The nuts and bolts of rolling over and transfers?

[MarieIG]

So, I have finally started on rolling over to prepare for the back door Roth.

I was starting with my little SEP which is in Vanguard (total stock market fund), and contacted my 401k provider.

One thing that I learned is that it is not a wire transfer. A check will be issued - whenever, which will then proceed by snail mail to John Hancock, to be deposited, whenever, in the proportion of funds I already have selected.

My concern is that I won't have any control over the price that the fund is liquidated, and won't have any control over the price at which the new purchase is made.

I was considering transferring my Vanguard SEP into a money market (within the SEP) and giving instructions that upon arrival, to deposit it into the income fund, until I am ready to move it.

BTW, I have never had any skill for timing the market, but tend to buy a little on drops.


Thoughts?

 

[sengsational]

The way I did it was to set it up at the receiving I institution (Fidelity). It took a while, had several steps, but worked as expected. So that sounds like what you're doing with JH.

As to the temporary asset allocation weighting problem, you might see if you can transfer 'in kind', but that's rare. If you have a cash allocation somewhere, you can 'sell to yourself', meaning sell the equity so you can transfer in one account and in some other account, buy the same amount of the equity. You can re-swizzle your AA after you get the transfer done. If your new purchase is in the money fund, then you can control the purchase timing, and do it at the same time as you reverse the equity purchase.

 

[MarieIG]

The way I did it was to set it up at the receiving I institution (Fidelity). It took a while, had several steps, but worked as expected.



As to the temporary asset allocation weighting problem, you might see if you can transfer 'in kind', but that's rare. If you have a cash allocation somewhere, you can 'sell to yourself', meaning sell the equity so you can transfer in one account and in some other account, buy the same amount of the equity. You can re-swizzle your AA after you get the transfer done.

Thank you. I don't believe that they do in kind, which I would prefer, but I will ask.

Otherwise, when I did a roll over of my 401k from my last job, it took about 10 days for my funds to show up in my account, while the stock market swooped all over the place.

I know I am also "risking" loss of gains, i.e. if the stock market dips while my distribution is meandering its way over to the 401k - but the having no control of the liquidation and purchase date is scary.

 

[Senator]

Thank you. I don't believe that they do in kind, which I would prefer, but I will ask.

Be prepared for the shares to potentially "get lost". They may sit at Compushare for a while. And they are not really yours anymore, and they are not really in your employer's account anymore.

My DGF's sat there for months.

 

[zinger1457]

I recently consolidated all my IRA accounts with Schwab. All the transfers were initiated from Schwab and automatically placed into a Schwab cash account. Not really sure if the funds were wired over or sent by check, I just filled out the Schwab Transfer Account form and they handled everything from there. It did take a few days to get everything transferred over but once in the cash account I then had control over when and how I wanted those funds invested.

 

[sengsational]

You can control the dates by liquidating yourself before the transfer. And that could be timed with the purchase of the same magnitude in another account (the sell to yourself idea). Thus your AA doesn't shift. You won't make or lose on market swings while you're doing the transfer.

 

[REWahoo]

You can control the dates by liquidating yourself before the transfer.

Wow. Suicide seems a drastic way to manage a rollover.

 

[Animorph]

I had about a year's worth of expense money in cash and a normal 2% AA of cash. For DW's 401k rollover I sold shares in the 401k and bought the corresponding shares in another account using excess cash. Did the rollover of the cash proceeds from 401k to IRA, then bought shares in the rollover and sold the same temporary shares in the other accounts. If you're all in retirement accounts there should not be any tax concerns. Due to cash limitations it took me about five partial rollovers to completely drain the 401k, but our AA never changed. It would have been about a week out of the market for us otherwise.

Not sure all that was worth it in the end, but you never know.

 

[MarieIG]

Be prepared for the shares to potentially "get lost". They may sit at Compushare for a while. And they are not really yours anymore, and they are not really in your employer's account anymore.

My DGF's sat there for months.

Oh my, not a result I am seeking.

 

[MarieIG]

Wow. Suicide seems a drastic way to manage a rollover.

Yes, but it looks as if it may be heading in the, um, liquidation direction.

 

[davebarnes]

It took me 5 months to move $50K from a Vanguard mm fund to a Fidelity mm fund.
I still have no idea why.

 

[MarieIG]

I had about a year's worth of expense money in cash and a normal 2% AA of cash. For DW's 401k rollover I sold shares in the 401k and bought the corresponding shares in another account using excess cash. Did the rollover of the cash proceeds from 401k to IRA, then bought shares in the rollover and sold the same temporary shares in the other accounts. If you're all in retirement accounts there should not be any tax concerns. Due to cash limitations it took me about five partial rollovers to completely drain the 401k, but our AA never changed. It would have been about a week out of the market for us otherwise.

Not sure all that was worth it in the end, but you never know.

I am sure this is very clever, but with my luck, the money would come out of the IRA, and the 401k would refuse to accept the cash from me, and I would get hit with income tax and a penalty.

 

[sengsational]

Wow. Suicide seems a drastic way to manage a rollover.

Yes, but it looks as if it may be heading in the, um, liquidation direction.

Liquidating one's self is frowned upon in our society, certainly. But I'm serious about this rollover stuff. I get what I deserve

 

[MarieIG]

The SEP account finally disappeared from Vanguard . . .

 

[MarieIG]

All pretax IRA contributions (rollovers) and gains have been removed from Vanguard and accepted by my employer's 401k.

The post tax contributions as reflected on the 8606 (with this year's post-tax contribution added) have been converted to a Roth IRA.

Re: 2020, I am planning on retirement. I will continue to fund my employer's Roth 401k until I retire.

I am permitted to make in service withdrawals upon reaching age 59 1/2, which is early next year, prior to the earliest planned retirement date. I was thinking about transferring all of my Roth 401k to Vanguard as soon as I qualify to roll it out, as the expenses are much lower.

The question will then be, how long should I leave the taxable portion of the 401k in the company's plan? Pros/cons?

Thank you.