lwp2017
Recycles dryer sheets
- Joined
- Feb 10, 2014
- Messages
- 157
FYI, a snag in my plans to rollover my 401K.
I retired at 56 this spring and have a Vanguard 401K plan. It has pretax, after tax, and Roth 401K funds.
I requested to transfer my pretax money into an IRA, my after-tax funds into a brokerage account and leave my Roth 401K funds in the Vanguard plan until I turn 59 1/2. I have very limited investment choices in my 401K and wanted a wider choice in an IRA.
I talked this over face-face with my company’s Vanguard rep prior to retirement because my plan document is silent on pre 59 1/2 partial withdrawals.
It only states you won’t have to pay a 10% penalty if retired and older than 55. Thought my plan was solid after the discussion.
Tried to make rollovers happen last week and Vanguard told me I had to withdraw all funds from the 401K to keep pretax, after tax, and Roth funds separate.
A full withdrawal resets my 5 year Roth clock (2010 date) by going from a Roth 401K to a Roth IRA.
That was unacceptable because I had planned withdrawals from my Roth at 59 1/2.
Even worse, I was told any partial 401K withdrawals would be an equal percentage from after tax, pretax, and Roth. This results in a Roth withdrawal penalty and commingles after tax with pretax savings.
I appealed to a higher level inside Vanguard sine this will cause me financial harm and asked for a written statement of the partial withdrawal policy. I was told by the “expert” that since a partial withdrawal that keeps funds separate isn’t specifically stated in the former company’s plan document then it is disallowed.
Much discussion ensued, I had a copy of the document and had read it thoroughly. I realized there was no changing his arbitrary decision and decided to try a different approach.
Fortunately I had kept the Vanguard company rep’s phone number and gave him a call.
He recognized how illogical Vanguard corporate is responding and said he has had other company clients’ retired before 59 1/2 proceed with partial withdrawals exactly like I wanted.
He contacted corporate Vanguard and has created an amendment to my former company’s plan document specifically addressing pre 59 1/2 retiree partial withdrawals that keeps funds separate.
He expects my former company HR to accept the amendment next week. Lucky I worked at a small company and am still friends with execs and HR management so I’m expecting a positive outcome. Keeping fingers crossed.
I retired at 56 this spring and have a Vanguard 401K plan. It has pretax, after tax, and Roth 401K funds.
I requested to transfer my pretax money into an IRA, my after-tax funds into a brokerage account and leave my Roth 401K funds in the Vanguard plan until I turn 59 1/2. I have very limited investment choices in my 401K and wanted a wider choice in an IRA.
I talked this over face-face with my company’s Vanguard rep prior to retirement because my plan document is silent on pre 59 1/2 partial withdrawals.
It only states you won’t have to pay a 10% penalty if retired and older than 55. Thought my plan was solid after the discussion.
Tried to make rollovers happen last week and Vanguard told me I had to withdraw all funds from the 401K to keep pretax, after tax, and Roth funds separate.
A full withdrawal resets my 5 year Roth clock (2010 date) by going from a Roth 401K to a Roth IRA.
That was unacceptable because I had planned withdrawals from my Roth at 59 1/2.
Even worse, I was told any partial 401K withdrawals would be an equal percentage from after tax, pretax, and Roth. This results in a Roth withdrawal penalty and commingles after tax with pretax savings.
I appealed to a higher level inside Vanguard sine this will cause me financial harm and asked for a written statement of the partial withdrawal policy. I was told by the “expert” that since a partial withdrawal that keeps funds separate isn’t specifically stated in the former company’s plan document then it is disallowed.
Much discussion ensued, I had a copy of the document and had read it thoroughly. I realized there was no changing his arbitrary decision and decided to try a different approach.
Fortunately I had kept the Vanguard company rep’s phone number and gave him a call.
He recognized how illogical Vanguard corporate is responding and said he has had other company clients’ retired before 59 1/2 proceed with partial withdrawals exactly like I wanted.
He contacted corporate Vanguard and has created an amendment to my former company’s plan document specifically addressing pre 59 1/2 retiree partial withdrawals that keeps funds separate.
He expects my former company HR to accept the amendment next week. Lucky I worked at a small company and am still friends with execs and HR management so I’m expecting a positive outcome. Keeping fingers crossed.
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