Meryl Lynch Retirement Preservation

[MarathonMan]

In the next week or two I expect to sign a property settlement agreement as part of a Pennsylvania divorce. The agreement has a QDRO that calls for me to pay 165K from my 200K Meryl Lynch 401(k) account. Here is where it gets interesting:

I am responsible for gains and losses from then until the entry of the QDRO (perhaps 90 days). I am [-]afraid[/-] concerned that a major downturn in this time frame will leave me with a debt that consumes my 35K portion perhaps to the extent that I'm forced to liquidate other accounts to pay this debt (attempting to change the agreement involves even more risk).

Normally we don't concern ourselves with short term market fluctuations as we expect to be rewarded in the long term. With this, I need to find a way to stablize the account.

The account is invested 60% Meryl Lynch Retirement Preservation and 40% Blackwell SP500 Index (I'm 48 years old). Meryl Lynch claims their Retirement Preservation is my best choice but there are no gaurentees. It seems to me that, we might be at a point in time, where stocks have less short term risk that these 'safe' investments.

Does anyone have a feel for how much subprime exposure might be contained in this fund (or the Insurance/Banking company contracts it holds)? If it were your future on the line, would you throw it all on Retirement Preservation?

(I might need to start a late-retirement forum)

 

[2B]

Let me start off by saying I don't understand everything you are saying about your divorce settlement. I will say that if portfolio fluxuation is a major concern to you in the next 0 to 180 days you should put everything into a federal money market fund. Don't try to be too smart.

 

[Animorph]

That makes you very highly leveraged! I don't know anything about your options, but there should be a money market or stable value fund choice somewhere. You want to be in whatever is closest to cash. At least for the part you have to give up.

Dan

 

[Texas Proud]

Let me start off by saying I don't understand everything you are saying about your divorce settlement. I will say that if portfolio fluxuation is a major concern to you in the next 0 to 180 days you should put everything into a federal money market fund. Don't try to be too smart.

Agree with this... move the money ASAP.... almost every one has a fund called a Stable Value Fund with is usually a fixed rate for a year or so.. and the one in my company pays about 5.5%... NO downside for the $170...

Don't play with the leverage or you could be wiped out (and yes, there is a big upside also, but are you willing to 'roll the dice' on this?).

 

[chinaco]

Ditto... stable value fund or money market ASAP.

 

[MarathonMan]

Thanks for the replies!

Just to be clear, Meryl Lynch Retirement Preservation is a stable value fund. It is the most conservative fund available in my 401(k) plan - there is no money market available.

I'd like to bump this from 60% to 100% but am concerned about possible subprime exposure. Meryl only provides a short paragraph (no prospectus) indicating that it is invested in GICs and BICs and that income is typically higher than money market funds. I don't believe it is regulated by the SEC.

 

[travelover]

......I am responsible for gains and losses from then until the entry of the QDRO (perhaps 90 days).......

I'm not sure if you are stuck with this stipulation, but when I did my QDRO is stated that the split was based on a value as of a certain (past) date. The terms you are dealing with seem unfair, as you assume all the risk for fluctuation.

 

[Animorph]

My DW's stable value fund has not lost any money yet. My Fidelity Retirement MM has not lost money yet. You should be able to check the recent performance of your fund online. If it hasn't lost money recently, I would think it will be safe. The alternatives aren't going to be much better!

Dan

 

[Texas Proud]

Thanks for the replies!

Just to be clear, Meryl Lynch Retirement Preservation is a stable value fund. It is the most conservative fund available in my 401(k) plan - there is no money market available.

I'd like to bump this from 60% to 100% but am concerned about possible subprime exposure. Meryl only provides a short paragraph (no prospectus) indicating that it is invested in GICs and BICs and that income is typically higher than money market funds. I don't believe it is regulated by the SEC.

A stable value fund is just that... STABLE... they do not invest in bonds or other things that fluctuate.... it is a CD with an insurance company... the only risk is that the insurance company goes under... but that is so rare that you do not have to worry about that...

Repeat... stable value = no downside risk...

 

[TruthTeller]

Be careful who you listen to...

But perhaps the worst accusation that's levied against GICs is that the word "guaranteed" in their names is misleading to the inexperienced investor. They ARE'NT backed by the full faith and credit of the United States government, as Treasury securities are. Nor do they have the luxury of being insured by the Federal Deposit Insurance Corporation as deposit accounts and bank-sold CDs do. (While banks can't issue GICs, they can and do issue BICs, or bank investment contracts. Unlike GICs, these instruments are FDIC-insured up to $100,000 per depositor.) Generally, guaranteed investment contracts are guaranteed only by the insurance companies that issue them, which could certainly be problematic. For instance, if the insurance company becomes insolvent, your GIC investment may well end up being worthless, as well. For this reason you should periodically check the financial stability of the company that's issuing the contract.

 

[megacorp-firee]

Let me start off by saying I don't understand everything you are saying about your divorce settlement. I will say that if portfolio fluxuation is a major concern to you in the next 0 to 180 days you should put everything into a federal money market fund. Don't try to be too smart.

IMH(and conservative)O, What 2B said ... ASAP

 

[samclem]

This thread started about a year ago, and the OP hasn't posted since then. My guess is the MarathonMan is gone. And we all wonder . . "is it safe?"

 

[REWahoo]

I'm always curious as to why a first time poster wades into a long-dead thread without any sort of introduction, much less an explanation. Usually indicates spam will soon follow...

 

[Notmuchlonger]

I'm always curious as to why a first time poster wades into a long-dead thread without any sort of introduction, much less an explanation. Usually indicates spam will soon follow...

Hi would you like to buy an annuity?