401k after Retirement

[Rjhasti]

those 401k's float money for up to 8 weeks I have found..........it is because they use your money while it is floating!!!!!!!! That is just like another fee!!!!!!

 

[Koolau]

I retired about 6 months ago and left my 401k at my employer without making any changes (obviously no further contribution activity).

As the new year came, I wanted to make sure that I could withdraw funds if I needed for supplemental cash needs. I logged into my Vanguard account and found that Withdrawals are NOT allowed.
Upon calling Vanguard they said I could take a full distribution or roll it over to an IRA, from which I could self manage or withdraw funds as needed.

I chose to open a Vanguard brokerage IRA account to roll over the funds to. It was very easy to do and the phone rep walked me thru it while I was in my account online. Funds and assets (in kind except for any proprietary portfolios) will be in the brokerage account in 2 days.

I guess I had assumed that leaving assets in my 401k after retirement would be accessible. No one at my company HR department nor Vanguard had ever informed me otherwise.

Do all 401k plans work like this post retirement or is this a provision of my company’s plan or Vanguard rules?

I treat my 401(k) like a bank - except I can't make deposits. When I need cash, I request an exact amount (pay the 20% taxes up front) and the money is in checking within 2 or 3 days. I'm surprised that you can't take withdrawals but I guess I'm spoiled by my 401(k).

 

[Finance Dave]

We moved our 401ks to FIDO when we FIRE'd. Pros and cons mentioned above, but we wanted more investment choices. Our Megacorp 401k had low fees (subsidized by the company and through Vanguard), so fees were not the issue. We were too young at the time to take any distributions, so that was not an issue for us either.

 

[Luvtoride]

OP...moving a 401k to an IRA can be a bad idea in some situations. If you have ever made non-deductible contributions to an IRA in the past, moving a large 401k to a tIRA can make it nearly impossible to recover your basis in the IRA. Remember that an individual only has one IRA, regardless of the number of IRA accounts you may have. My 401k has never been moved, even after 24 years of retirement.
Also, you never mention if your plan included the "Rule of 55" where withdrawals can be made from the 401k without incurring early withdrawal penalties. To withdraw from TIRA, you must generally be over 59.5 without incurring a penalty tax.

RE2, thanks for the heads up. No non-deductible contributions were ever made in my 401k. Also plan did not include “rule of 55”. I had actually did “in-service “ withdrawals of most of my IRA funds a few years before I retired in order to reinvest this large portion of my assets more strategically for retirement. I stayed in the plan with the generous company match until retirement. There really is no benefit of staying in the plan post retirement based on the restrictive rules that apply to my plan.
Vanguard has offered the assistance of a Financial Advisor to help with investing the funds now in the IRA (transition took 2 days).
So what benefits are there for anyone to remain in their company 401k after retirement?

 

[Luvtoride]

I treat my 401(k) like a bank - except I can't make deposits. When I need cash, I request an exact amount (pay the 20% taxes up front) and the money is in checking within 2 or 3 days. I'm surprised that you can't take withdrawals but I guess I'm spoiled by my 401(k).

Koolau, yes I was surprised too especially after having taken in-service distributions (2 per year were allowed) to move funds to an outside IRA account while I was working.

 

[Rjhasti]

Koolau, yes I was surprised too especially after having taken in-service distributions (2 per year were allowed) to move funds to an outside IRA account while I was working.

normally there is a fee everytime you take an "in-service" transfer. Often it is $25-50 each time..............they won't tell you they just do it.
Check to make sure.

 

[USGrant1962]

I knew there was an echo in here. Here's an identically named thread from 2020:

https://www.early-retirement.org/forums/f30/401k-after-retirement-105554.html#post2484820

 

[Out-to-Lunch]

I knew there was an echo in here. Here's an identically named thread from 2020:

https://www.early-retirement.org/forums/f30/401k-after-retirement-105554.html#post2484820

Ha! That post you cited generated two pages of discussion, and was the OP's only post!

 

[Koolau]

I knew there was an echo in here. Here's an identically named thread from 2020:

https://www.early-retirement.org/forums/f30/401k-after-retirement-105554.html#post2484820

Your memory is better than mine.

I guess some subjects just keep coming back (like "Pay off the mortgage...")

Too bad the OP of that old thread didn't stick around.

 

[JohnDoe]

yes, just do some digging into your account on their web site.
often it is under the transactions .......you will see the fees they take out without your knowledge.

I have helped many of my employees and friends with this. You will be amazed and ticked

Couldn't find any fees. Did the math on the contributions and the shares bought with the closing price. Check the expense ratios, the performance, the activity, and the stmts. All looks good.

 

[Rjhasti]

Couldn't find any fees. Did the math on the contributions and the shares bought with the closing price. Check the expense ratios, the performance, the activity, and the stmts. All looks good.

I am very happy for your because this is a 1st for me. Like I have said I have done these comparisons during my working years for my employees and incoming manager and have never found that to be the case.

But for the 99% it is the case.

Glad to have found the 1%.

I am sure you rest easy knowing you have a good low cost 401k plan.

 

[LakeRat1]

I retired at 52 from MegaCorp, rolled my 401k over to Fidelity IRA/Rollover account.... Been very happy the past 10 years ...... I have had full access to the funds, had I wanted to take some $$$ out before 59.5, I would have had to pay the penalty .....

 

[sengsational]

Smaller companies often have a "bad deal 401k" to escape from ASAP. The company I was working for when the music stopped was a huuuuge conglomerate, and as such, had low fees and a guaranteed income fund that can't be matched in an IRA.


But, unlike the OP, I can pull out whatever dollar amount I want. It would certainly be harder to stay with the old employer's plan if it were an "all or nothing" proposition.

 

[Rjhasti]

Smaller companies often have a "bad deal 401k" to escape from ASAP. The company I was working for when the music stopped was a huuuuge conglomerate, and as such, had low fees and a guaranteed income fund that can't be matched in an IRA.


But, unlike the OP, I can pull out whatever dollar amount I want. It would certainly be harder to stay with the old employer's plan if it were an "all or nothing" proposition.

Can you share that company with us.........I would like to look them up. It is sort of a hobby of mine to see what companies have the best retirement plans.
Thanks

 

[ychuck46]

I agree that this is the right thing to do 401ks that have high fees and/or poor investment options. But this is not the case for all plans. My megacorp 401k offers index funds with very low fees, on par with Vanguard and Fido. So I've had no reason to move the money.

Same here. Retired 10 years ago and left my 401k with my last employer. Considered one of the best plans out there, the fees are super low, and the ETFs offered are some the best from Vanguard and others.

One other positive for leaving money in a 401k versus transferring to an IRA - the only retirement accounts safe from lawsuits are 401Ks and pensions. IRAs do not have the same protection.

 

[Koolau]

Can you share that company with us.........I would like to look them up. It is sort of a hobby of mine to see what companies have the best retirement plans.
Thanks

Heh, heh, maybe do a "deep dive" on all the Fortune 500 company 401(k)s and report back.


It's a long shot, but if I ever go back to w*rk, I'd like to w*rk for a company with a great 401(k). YMMV

 

[jazz4cash]

To avoid surprises, check to see how your state treats 401k distributions. My state has an exemption for workplace savings plus SS combined. IRAs don’t qualify but 401ks do.