Rollover advice

[777re777]

New to the ER Homepage.

I’m presently 50 years old and plan to ER at 55. The company I’m working for is being sold and to be finalized in April. At this time I will have an opportunity to keep my 401K in Wells Fargo, transfer 401 K to the new owner which is T Rowe or put into an IRA. I have around 185K and will be maxing out (20K) my contributions until 55. When I ER at 55, I will most likely need to tap into these funds. Any advice on how to handle this?

 

[2B]

Withdrawing from a 401k after age 50 can be done without the 10% penalty or the 72t. That's the advantage of rolling it over to T Rowe. Puting it into an IRA would give you freedom to invest in lower cost or better options than you would have available at T Rowe. You'd have to investigate whether you would have a better deal than rolling it over to the new company's 401k. It's pretty staight forward so it shouldn't be a difficult analysis.

 

[Texas Proud]

Hmmmm... are you a pilot 777??

OK another option... roll over the current balance to an IRA so you can have more control over it and invest where you wish..

Max out like you have said in T Rowe.. at $20K per year that is $100K plus earnings.. and if you get a match... that much more...

Then tap your 401(k) until you reach 59 1/2 OR your savings and then start using your IRA...

 

[scrinch]

Good thinkin' Texas! That sounds like it would give the maximum flexibility plus maximum return.

 

[Martha]

If you retire the year you turn 55 or later, you can take money out of your 401k without penalty, provided that 401k is with the employer where you last worked. So that argues in favor of moving your 401k to the new employer.

However, because a 72t withdrawal is possible even if you retire before 55, you can make the decision based upon how good are your options in the new 401k and whether you would prefer the flexibility of choice offered by an IRA.

Here is an article about how to do 72t withdrawals: http://www.retireearlyhomepage.com/wdraw59.html