NOT touching 401K after retirement

[GhostofTomJoad]

Don't think it's a good idea to let 401k/403b just sit. Many companies charge fees just to maintain it, particularly if you're gone from that job. Best to rollover into an IRA. I'm an interloper here: NOT financially independent, but living the good life in a modestly comfortable (but expensive) apartment, island style. Island prices are nuts. I'm retired, wife is not. It makes us smile to be able to send the nieces and nephews through university.

[DrRoy]

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Originally Posted by Midpack We haven’t touched our 401k’s, TIRAs or my Roth IRA. Won’t until RMDs start. But then that shouldn’t be unusual - more likely later in retirement when 10-30 years of COL really have an impact. If you need or even spend your 401k right away, might be a bad sign unless you have all the SI you’ll ever need.

+1. I am one of the oversaved. Only need a 2% WR now. At 70 with SS, only .5%. While we BTD plenty for travel, I am having trouble with $2600 for a large single point quartz crystal that I would really like to have. It's easier to blow on 'experiences' than 'stuff'.

[Andre1969]

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Originally Posted by jollystomper It just depends on one's situation. I enjoyed my work, so never looked at it as 'working longer than I need to". As for having "saved a lot more than I needed to", I just look at that as benefitting those people/organizations I choose to leave an inheritance to. So I am fine with "too much" , but I understand how others can have a different perception.

I think it's also hard to fine tune things to the point that you can retire at exactly the right time, with exactly the right amount of money. And, of course, nobody knows how long they're going to live, right up until the end.

Looking back at my own financial data, I have a feeling I could have retired in September 2018, right after I signed the paperwork on my current house. I'm using that as a reference point, because if I had retired earlier, I probably would not have qualified for the mortgage.

But, soon after I bought the house, the market went south, and then they put us on furlough for about 5 weeks. Then there was the drop in 2020, thanks to COVID. In 2021 I blew around $90,000 having a garage built. And then in 2022 we had a pretty sizable market drop. Looking back on it now, I know I would have survived all of that, financially. But I probably would have been sweating bullets, as I was going through it!

[Andre1969]

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Originally Posted by Enuff2Eat Excellent question. I think we over saved but DW still want to be frugal. We drives Honda, lived in a modest home, iphone 11, NOTHING luxurious while I think we can afford more. No cable, basic internet, nice but "budget" dinner (nothing like $200-$300 meals). Basically we are a few dollars ahead of our friends but we live way below their standard. Some said that probably leave too much for the kids and their spouses. (hope they don't get divorce). At the end of the day, we probably won't touch our 401k. Enuff

Wait? They're up to the ELEVEN now?! Well wheee doggies! And here I am still roughing it with an iphone 7S!

[Surewhitey]

+1 on management of ACA subsidies when we pull the chute. We'll postpone the 401ks unless it makes sense to do rollovers. There's 6 years between us which complicates things.

If we do this at age 54&60, we have plenty in after tax accounts to bridge us. DW has a small pension (10k-ish / yr) that she'll eventually have to start & RSU's at the end too. I have a small biz to slow down on... Lots of moving parts, but looking forward to playing the game. 401ks are likely a 70+ age pc of the puzzle when both are on Medicare.

Another reason to have a healthy post-tax account.

[jazz4cash]

It’s fine not to touch it, but what does that REALLY mean? Are you at least monitoring the account? Does not touching mean no withdrawals or something else? Are you not touching because your 401k has the very best options at the very lowest cost and you have no need to rebalance? I kept one of my 401k’s because it has attractive features like a stable value fund and low cost. My other plan started charging fees that were previously paid by megacorp so I dumped it.

I always managed both plans as part of an overall personal investment plan so I was rolling over to IRAs to buy securities not offered in the 401k.

[scrabbler1]

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Originally Posted by jazz4cash It’s fine not to touch it, but what does that REALLY mean? Are you at least monitoring the account? Does not touching mean no withdrawals or something else? Are you not touching because your 401k has the very best options at the very lowest cost and you have no need to rebalance? I kept one of my 401k’s because it has attractive features like a stable value fund and low cost. My other plan started charging fees that were previously paid by megacorp so I dumped it. I always managed both plans as part of an overall personal investment plan so I was rolling over to IRAs to buy securities not offered in the 401k.

I read the question as to making withdrawals, not to monitoring or rebalancing. I do plenty of monitoring and rebalancing, as I have gradually changed its AA from 55/45 to 40/60 as I have aged.

[MarieIG]

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Originally Posted by scrabbler1 I read the question as to making withdrawals, not to monitoring or rebalancing. I do plenty of monitoring and rebalancing, as I have gradually changed its AA from 55/45 to 40/60 as I have aged.

Yes, there is plenty of monitoring here too. Now, excuse me - time to monitor!

[pb4uski]

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Originally Posted by oldtimer It is interesting that a number of people fully convert their IRA to Roth, but keep their 401ks. They have lost a flexibility of qualified charitable distributions (QCDs) that is available for IRA, but not 401k or other qualified employer plans. We have rolled over our 401k to our IRAs. We have been doing Roth conversions for the past 5 years and plan to continue until at least 70 when claim SS. Being able to take QCD will help us stay under IRMAA threshold once RMDs begin at 73.

No, they haven't lost the ability do QCD's but they have made it more complicated... all they need to do is rollover all or part of their 401k to an IRA and then do a QCD out of that IRA.

[HI Bill]

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Originally Posted by RunningBum You have factored in that the IRA distributions reduce the 0% LTCG space, right?

Yes, unfortunately it does. But I can use up my itemized deductions to offset short term capital gains, dividends and RMDs to allow me to utilize nearly 100% of my 0% LTCGs bracket.

[thatguy]

We hope the unspent money can cover LTC or whatever other catastrophic event that can come up later in life, or maybe we will decide to buy into a CCRC. My younger DW will have a greater need for withdrawals when she looses me and my pension.

[TheWizard]

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Originally Posted by pb4uski No, they haven't lost the ability do QCD's but they have made it more complicated... all they need to do is rollover all or part of their 401k to an IRA and then do a QCD out of that IRA.

One of the complications is: once you start RMDs, you need to take the RMD from where the accounts stand on January 1st before you can do any rollovers.

So do a rollover 401(k) --> IRA this year after RMD from 401(k) to allow QCDs in future years...

[Gumby]

We spend as much money as we want. If spending more would make us happier, then we would do that. But, so far, achieving the happiness threshold has not required withdrawing from our portfolio. And I didn't hate my job, so I was willing to work long enough to not ever have to worry about money again. I also will not feel shortchanged if I die with a big pile of unspent money.

[jazz4cash]

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Originally Posted by Andre1969 Wait? They're up to the ELEVEN now?! Well wheee doggies! And here I am still roughing it with an iphone 7S!

No! They’re up to FOURTEEN now. I am generally happy with my 6S but I confess to considering a new phone BTD style, but may not go to the very latest.

[Koolau]

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Originally Posted by aaronc879 To me it would mean I saved a lot more than I needed to and worked a lot longer than I needed to. I would not be ok with that. I won't have the money any of you have but I also won't have spent 30+ years working 40+ hours a week.

That's a good way to look at it.

In my case, I was so happy to find something I could immerse myself in at w*rk at just about the time I became FI. Had I not, I'd like to think I'd have had the courage to leave. BUT instead, I stayed at Megacorp in order to enjoy the assignment I'd actually created for myself. (I like to think I "pulled one over" on Megacorp. IOW they paid me to do what I wanted to do. It took 'em 7 years to figure out I'd done so. Then I was GAWN.)

Time>>money

[rodi]

I think it's interesting that people are differentiating between 401ks and IRAs... They are very similar.

Like many here have posted I rolled my 401k over to a trad IRA. I've been roth converting from that. Have not withdrawn from tIRA or rIRA. I have been making RMD withdrawals from my inherited IRA - which is required by law. Dad died long enough ago that it's a full stretch... It definitely helps our monthly cashflow because my pensions are tiny, I don't take SS yet. Hubby is on SS. And we have rental income... but that inherited IRA is definitely part of our spending.

I think everyone's situation is a bit different. Some have bigger pensions. Some are making moves to reduce taxes later. Some are sitting on large non tax-preferred accounts. We all make our own decisions based on our personal situations.

[pb4uski]

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Originally Posted by TheWizard One of the complications is: once you start RMDs, you need to take the RMD from where the accounts stand on January 1st before you can do any rollovers. So do a rollover 401(k) --> IRA this year after RMD from 401(k) to allow QCDs in future years...

Are you sure about that? I do recall that in calculating the RMD that you need to look across all your tax-deferred accounts, but you seem to be saying across all 401ks separately from across all traditional IRAs.

In any event, while there might be an exceptional circumstance, I've never understood why anyone over 59-1/2 would choose to keep a 401k and not roll it over to an IRA.

[Out-to-Lunch]

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Originally Posted by pb4uski In any event, while there might be an exceptional circumstance, I've never understood why anyone over 59-1/2 would choose to keep a 401k and not roll it over to an IRA.

Just a digression: Here is my particular edge case: The ability to do unlimited numbers of rollovers.

We are planning to buy a new house. Although we are prequalified on financing based on our assets and pension income, I want to retain some flexibility in case something goes awry with current financing plans. In particular, my fallback plan is to start a series of monthly withdrawals from the 403(b) to show "income." And then treat each one as an indirect rollover to the tIRA. And then stop this after the closing date. To me, this flexibility is worth the ~$40/quarter that my 403(b) charges.

[TheWizard]

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Originally Posted by pb4uski Are you sure about that? I do recall that in calculating the RMD that you need to look across all your tax-deferred accounts, but you seem to be saying across all 401ks separately from across all traditional IRAs. In any event, while there might be an exceptional circumstance, I've never understood why anyone over 59-1/2 would choose to keep a 401k and not roll it over to an IRA.

Yes, you need to take RMDs separately from 401k accumulations and IRA accumulations.

And I'm decently sure that you can't move tax-deferred money from one type of account or custodian to another until you've completed the RMD on that account for the year. Even moving an IRA entirely from Vanguard to Fidelity, for instance, *might* not be allowed until RMD complete.

As to your second point, I have a 403(b), not 401(k), that I'm keeping in my (former) employer's plan at TIAA for a few reasons:
I have access to TIAA Traditional paying 5%+ nowadays.
That plan offers a few Vanguard Institutional index funds with slightly lower ERs than I could get on my own in an IRA.

However, QCDs are only available from an IRA so I might make a change at some point...

[pb4uski]

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Originally Posted by Out-to-Lunch Just a digression: Here is my particular edge case: The ability to do unlimited numbers of rollovers. We are planning to buy a new house. Although we are prequalified on financing based on our assets and pension income, I want to retain some flexibility in case something goes awry with current financing plans. In particular, my fallback plan is to start a series of monthly withdrawals from the 403(b) to show "income." And then treat each one as an indirect rollover to the tIRA. And then stop this after the closing date. To me, this flexibility is worth the ~$40/quarter that my 403(b) charges.

I know that you are limited to one IRA-to-IRA indirect rollover per year... are you saying that the one per year limit doesn't apply to 403b to IRA indirect rollovers?