Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
need help! Whether to roll 401k?
Old 12-03-2017, 10:37 PM   #1
Dryer sheet wannabe
 
Join Date: Apr 2014
Posts: 11
need help! Whether to roll 401k?

I finally pulled the plug after 20 years working for a big firm, and decided to be my own boss.

My question is what to do with my 401(k)? $150K in a Roth 401(k), with the remaining $600k is a conventional $401(k). It is invested in a handful of mutual funds mirroring Dave Ramsey's International, Growth, Growth and Income, Aggressive Growth recommended split.

Is it best to roll it out to a TD Ameritrade/Charles Schwab type self managed account; move it to a stock broker (ML, Wells, etc); or leave it where it is?

I just turned 48 and my wife is 46. We have fully funded college funds for the 3 kids, paid for beach house and nearly paid for primary residence, a $25K Roth IRA that is in some growth fund, a municipal retirement plan for my wife, and some non-retirement funds (some managed at Wells, some self directed Index Funds at Schwab, some self directed individual stock picks at TD Ameritrade).

I am active in my community (president of the chamber, elected to county office, on several boards), and my wife is a part time judge and adjunct professor, so we are not ready to retire just yet, but I do plan to retire in 7 years at age 55.
__________________

CSdot is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-03-2017, 10:51 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 8,034
401K's can be good if the fees are low and there are low fee funds to invest in.
You need to read the 401K information to find out these details.
The great thing about a 401K is protection from lawsuit, so if the fees are low, and choices are fine, it's worth keeping.
__________________

Sunset is offline   Reply With Quote
Old 12-03-2017, 11:02 PM   #3
Recycles dryer sheets
sheldon cornped's Avatar
 
Join Date: Mar 2011
Posts: 155
Shop around and explore each institutions' websites, incentives, tools, resources and fees. Give Fidelity a fair shake. I have been pleased with our experience thus far.
sheldon cornped is offline   Reply With Quote
Old 12-04-2017, 02:02 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,134
I chose to roll my 401K over for a better choice of investment options with much lower fees.
Scuba is offline   Reply With Quote
Old 12-04-2017, 05:23 AM   #5
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,942
Quote:
401K's can be good if the fees are low and there are low fee funds to invest in.
The great thing about a 401K is protection from lawsuit, so if the fees are low, and choices are fine, it's worth keeping.
+1. Also, if you are retired, you can withdraw at age 55.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 12-04-2017, 06:12 AM   #6
Full time employment: Posting here.
 
Join Date: Nov 2014
Location: Austin
Posts: 795
I've always rolled my 401K's over into an IRA after leaving each company. The pros are that I can now invest exactly how I want without being restricted. The con would be if I wanted to do a backdoor Roth, due to the Pro-Rata rule, most of it would be taxed at conversion time.
big-papa is offline   Reply With Quote
Old 12-04-2017, 06:44 AM   #7
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Do not leave it where it is, unless you need to do a Roth Conversion in your personal accounts. That would only be an issue if you had after-tax money in the tIRA.

You want it where it takes one signature to get money out, and that signature is yours. I am not 100% sure how safe a 401K is from corporate raiding.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-04-2017, 08:45 AM   #8
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Location: Nashville
Posts: 1,865
Quote:
Originally Posted by DrRoy View Post
+1 [to keeping in 401k]. Also, if you are retired, you can withdraw at age 55.
Not if you separate from service with that employer prior to age 55. See https://www.irs.gov/pub/irs-pdf/p575.pdf Reasonably good overview/explanation here: https://www.thebalance.com/what-is-t...-of-55-2894280
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 12-04-2017, 08:59 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,721
One thing to find out is whether your former employer's 401k offers a stable value fund and, if so, what that stable value fund pays. You can't get a stable value fund in a tIRA and if you have one that pays a decent rate of interest then that might be one reason to keep some money in there. Given the prospect of higher interest rates, a stable value fund is an attractive bond substitute since they do not have any interest rate risk.

Another thing to consider is whether IRAs in your state are protected from legal judgements.... as I recall, 401ks are universally beyond the reach of legal judgements but for IRAs it varies by state.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is online now   Reply With Quote
Old 12-04-2017, 09:13 AM   #10
Full time employment: Posting here.
 
Join Date: Jun 2013
Posts: 865
Quote:
Originally Posted by Senator View Post
Do not leave it where it is, unless you need to do a Roth Conversion in your personal accounts. That would only be an issue if you had after-tax money in the tIRA.

You want it where it takes one signature to get money out, and that signature is yours. I am not 100% sure how safe a 401K is from corporate raiding.
Can you elaborate? This is the first time I've heard about the potential for corporate raiding of a 401k.
Which Roger is offline   Reply With Quote
Old 12-04-2017, 09:46 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,721
Not much of risk IMO. Funds are usually held by a fiduciary third-party (Vanguard, Fidelity, or whoever).
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is online now   Reply With Quote
Old 12-04-2017, 09:55 AM   #12
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 684
Quote:
Originally Posted by big-papa View Post
I've always rolled my 401K's over into an IRA after leaving each company. The pros are that I can now invest exactly how I want without being restricted. The con would be if I wanted to do a backdoor Roth, due to the Pro-Rata rule, most of it would be taxed at conversion time.
I thought I read something recently where mixing 401k money with existing IRA money can cause tracking/accounting nightmares. Is that not accurate?
Carpediem is offline   Reply With Quote
Old 12-04-2017, 09:55 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 8,572
There's a thread on Boggleheads about that subject.

https://www.bogleheads.org/forum/viewtopic.php?t=41697
MRG is online now   Reply With Quote
Old 12-04-2017, 10:24 AM   #14
Thinks s/he gets paid by the post
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 4,063
Quote:
Originally Posted by CSdot View Post
... 401(k)? $150K in a Roth 401(k) ... $600k is a conventional $401(k). ... fully funded college funds for the 3 kids ... a $25K Roth IRA ... non-retirement funds (some managed at Wells, some self directed Index Funds at Schwab, some self directed individual stock picks at TD Ameritrade). ...
Ack! How could you possibly keep track of all of that? It would drive me nuts.

I would consolidate all that stuff in the absolute minimum number of accounts at either Fido or Schwab. I omit TDAmeritrade because their historical strength has been supporting individual traders. They have only recently become a Schwab/Fido wannabe. So I don't think they offer anything that the two more experienced houses don't offer in greater depth.

I would stay away from the traditional full service brokers like ML or a bank. Places like ML and Morgan Stanley, are playing catch-up to the Schwab/Fido model while trying to keep their bottom lines healthy. Morgan Stanley just reported "Wealth Management" revenue of over four billion with almost 27% taken to the bottom line. Is donating to that attractive to you? Banks, even banks that have built or bought brokers, are still banks and the brokerage business is a sideline. So why become a sideline for them?

I'd suggest interviewing a couple of brokers each at Fido and Schwab, starting by describing your situation to each branch manager and asking them to suggest suitable candidates.
OldShooter is offline   Reply With Quote
Old 12-04-2017, 10:39 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,721
Quote:
Originally Posted by Carpediem View Post
I thought I read something recently where mixing 401k money with existing IRA money can cause tracking/accounting nightmares. Is that not accurate?
Not if existing t-IRA money was all deductible contributions... in that case then the basis is zero and all withdrawals of contributions or growth would be ordinary income.

If some or all of your t-IRA contributions were non-deductible, then you do have an accounting headache.... that is why I purposefully chose not to make non-deductible t-IRA contributions.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is online now   Reply With Quote
Old 12-04-2017, 10:55 AM   #16
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Location: Nashville
Posts: 1,865
Quote:
Originally Posted by pb4uski View Post
Quote:
Originally Posted by Carpediem View Post
I thought I read something recently where mixing 401k money with existing IRA money can cause tracking/accounting nightmares. Is that not accurate?
Not if existing t-IRA money was all deductible contributions... in that case then the basis is zero and all withdrawals of contributions or growth would be ordinary income.

If some or all of your t-IRA contributions were non-deductible, then you do have an accounting headache.... that is why I purposefully chose not to make non-deductible t-IRA contributions.
The other aspect concerns federal protections in the event of a bankruptcy. IRA funds that are traceable to rollover/transfers from employer plans benefit from unlimited protection without regard to state law. Funds traceable to IRA contributions are protected to 1.3 million or thereabouts. Easy explanation here: https://www.irahelp.com/slottreport/...y-be-surprised

That is the reason we keep our traditional IRAs separate from rollover/transfers. Hopefully, we will never be in bankruptcy, but just in case....
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 12-04-2017, 10:59 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,721
I guess that risk is so remote that I'll take my chances on it.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is online now   Reply With Quote
Old 12-04-2017, 11:00 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 1,738
Not sure I understand the risk of any corporation raiding a 401K fund. I retired 2 years ago, left my 401K for myself and wife with our prior employer. Low fees, great service. Plus I retired at 55 so I can now tap my 401K if needed without any penalty. If I moved those funds I would have lost that option.
bobandsherry is offline   Reply With Quote
Old 12-04-2017, 11:13 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,721
Yeah, that would be right up there with not remitting employee taxes withheld... or not remitting employee 401k contributions to the 401k administrator..... things that they send people to jail for!

I have heard of the above but never heard of a company raiding 401k monies after they had been deposited with the 401k adminirator.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is online now   Reply With Quote
Old 12-04-2017, 11:44 AM   #20
Thinks s/he gets paid by the post
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 4,063
Quote:
Originally Posted by pb4uski View Post
Yeah, that would be right up there with not remitting employee taxes withheld... or not remitting employee 401k contributions to the 401k administrator..... things that they send people to jail for?

I have heard of the above but never heard of a company raiding 401k monies after they had been deposited with the 401k adminirator.
Yup. No 401K trustee is ever going to give money received back to the employer. The only opportunity for the employer is to delay payments to the trustee, which does happen from time to time with a cash-short employer. The beneficiary can check this on his/her statements or by contacting the trustee.

Not remitting tax withholding is A Very Big Deal. The feds can pierce the corporation and hold individuals responsible. Not sure if the 401K funds are protected that viciously or not.
__________________

OldShooter is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Job Loss need advice whether I can early retire? dallasboy Hi, I am... 42 08-13-2017 01:42 PM
Need help: Not sure whether to start medicine on lowering cholesterol level Moscyn Health and Early Retirement 109 01-08-2015 12:24 PM
Deciding whether to invest in Merrill Lynch 401k bks FIRE and Money 6 12-31-2006 06:53 AM
Not sure whether to invest or pay debt? thechoson FIRE and Money 12 04-11-2005 02:52 PM

» Quick Links

 
All times are GMT -6. The time now is 02:26 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×