temporary money move in 401K

[steady saver]

We have money in 5 funds in our 401K. The value fund is being eliminated and I need to move that money within the next couple of days.
DH is retiring at the end of the month, after which time we plan to roll it into an IRA fairly soon anyway.

With the market taking it's current dip, is there any strategy at all that I should be employing, or just put it into the US Equity Index Fund that I had planned on? The other investments are a mid cap equity index fund, a US Debt Index, and a large blend equity index fund. The 5th fund is a company stock fund that I'm also pulling out of.

Thanks.

 

[njhowie]

If you're going to be rolling to an IRA at one of the brokerages, you'll be better off just leaving it as cash for the short time. You may even be forced to sell/cash any mutual funds held in the 401k depending if where you are rolling over to will take them.

 

[38Chevy454]

I kind of agree that just selling the value fund into cash, and if you can, selling the company stock into cash, at this time. I believe the stock market is in a kind of weird pattern now until the election when it should bring a little better focus. Then you can invest the cash. I would hold onto the rest of the funds, it is not time to panic, just normal volatility. But having the cash, especially for the company stock, makes it easy to move over to IRA and be able to reinvest that later.

Is there any need to keep some on the 401k for the rule of 55 withdrawals? Is DH between 55-59.5 age? If so, keeping some percentage in the 401k to allow for penalty free withdrawals might be beneficial. If you move all to IRA, then you have to wait until 59.5 to access penalty free. Unless you set up 72t withdrawals as a way to sidestep that.

 

[steady saver]

I kind of agree that just selling the value fund into cash, and if you can, selling the company stock into cash, at this time. I believe the stock market is in a kind of weird pattern now until the election when it should bring a little better focus. Then you can invest the cash. I would hold onto the rest of the funds, it is not time to panic, just normal volatility. But having the cash, especially for the company stock, makes it easy to move over to IRA and be able to reinvest that later.

Is there any need to keep some on the 401k for the rule of 55 withdrawals? Is DH between 55-59.5 age? If so, keeping some percentage in the 401k to allow for penalty free withdrawals might be beneficial. If you move all to IRA, then you have to wait until 59.5 to access penalty free. Unless you set up 72t withdrawals as a way to sidestep that.

Thank you both.
I don't see where I have to option of selling into cash in our 401K. That was my original thought but there is nowhere that gives "cash" as an option. What's the next best thing?

We're both 57; DH will be 58 at year's end. We won't need the money before 59 1/2 so we're okay there. Thanks for pointing that out though.

 

[OldShooter]

Your funds list looks unnecessarily complicated to me. "US Equity Index Fund" and " large blend equity index fund" are likely to hold pretty much the same stocks and behave nearly identically. "mid cap equity index fund" gives an unusual tilt. Most people doing tilts are adding doses of small caps and/or value stocks to a basic total market portfolio. You might want to re-look that decision. All this can and should wait until you are settled in your new IRA boat.

My standard book recommendations: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com

and "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

... With the market taking it's current dip, is there any strategy at all that I should be employing ...

No. Here is all you need to know about market timing: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

 

[steady saver]

Your funds list looks unnecessarily complicated to me. "US Equity Index Fund" and " large blend equity index fund" are likely to hold pretty much the same stocks and behave nearly identically. "mid cap equity index fund" gives an unusual tilt. Most people doing tilts are adding doses of small caps and/or value stocks to a basic total market portfolio. You might want to re-look that decision. All this can and should wait until you are settled in your new IRA boat.

My standard book recommendations: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com

and "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365


No. Here is all you need to know about market timing: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

Understand and agree. Those were chosen years ago and left alone. There are lots of things I'd go back and do different if I could. I messed up alot but we're still retiring, ha ha. It amazes even me! Makes the case for being a steady saver and it working out despite myself. I'll make changes after we roll over to an IRA. In the meantime, I just need to change this investment to something bland and safe and would welcome any suggestions. Cash doesn't seem to be an option.

 

[njhowie]

Thank you both.
I don't see where I have to option of selling into cash in our 401K. That was my original thought but there is nowhere that gives "cash" as an option. What's the next best thing?

We're both 57; DH will be 58 at year's end. We won't need the money before 59 1/2 so we're okay there. Thanks for pointing that out though.

Since you no longer have stable value as an option, money market (fund) is next best.

When you do your rollover paperwork, there will likely be a box to check where there is a cash out option. The place where you rollover to will give you all the necessary information when the time comes.

 

[OldShooter]

... I just need to change this investment to something bland and safe and would welcome any suggestions. Cash doesn't seem to be an option.

I agree with @njhowie. No reason to obsess over the money when the 401K will hold it for such a short time. Just park it in whatever option you have. A short duration govvie fund would be cash-like. It doesn't matter.

When it gets to the IRA you can start making decisions. But even then, patient thought wins over urgency. If you take two months to decide you'll never remember that. If you take a week and do something stupid you'll remember it forever.

 

[steady saver]

Since you no longer have stable value as an option, money market (fund) is next best.

When you do your rollover paperwork, there will likely be a box to check where there is a cash out option. The place where you rollover to will give you all the necessary information when the time comes.

Thanks for your response.

We're going from Fidelity run 401K to Fidelity IRA.
The current issue is that our 401K is making changes and is dropping the Value Fund as an option and I have to move out of that in the next couple of days. If I don't it defaults to a Life Path Fund..

DH retires 5 days after we have to make this forced change. It is inconvenient but there it is. I was just thinking with the market so weird right now that I wanted a boring safe place to park that money for the short term.

 

[steady saver]

I agree with @njhowie. No reason to obsess over the money when the 401K will hold it for such a short time. Just park it in whatever option you have. A short duration govvie fund would be cash-like. It doesn't matter.

When it gets to the IRA you can start making decisions. But even then, patient thought wins over urgency. If you take two months to decide you'll never remember that. If you take a week and do something stupid you'll remember it forever.

Thanks to you both. I found that in my options.

 

[pjm-7]

Retirement plans are required to have some kind of "cash" option (not talking about stock purchase plans). There should be some kind of money market account, bank savings acoount, or equivalent. Please check your plan documents or contact the plan custodian to verify all available funds.