Best time to roll......

[doneat54]

... over 401Ks? Prudential have DW and I's 401Ks, combined they represent around 75% of the portfolio. Fidelity has roughly the other 25%. I intend to move the Prudential segments into Fidelity before May when DW retires. With the recent "dip", it has made me wonder if/when is the best time to do this. Have spoken to the Fido rep about this and he says they have "like" mutual funds to invest the proceeds in. That would be the intent, I like Fidelity and once DW retires and we start drawing on the portfolio, I want the bulk of it all the same place.


Part of me thinks that if it is reinvested in the Fido products fairly quickly, it really doesn't matter much. Thoughts??

 

[CardsFan]

If you can, I would transfer "in Kind". No sale. No time out of market. Then you can change once you get to Fidelity.

If they cannot be transferred in kind, be prepared for having the money in limbo (and out of the market) for several weeks.

 

[Out-to-Lunch]

To my mind, the biggest risk (which isn't all that big) is inadvertantly being out of the market more than you want to be. I doubt you will be able to transfer your Pru funds in kind to Fido. Instead, they will likely be liquidated to cash, then a check sent to you or to Fido (FBO you). Meanwhile, if the market goes up, you lose out, and if the market goes down, you win?

What is your AA? One way to mitigate the small risk posed above is to put all of your Fido in stocks, and move money from Pru in chunks. The first chunk would be equal or smaller than your intended bond holdings. (I am quasi-equating cash and bond funds for this move, as bonds are much less volatile.) Once you move that chunk to Fido, invest it in stocks, and simultaneously sell stocks at Pru to fund the next chunk to be transferred. Repeat until it is all transfered.

 

[latexman]

Besides a 4% match on contributions, my company gives us 5% of earnings into our 401k; 2.5% at end-June and 2.5% at end-December. Those two deposits into the account have caught several retirees unaware after they rolled everything into an IRA earlier. Not a big problem, but still a PITA.

I don’t know about your employer/401k, but I’ll probably wait until after those deposits.

 

[luckydude]

... over 401Ks? Prudential have DW and I's 401Ks, combined they represent around 75% of the portfolio. Fidelity has roughly the other 25%. I intend to move the Prudential segments into Fidelity before May when DW retires. With the recent "dip", it has made me wonder if/when is the best time to do this. Have spoken to the Fido rep about this and he says they have "like" mutual funds to invest the proceeds in. That would be the intent, I like Fidelity and once DW retires and we start drawing on the portfolio, I want the bulk of it all the same place.


Part of me thinks that if it is reinvested in the Fido products fairly quickly, it really doesn't matter much. Thoughts??

I assume you're rolling over your 401(k) into an IRA? If so, a tangential observation: 401(k) has ironclad protection from creditors. Only IRS or a spouse can make claim on that money.

IRA, on the other hand, has only limited protection:

From https://finance.zacks.com/retirement-plan-safe-lawsuit-7616.html

"The U.S. Supreme Court ruled in 2005 that traditional and Roth IRAs assets generally are protected from lawsuits. However, the court left an important issue unresolved when it said IRA money is shielded only to the extent of what might be considered "reasonably necessary" to support the IRA owner and his or her dependents. The ruling allows any amount of money above and beyond that amount to be seized in a lawsuit, depending on the laws in that state. However, the ruling generally allows individual judges to decide what is reasonably necessary."

So there's a chance that one's IRA may be subject to creditor claims depending on the discretion of individual judgements on what is "reasonably necessary."

This is the reason why I decided to my keep my 401(k) at Fido when I retired instead of rolling it into IRA. It's just another layer of protection on top of the umbrella policy (extensively discussed in another thread on this forum).

Just a thought.

 

[Dtail]

Will you be using a Fidelity rep, or DIY?
If you are over 1m, you can get some advice from a Fidelity rep without forking over 1% type fees.
Additionally, do you have a Stable Value fund in the 401k accounts? These funds can be a good proxy for a portion of your Fixed Income portfolio with decent yields and low risk levels.

 

[kgtest]

... over 401Ks? Prudential have DW and I's 401Ks, combined they represent around 75% of the portfolio. Fidelity has roughly the other 25%. I intend to move the Prudential segments into Fidelity before May when DW retires. With the recent "dip", it has made me wonder if/when is the best time to do this. Have spoken to the Fido rep about this and he says they have "like" mutual funds to invest the proceeds in. That would be the intent, I like Fidelity and once DW retires and we start drawing on the portfolio, I want the bulk of it all the same place.


Part of me thinks that if it is reinvested in the Fido products fairly quickly, it really doesn't matter much. Thoughts??

I've historically rolled mine over starting the day I leave the company.

 

[donheff]

DW just rolled a 401K over to an IRA at Schwab. Unfortunately, the custodian didn't permit in kind rollovers so we had to liquidate. The worry is being out of the market during a rapid rise. In the several days she was out we had a minor fall so no harm, no foul. We were able to offset the degree of exposure by exchanging bond funds for equity funds in another IRA during the transition.

 

[doneat54]

AA in mine (50%) is 51/49 and DWs (25%) is 63/37. DW is not currently employed by the company that offered that 401k, so there is no "match" issue. Based on what I have gleaned so far, doing an "in kind" transfer is not an option, the Pru accounts would be liquidated to cash, a check for each cut to Fido, then re-invest in Fido when there.


I am talking about rolling over the 401Ks into an IRA, good point about the protection that 401Ks offer. What are my options? Can't have a 401K if not employed? But you can keep the 401k in the account that you "retired from"? Not sure there. DW has a 401K with her present employer (tiny) but will retire in May. We do have an umbrella policy however.

It would be a DIY move. Fido rep has already pointed me to the inbound requirements, I'll have to initiate it with Pru when the time is right. We do have investments in Stable value fund.


I am not that worried about being "out of market" in cash while the liquidation/re-investments are made, AS LONG AS, the market is fairly stable. Right now it is not. I'm down nearly 4% YTD in my 401K. I'd be OK waiting for things to settle out/rebound before liquidating Pru accounts. And there is no pressure. The present Fido accounts (25%) are at a 10/90 AA so I am happy to draw from them after DW retires and just ride out what ever volatility exists in the markets.

As always, thanks for the insights.....