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Old 04-07-2021, 06:56 PM   #21
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90 degrees to the discussion, have you confirmed that rolling over is the best choice? I'm sure you have more options for investment in other brokerage accounts. In my case, I rolled over some but kept some in my 401(k). My 401(k) had a guaranteed income fund which I liked. Keeping my company stock in the 401(k) made sense to me at the time and added some flexibility since I WANTED to keep my Megacorp stock.

Other practical issues of 401(k)s. My understanding is they are the most secure from being taken from you in a civil judgement. Others may have more info on this, but I think some states may have allowed civil judgments with IRAs but don't quote me.

Honestly, I have found my 401(k) to be WAY easier to manipulate (by phone or the Net) than even Vanguard where virtually all my IRAs are maintained.

I mention all of this ONLY to suggest you convince yourself there are too few reasons to keep all or part of your funds within your particular 401(k). Maybe I'm just lucky (or, heck, maybe I'm wrong) but I am really happy with a good chunk of my funds STILL in the 401(k) 15 years after FIRE.

As always and more than ever this is very much a YMMV.
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Old 04-07-2021, 07:08 PM   #22
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My after tax 401k contributions were rolled into a Roth IRA along with Roth 401k contributions and earnings. Everything else went into a tIRA. Iím pretty sure only cash can be moved into an IRA, so 401k funds were all liquidated before the electronic rollover. Then I invested into individual stocks and ETFs. In kind rollovers/conversions can be done between IRAs.
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Old 04-07-2021, 08:02 PM   #23
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Quote:
Originally Posted by always_learning View Post
Based on your reply to my other thread, this is exactly what we are going to do! (call them, that is, but we may not need the hand holding I thought we would).
+1

My 401k is with Fidelity, and though I do not plan to roll it over into an IRA, I called them to ask "If I wanted to roll my 401K over into an IRA, what exactly would have to be done?". They were happy to give me the detailed steps with no pressure.
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Old 04-08-2021, 07:01 AM   #24
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Originally Posted by copyright1997reloaded View Post
After tax contributions are eligible to be rolled into a ROTH IRA. Earnings on after tax contributions are treated like pre-tax contributions and can be rolled into a traditional IRA.

That is:
401k Pre-Tax withdraw => Ordinary Income (or roll to traditional IRA)
401k After-Tax contribution withdraw => Not taxed (return of principal) (or roll to ROTH IRA)
401k After-Tax earnings withdraw => Ordinary Income (or roll to traditional IRA)

Now, here's the rub: You can't just take out (or roll over) the after tax contributions without also withdrawing the earnings on those contributions. For example, let's say your account had $100K, 50K pre-tax + earnings, 20K after-Tax, and 30K after-tax earnings. If you distributed $10K, 80% of the 10K (8K) would be considered ordinary income.

Further complicating things: If you are considering traditional to ROTH IRA conversions and have any after tax (i.e. non-deductible) IRA's, all of the IRA's are considered together when determining the % that is after tax. This article explains it further: https://rodgers-associates.com/blog/pro-rata-rule/
The part I bolded may be true when you are making actual withdrawals from an account which has a mix of after-tax contributions and the untaxed earnings of the after-tax contributions. However, and maybe this isn't true any more, but back in late 2008 when I liquidated my 401k/ESOP, I was able to completely separate the after-tax contributions from the earnings on those after-tax contributions and handle them differently in the most tax-favorable way.

As I wrote in an earlier post in this thread, I took as cash all of my after-tax contributions and paid zero taxes on them, while at the same time did a direct, trustee-to-trustee rollover of the earnings of those after-tax contributions into a tIRA. The earnings of those after-tax contributions joined my pre-tax contributions, company match contributions, and all earnings of all types in the new tIRA. All the earnings had not been taxed yet, of course. I did not have to do any proportional split.

I had learned about this tactic in a company memo a few years earlier which permitted this only when the 401k was being emptied. Otherwise, the proportional split when determining its tax treatment applied.
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Old 04-09-2021, 01:39 PM   #25
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Quote:
Originally Posted by RetireBy90 View Post
3 quick comments, 1) you can look at the funds he has in the 401K and then look them up say on finance.yahoo.com to see if they are available in an IRA or not.
And 2) I thought I had read something says you were going to transfer to Fidelity. I have done transfers in person at the local office and over the phone. Each time they worked the details and I never touched a check or the money. They called the current custodian and asked me to join a conference call to approve to custodian but they did the transfer. And 3) as far as company stock, I would call the custodian and ask about transferring that or selling it in the 401K and then transfer the funds to the IRA. My company funded the match to my contributions with company stock and they would let you sell the stock. May work or may not, custodian will know if you can do this.
Fantastic. Thanks for posting!

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Originally Posted by scrabbler1 View Post
When I left my old company back in late 2008, my 401k had a lot of different types of money in there. I had pre-tax contributions, after-tax contributions, company match, and company stock. When I received a package of forms to complete, telling the plan admin what I wanted to do, I included several special instructions.

The company stock I cashed out using NUA, an option specified in the forms. I wanted those funds electronically moved to my local bank account, so I had to provide a Medallion Signature Guarantee due its large amount.

The after-tax contributions (a small amount) I also wanted to take as cash. This was a non-taxable event.

The pre-tax contributions, company match, and all earnings from them and the after-tax contributions I took as a direct rollover to my tIRA. I had set up a shell account with Fidelity beforehand so the 401k plan admin could include it on the check made out to Fidelity (trustee-to-trustee) but mailed to me. This was a non-taxable event.

After the check arrived, I went to my local Fidelity office to deposit it, and to set up a new bond fund within my existing taxable account using the company stock's proceeds which had arrived a week earlier.

The only thing I had forgotten to do was to note how much of my 401k's rollover part was in the stock fund and the bond fund so I could mimic the AA in my new tIRA. By the time I remembered, the account was zero. I set up an AA as best as I could remember, which ended up being very close, as I learned later.
Thanks for typing all of that out. It has given me more to think about.

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Originally Posted by a60dan View Post
I recently rolled over my Fidelity 401k to a Vanguard traditional IRA (tIRA).

First I opened a separate traditional IRA at Vanguard because I wanted to keep the funds separated. I think I could have rolled it over to an existing IRA.

Fidelity sent a paper check made payable to Vanguard FBO <me>. (For Benefit Of). They charged me $25 (from the proceeds), and had free use of my money for several days. In hindsight, I wish I'd paid the extra to Fidelity to move it faster (for the large amount involved).

I mailed the check to Vanguard to deposit into the new tIRA, and invested it per the current asset allocation.

Because I'm still employed, and can rollover the 401k as often as I wish, I rolled over another year's worth of 401k contributions about a year later.

This time I had a "V8 moment" and deposited the rollover check using the Vanguard app :-) This rollover was relatively small, so I didn't care about the free loan to Fidelity. I could have done that the first time but didn't think of it.
I've seen recommendations to keep rollover funds separate but never really found out why. Is there a reason you chose to do so?

Quote:
Originally Posted by MarieIG View Post
I did that recently - but into Vanguard.

I pressed a button that I was interested in transferring in excess of 300k so got a call back from a Vanguard rep.

In my case, I already had an account, and was able to specify how I wanted the money allocated. Otherwise, it would have gone into a money market account.

My 401k did an electronic transfer of funds; and the money arrived quickly (first into Vanguard's bank account - and then after another telephone call, into my account.) Probably from soup to nuts, a three day turn around. You will need the forms authorizing the rollover, but they do distinguish between pre-and post tax. I did not ask about an in kind transfer, as I did not want to keep the funds I had; but that may be available if they funds are the same. There should be no tax consequences.

The money never came to me - it was a direct custodian to custodian transfer, which I believe is preferable, if the 401k custodian allows for it.

It took much, much longer to "roll" the funds from DH's 401k managed by Vanguard, into a Vanguard IRA. It "disappeared" for what seemed like weeks. (It was a shame to lose some of the investment options, but getting money out of the 401k was horrific.)

There is nothing wrong with handholding by a Fido rep. They can check over your forms and make sure everything is in order.
Thanks for replying. This is helpful.
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Old 04-09-2021, 01:55 PM   #26
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Quote:
Originally Posted by copyright1997reloaded View Post
After tax contributions are eligible to be rolled into a ROTH IRA. Earnings on after tax contributions are treated like pre-tax contributions and can be rolled into a traditional IRA.

That is:
401k Pre-Tax withdraw => Ordinary Income (or roll to traditional IRA)
401k After-Tax contribution withdraw => Not taxed (return of principal) (or roll to ROTH IRA)
401k After-Tax earnings withdraw => Ordinary Income (or roll to traditional IRA)

Now, here's the rub: You can't just take out (or roll over) the after tax contributions without also withdrawing the earnings on those contributions. For example, let's say your account had $100K, 50K pre-tax + earnings, 20K after-Tax, and 30K after-tax earnings. If you distributed $10K, 80% of the 10K (8K) would be considered ordinary income.

Further complicating things: If you are considering traditional to ROTH IRA conversions and have any after tax (i.e. non-deductible) IRA's, all of the IRA's are considered together when determining the % that is after tax. This article explains it further: https://rodgers-associates.com/blog/pro-rata-rule/
Thanks for your reply and the details. We're looking more in-depth at the various amounts and thinking about what to do so this is helpful.

I'm making notes on everyone's replies and trying to figure out what will be the best course of action.


Quote:
Originally Posted by Koolau View Post
90 degrees to the discussion, have you confirmed that rolling over is the best choice? I'm sure you have more options for investment in other brokerage accounts. In my case, I rolled over some but kept some in my 401(k). My 401(k) had a guaranteed income fund which I liked. Keeping my company stock in the 401(k) made sense to me at the time and added some flexibility since I WANTED to keep my Megacorp stock.

Other practical issues of 401(k)s. My understanding is they are the most secure from being taken from you in a civil judgement. Others may have more info on this, but I think some states may have allowed civil judgments with IRAs but don't quote me.

Honestly, I have found my 401(k) to be WAY easier to manipulate (by phone or the Net) than even Vanguard where virtually all my IRAs are maintained.

I mention all of this ONLY to suggest you convince yourself there are too few reasons to keep all or part of your funds within your particular 401(k). Maybe I'm just lucky (or, heck, maybe I'm wrong) but I am really happy with a good chunk of my funds STILL in the 401(k) 15 years after FIRE.

As always and more than ever this is very much a YMMV.
Thanks for asking. Is this the best course of action? I honestly have no idea. Our thoughts were that we would have more investing options going forward and we could take advantage of highly-appreciated co. stock. While we aren't unhappy with the company's performance, we feel the amount in there is worth using the NUA for the tax bonus and decide if/when to sell the actual stock. To take advantage of the NUA we have to liquidate the 401k.

As for the guaranteed income fund, we are mostly growth investors with some more aggressive funds than what the 401k offers and won't (shouldn't!) need the guaranteed income from the smallish amount we would keep in there.

So, as I said, I have no idea if it's the right choice, but I think it is?
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Old 04-09-2021, 02:04 PM   #27
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Quote:
Originally Posted by Dash man View Post
My after tax 401k contributions were rolled into a Roth IRA along with Roth 401k contributions and earnings. Everything else went into a tIRA. Iím pretty sure only cash can be moved into an IRA, so 401k funds were all liquidated before the electronic rollover. Then I invested into individual stocks and ETFs. In kind rollovers/conversions can be done between IRAs.
Thanks!!
Quote:
Originally Posted by jollystomper View Post
+1

My 401k is with Fidelity, and though I do not plan to roll it over into an IRA, I called them to ask "If I wanted to roll my 401K over into an IRA, what exactly would have to be done?". They were happy to give me the detailed steps with no pressure.
This is a good idea. I think we'll call next week and see what info we receive.



Quote:
Originally Posted by scrabbler1 View Post
The part I bolded may be true when you are making actual withdrawals from an account which has a mix of after-tax contributions and the untaxed earnings of the after-tax contributions. However, and maybe this isn't true any more, but back in late 2008 when I liquidated my 401k/ESOP, I was able to completely separate the after-tax contributions from the earnings on those after-tax contributions and handle them differently in the most tax-favorable way.

As I wrote in an earlier post in this thread, I took as cash all of my after-tax contributions and paid zero taxes on them, while at the same time did a direct, trustee-to-trustee rollover of the earnings of those after-tax contributions into a tIRA. The earnings of those after-tax contributions joined my pre-tax contributions, company match contributions, and all earnings of all types in the new tIRA. All the earnings had not been taxed yet, of course. I did not have to do any proportional split.

I had learned about this tactic in a company memo a few years earlier which permitted this only when the 401k was being emptied. Otherwise, the proportional split when determining its tax treatment applied.
I'm really going to have to investigate this.

Did the company automatically tell you what these numbers were once you began the process? We can see the cost basis of each fund, but not the % of contributions vs growth. Unless... the area where they break down before tax/after tax/after tax contributions is the only number I need and I just take the % of after-tax contributions and they've already left out the growth on that?
Added to that the fact that we moved money around a bit over the decades and I have no real idea what the tax implications of everything is. I don't think. Blech. There is so much to consider!
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