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Retired and still holding onto 401k because....
Old 09-05-2023, 12:49 AM   #1
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Retired and still holding onto 401k because....

I'm retired and still holding my 401k because of two main reasons.
1. ERISA protections
2. Stable value fund

I've wrestled with the decision to stay in the 401k since fixed rates are much higher now. The mmf option is paying 5.17% so that has been my choice over a bond fund. Brokerage link via my plan does not allow for the purchase of cds, individual bonds, etc...only mutual funds. I see all of this money parked in a floating rate fund and wonder if I'm being overly cautious regarding the two reasons above. How important are those two items to you? My 401k holds 50% of our retirement assets. My home state extends protections to TIRAs but not Roth IRAs so I would have protections under the state code for a rollover. However, I've read that nothing beats the coded federal protections.
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Old 09-05-2023, 02:46 AM   #2
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I still have mine after almost nine years of retirement for the same reasons. Also, my Vanguard funds are charged with the Institutional Rate.
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Old 09-05-2023, 04:29 AM   #3
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IMO ERISA protections is not worth keeping a 401k. I've never used anyone, never been sued and have $2m of umbrella insurance coverage. Also, a recent thread suggested that a rollover IRA from a 401k continues to have ERISA protections as long as you don't taint it with other IRA money or contributions.

Stable value fund is much less attractive now that interest rates are so low unless it pays a decent yield.

I rolled over my 401k to a tIRA within a year of retirement and have never looked back. Having a wide variety of great investment options available trumps a stable value fund and ERISA protections IMO.
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Old 09-05-2023, 05:45 AM   #4
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I still have my 401k for the Stable Fund option. It is net yielding 4% now, which is on the low side.
However over the longer term, the yields have been higher than other fixed income options, plus it does offer low cost Vanguard index funds. I can switch some of my IRA to Fixed Income and offset it with moving the Stable Value to Equities in the 401k.
Edit - it represents 30% of our total portfolio.
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Old 09-05-2023, 05:51 AM   #5
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Originally Posted by pb4uski View Post
IMO ERISA protections is not worth keeping a 401k. I've never used anyone, never been sued and have $2m of umbrella insurance coverage. Also, a recent thread suggested that a rollover IRA from a 401k continues to have ERISA protections as long as you don't taint it with other IRA money or contributions.

Stable value fund is much less attractive now that interest rates are so low unless it pays a decent yield.

I rolled over my 401k to a tIRA within a year of retirement and have never looked back. Having a wide variety of great investment options available trumps a stable value fund and ERISA protections IMO.
+1 Same here, moved it to TIRA in less than a year. No regrets.

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Old 09-05-2023, 05:58 AM   #6
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If I had a good flexible 401k already with Fido or Schwab, I'd have kept it there as those offerings tend to be better than at other houses. Mine was WF, so I moved that quickly.
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Old 09-05-2023, 06:11 AM   #7
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We just had a thread where it was stated that funds transferred from a 401k to a Rollover IRA retain the same protection as the 401k.

I kept my 401k because
1. Stable Value Fund which has become uncompetitive at the moment.
2. It is very retiree friendly as set up by Megacorp and Fidelity.

I had another less retiree friendly plan that I exited.
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Old 09-05-2023, 06:29 AM   #8
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My state protects IRAs and 401Ks both so I rolled my 401K over as soon as I retired. My 401K was with Vanguard but the choices were limited and it was very difficult to segregate Traditional, Roth, and After Tax money so they could be drawn from and invested separately.
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Old 09-05-2023, 06:38 AM   #9
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DW had to roll hers since she dissolved her company upon retirement.
I rolled mine for better investment options and the power/simplicity of consolidation.
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Old 09-05-2023, 06:44 AM   #10
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Keeping mine for institutional diversity. I have about 60% with Vanguard (including DW's IRA) and 40% in my Empower 401(k). I initially kept if for Rule of 55 but never used that and am past 59.5 now. Also the funds have lower expense ratios than Vanguard, though 0.03% vs 0.04% is not really material.
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Old 09-05-2023, 06:44 AM   #11
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After 7 years into ER, I rolled mine to a TIRA. Main reason to consolidate investments. I now have just two financial companies instead of being so spread out.

I didn't worry about the two reasons you mentioned I just wanted to simplify.
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Old 09-05-2023, 06:54 AM   #12
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I think the stable value fund is rather compelling for a portion of your allocation.

Most folks do not have access to this in retirement.

How did it perform in 2022?
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Old 09-05-2023, 06:58 AM   #13
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10+ years into retirement and I still have my 7 figure 401k, untouched except for a small test withdrawal last year. I'm getting over 7% now in it's stable fund investment so I'm not going to mess with it. Without a doubt the best investment decision I have ever made. Nothing else comes close.
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Old 09-05-2023, 07:24 AM   #14
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10+ years into retirement and I still have my 7 figure 401k, untouched except for a small test withdrawal last year. I'm getting over 7% now in it's stable fund investment so I'm not going to mess with it. Without a doubt the best investment decision I have ever made. Nothing else comes close.
Wow! My SVF 1 year return is 1.69% (1.29% in 2022). I dumped it and went into the MM fund (7 day yield 5.19%) when rates were on the rise.
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Old 09-05-2023, 07:33 AM   #15
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Wow! My SVF 1 year return is 1.69% (1.29% in 2022). I dumped it and went into the MM fund (7 day yield 5.19%) when rates were on the rise.
Mine ranged between ~2 to 3% for the first 10 years of retirement (during the war on savers) but now. I'm making as much now each "quarter" as I did for an entire year for the first 10 years.
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Old 09-05-2023, 07:39 AM   #16
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I believe that the ERISA protection of a 401K was important to us at the time. However, it was just a part of our retirement investments. Since we left work, we qualified to roll 100% of it into a "ROLLOVER" IRA, which we did. We also did this with our pensions. A lot can be said for simplification. Our state has unlimited protection from creditors in IRAs, Rollover IRA's, & Roth IRAs which made it an easy decision for us.

As far as stable value funds, I think that they are good, but a comfortable AA will typically outperform a SVF. The trick is to find an AA that you can sleep overnight with.
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Old 09-05-2023, 08:04 AM   #17
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I agree with others. SVF use to pay OK but now there's better options like CDs and T-bills. Now I'm 100% in stocks in my 401K and I hold the equivalent amount of CDs in my after tax brokerage account.
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Old 09-05-2023, 08:18 AM   #18
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For now, I am keeping mine for an interesting (to me!) edge case: You are allowed to do unlimited numbers of indirect transfers from a qualified plan (401k, 403b, 457...) to an IRA. In contrast, you are limited to one per year for IRA to IRA.

Why do I care? I may need to demonstrate regular "income" for a mortgage, but I don't really want to tap the tax-deferred funds. So I could make regular withdrawals, and then deposit them into a tIRA each month.
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Old 09-05-2023, 08:26 AM   #19
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As my 403(b) was at Fidelity, I, too, thought of leaving it in the 403(b). I decided to move it over about two years. First, Fidelity gave me pretty large bonuses for switching over $1M each time. Second, the index funds fee structure for regular investors came pretty close to matching my 403(b). Finally, my company ended up charging a maintenance fee for the fidelity account (actually I had mad my final transfer just before this fee was initiated).

If you are at one of the big brokerages, make sure you get rewarded for setting up your rollover IRA.

Marc
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Old 09-05-2023, 08:32 AM   #20
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My 401k plan is "okay" but doesn't allow for investing in individual stocks (except for the parent companies stock). It does have a reasonable number of "funds" and a stable value option to invest in.

My biggest gripe is they only allow one withdrawal a year. If you want to make a second withdrawal in a calendar year, you must close your account. So, I just don't touch it. That of course will change as RMD's come into play.
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