into another when all I accomplish is to more than double my expenses?
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Old 02-17-2013, 09:36 AM   #49
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1. The stable value fund in my 457 is not available elsewhere and has a current yield of 2.43%. In my view that makes it a superior alternative for a portion of the bond allocation in my portfolio.
I think a similar argument might be in play for retired Feds who have access to the "G" fund in the TSP.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-17-2013, 09:43 AM   #50
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Originally Posted by photoguy View Post
I always thought everybody just maxed out their contributions but when it's come up in casual conversation I've been surprised that many do not. Even when coworkers are making over 100k/year and they have math/stats/physics degrees etc.



They may be socking money away in some other investment, like a Roth IRA. Maxing the 401K and a couple of Roth's on 1 salary, even one above $100,000 in a relatively high cost area is not easy. I have never been able to max both 401K and Roth contributions (Maybe I could if I pulled back all fun money and did not take a vacation, but not going to do that).
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Old 02-17-2013, 09:56 AM   #51
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My 401K has lower cost funds (institutional) then I could get at VG and more than enough choices. Also 401Ks fall under ERISA protection, so they can provide more protection in some states.
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Old 02-17-2013, 09:58 AM   #52
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My 401K has lower cost funds (institutional) then I could get at VG and more than enough choices. Also 401Ks fall under ERISA protection, so they can provide more protection in some states.
TJ
Ah, yes. I live in Texas which has some of the strongest asset protection laws anywhere, so I tend to forget that many states don't provide the same level of protection for IRAs as they do for 401Ks, since the latter is legally treated as a pension plan.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-17-2013, 10:29 AM   #53
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Starting to see lot's of discussion (fear) about the possibility of the Government swooping in and taking over 401K plans in an effort to address the problems with SS and underfunded retirees. Any thoughts as to whether an IRA is better protected against Government intrusion vs. 401k plans?
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Old 02-17-2013, 10:33 AM   #54
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Old 02-17-2013, 10:39 AM   #55
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Currently, fees for TSP administration is .027. That has a lot to do with why I will most likely leave my 401k money in the TSP. I plan to take monthly withdrawals for regular income. The biggest drawback I see for leaving my money in the TSP is that oncebegin the monthly withdrawals, I have no way to withdraw a lump sum if I need/want one.
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Old 02-17-2013, 12:26 PM   #56
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Starting to see lot's of discussion (fear) about the possibility of the Government swooping in and taking over 401K plans in an effort to address the problems with SS and underfunded retirees. Any thoughts as to whether an IRA is better protected against Government intrusion vs. 401k plans?
My personal feeling is that the government might change the rules with respect to *future* contributions but I doubt they'd retroactively change the rules on balances already in place. (Same goes for tax-free withdrawal of a Roth IRA.) Politically it's *much* easier to make changes to future situations than it is to retroactively change the rules on people, which is part of the reason why many of the proposed reforms to SS and Medicare specifically exempt anyone already receiving benefits (or are close to it). I think changing the rules on balances already in place would be political suicide.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-17-2013, 12:46 PM   #57
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I've said it before, but I'd rather have a GOOD 401k plan than a DB plan. Of course I'm a hands on control freak so it may not be for everybody

I think what some of us miss is having BOTH a GOOD 401k plan AND and a DB plan! That was fairly common at MegaCorps a couple of decades ago.

When the MegaCorp I toiled at, which had both a 401k plan with matching and profit sharing and a DB plan, froze the DB plan, the 401k remained but with no improvement. It wasn't a choice of one or the other, it was just the loss of the DB plan.

Edit: It's been many years so my memory may be failing me..... I'm having hallucinations vague memory recall that perhaps the 401k plan did temporarily receive additional matching when the DB plan was frozen. I'll nose around in the filing cabinet when I get a chance. In any case, we employees were definitely much better off with both the 401k plan and the DB plan prior to the freezing of the DB plan. The matching level today is only typical of similar corps. The recent recession gave corps an opportunity to reset matching levels by first suspending matching altogether and then re-establishing matching at some new (and likely reduced) level.
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