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Seems like a slam dunk, but...
Old 11-25-2006, 05:08 PM   #1
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Seems like a slam dunk, but...

When I bail in January I will be paid for all unused leave & accumulated sick/disability credits. This will be a substantial amount. I have determined that I can stash it all (up to the max allowable for the year ) in the tax deferred plan which is a self-directed (& mostly unmatched ) account of VG funds. I have enough short-term liquidity in the taxable portfolio to take care of needs for a couple of years, so it is obvious to me that I should shelter it. But what other considerations might there be - am I missing something?

A related question: this is a 403(b) plan, and under its terms I can only invest in VG funds (I know, not a terrible thing). Is it possible to roll it over to an IRA or other type of account wherein I can use a brokerage type of account to access other fund families or even individual equities? I'll check with the plan, of course, but figure the folks assembled here have knowledge/info/insights/opinions.

Thanks!
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Re: Seems like a slam dunk, but...
Old 11-25-2006, 06:09 PM   #2
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Re: Seems like a slam dunk, but...

How old will you be? As you note, check your SPD, but after you retire, you should be able to easily roll to an IRA. Any chance you can get even a little matched?

I would confirm with your payroll dept they won't have any challenges in handling the lump sum nature of this ... sometimes that confuses folks. And, sometimes it gets weird if they're just using a fixed % limit, and not taking lump sums into account. Truth is, the company should appreciate this, because you'll probably help their discrimination testing results.
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Re: Seems like a slam dunk, but...
Old 11-25-2006, 11:21 PM   #3
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Re: Seems like a slam dunk, but...

Quote:
Originally Posted by Bobot


A related question: this is a 403(b) plan, and under its terms I can only invest in VG funds (I know, not a terrible thing). Is it possible to roll it over to an IRA or other type of account wherein I can use a brokerage type of account to access other fund families or even individual equities? I'll check with the plan, of course, but figure the folks assembled here have knowledge/info/insights/opinions.

Thanks!
nomally, yes, but I'm not sure all custodians can take a 403b and whether they have to have a relationship with your employer. A 403b can, however, be rolled over into an IRA which anyone will take and a brokerage account can be set up as part of the rollover.
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Re: Seems like a slam dunk, but...
Old 11-26-2006, 08:28 AM   #4
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Re: Seems like a slam dunk, but...

On the assumption that you will be in a very low tax bracket in 2007 by retiring in January, why not take it as taxable income?
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Re: Seems like a slam dunk, but...
Old 11-26-2006, 08:33 AM   #5
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Re: Seems like a slam dunk, but...

I agree with 2B. It depends on your overall tax situation. Remember, funds in deferred accounts are subject to taxes on withdrawal. So while I normally agree with the idea to pay tax later, it may not be the best in a particluar situation depending on the amounts in other deferred accounts, project income, etc.
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