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Old 04-18-2014, 09:27 AM   #1
Confused about dryer sheets
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Location: Sayreville
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Seeking advice

Hi, new poster here looking for advice. I'm 59 years old and retired due to restructure from Ally Financial (formerly GMAC) since 2010, and am trying to finally get a handle on my retirement finances. I have a GM pension (which they have since converted to a Prudential annuity), that more than pays my expenses, but will be reduced at age 62, and a very part time job as a school crossing guard that gives me approx. 4600 per year in earned income. My questions concern my 2 401K's below.

Ally 401K- aprox. $105,300 - Post 1986 after tax contributions-$3631.
100% Wellington Admiral - .18% exp.

GM 401K - approx $142147. - post 1986 after tax contrib- $42,505.
pre-1987 after tax contrib - $ 3525.
24% SSGA Lg Cap Index .01% exp.
08% SSGA Intl Index .09%
19% LSV Lge Cap Value EQ .35%
09% SSGA Emrg Mkts Index .25%
01% SSGA Trgt Ret. 2010 .01%
39% Pimco Core Plus Bond .37%

My plan was to do a rollover IRA at Vanguard, and fill with 100% Total Bond Market Index. Then open a taxable account and fill with 80/20 Total Stock Market Index & Int'l Market Index to achieve a simple 3 fund portfolio and an AA in the 40/60 area. Seemed simple enough for me to handle.

Then I started reading that 401Ks will handle keeping track of post & pre tax $ at distribution time, but with an IRA it's up to me. If I don't do the rollover, I could try to get my AA using the 401Ks- Ally does offer the Vanguard bond fund at .07 exp, and they charge me $25.00 quarterly admin. fee. However, the GM only has 3 bond offerings, Pimco Core Plus, Pimco Real Return & an Income Fund, which is a stable value, all at .37%, which seems high compared to the Vanguard expense ratio.

So my question for now is, is it worth doing the rollovers due to the pre tax contributions in these 401K's, or should I just bite the bullet and accept the higher fees & just reallocate within them. I really appreciate any insight offered, and I'm sure I'll have more questions for this forum as I try to learn more as I go forward. Thanks.

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Old 04-18-2014, 10:09 AM   #2
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If the yield on the stable value fund is good (say more than 2.5%) then I would keep that 401k and use it as your bond allocation. it would have a reasonable yield and no interest rate risk and little credit risk.

IIRC, you may be able to roll your after-tax money from the 401k into a Roth IRA and the pre-tax money from the 401k into a tIRA. If so, you wouldn;t have to worry at all about tracking anything. Talk to Vanguard about that possibility.

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Old 04-18-2014, 04:19 PM   #3
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I would definitely keep access to the GM Income (Stable Value) fund, although I see the rate has come down quite a bit. I think it was 2.6 last time I checked. These rates are for 4/17/14.

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