Best time to draw and rollover funds

[Camas Lilly]

I want to make a draw soon, but I also want to rollover an Employer 401k to an existing Vanguard rollover IRA, if Vanguard will let me do that. I need to make the draw sooner rather than later, so I was wondering what is the best time to do each of those? I know there are a lot of distributions right at the end of December, so is it better to rollover in January?

 

[pb4uski]

Not a lot to go on.

IMO, it doesn't matter much as long as the money is all pre-tax and you don't mind having the income from the draw on your tax return sooner rather than later.

Are you planning to take the draw from the 401k or the IRA? I don't think it matters, but jsut curious.

 

[Camas Lilly]

We bought an RV and haven't made any draws yet, but I planned on drawing 3.5% this fall and 3.5% first of the year to pay it off. We have the wiggle room on the income end.

I can take the draw before rolling over, after rollover or from the existing IRA. Makes no difference. I was wanting to collect the dividends and capital gains on the 401k at end of year though and I won't get those if I rollover before then, right? Rollover will probably be going to different funds.

 

[GalaxyBoy]

Are you talking about an RMD?

 

[Camas Lilly]

Are you talking about an RMD?

No, have a couple of years yet to go for RMD.

 

[njhowie]

Why not just do the rollover right now? You can absolutely rollover an existing 401k into an existing rollover IRA.

Do the rollover from Vanguard's side. Assuming they work similar to Fidelity, you just fill out the info on their site, upload your recent statement, and they'll handle everything and it should take no more than two or three weeks.

 

[pb4uski]

....I was wanting to collect the dividends and capital gains on the 401k at end of year though and I won't get those if I rollover before then, right? Rollover will probably be going to different funds.

Yes, you'll get it.... it is effectively included in the NAV (net asset value).

When dividends are paid and capital gains distributions are made the NAV goes down by the amounts paid out so it is all a wash.

The NAV are the fund assets divided by the number of shares... so any dividends that they haven't distributed are included in the fund assets and therefore in the NAV.

 

[Camas Lilly]

Why not just do the rollover right now? You can absolutely rollover an existing 401k into an existing rollover IRA.

Do the rollover from Vanguard's side. Assuming they work similar to Fidelity, you just fill out the info on their site, upload your recent statement, and they'll handle everything and it should take no more than two or three weeks.

It won't let me do it on Vanguard's side. The Employer 401k is held by Vanguard but I don't have the option of initiating a rollover on the Vanguard site. I have to go through the Plan Administrator.

 

[Camas Lilly]

Yes, you'll get it.... it is effectively included in the NAV (net asset value).

When dividends are paid and capital gains distributions are made the NAV goes down by the amounts paid out so it is all a wash.

The NAV are the fund assets divided by the number of shares... so any dividends that they haven't distributed are included in the fund assets and therefore in the NAV.

OK that makes sense. I did some reading about that a while back.

So from what I understand, it really makes no difference when or the sequence I do the draw or rollover, other than the rollover will probably take longer than if I were to just draw from the existing IRA we have on the Vanguard site.

 

[pb4uski]

^^^ You got it.

 

[Camas Lilly]

^^^ You got it.

Thanks!