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educate me 401-k

  1. #2676
    Lifer
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    Re: educate me 401-k


    Anyone here use a financial advisor for investment exit strategies, etc? My positions have increased substantially and I’m kind of at a loss as to what to do now.

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  2. #2677
    Lifer 01xj's Avatar
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    Re: educate me 401-k

    Could use some guidance on rolling over my 401k balance. I'm leaving my current job which is a traditional 401k and starting with a hybrid 457 plan. I do have any an appointment with an advisor as I've been invested in my current 401 for almost 15 years so it's not an insignificant amount of money. Anyone have any general advice? Fees to watch out for?

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  3. #2678
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    I don't know anything about 457 plans. I have rolled a few 401k's though. Maybe these thoughts help you, maybe they don't.
    There may be exit fees. They should not be substantial and they should be well published. The worst I remember seeing was one of my wifes' old 401ks charged like $15 or something.

    As I see it, you have three options:
    1) Leave it where it is
    2) Roll it into traditional IRA anywhere you want to
    3) Roll it into a new employer's program

    3 may not be an option for you. As I say, I don't know about 457 plans. For many the new employer's plan stinks (bad fund choices, high fees, etc) and so this is less desirable. One gotcha here is things change. I rolled a bunch forward to my employer's plan when investment choices were great and fees were reasonable. Not 8 months later they "revised" the plan, chopped the funds I liked and boosted fees! But then you can often change your mind an roll the bulk back out using option 2 later.
    2 can be an issue if you are a big income earner and you want to back-door ROTH.
    1 can kill you on fees. I've heard some will charge you more if you are no longer with the employer. Also the investment options are less.

    Door #2 has always been my choice. Roll to Fidelity or Vanguard and get access to their funds. Paperwork is minimal. Last couple times it was all electronic.

    All the big names are well versed in how this works. You can call Fidelity or Schwab or whoever and they should be able to easily answer questions and guide you into something.

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  4. #2679
    BMW track whore e30addict's Avatar
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    Re: educate me 401-k

    I've always rolled over any 401k into a Fidelity rollover IRA. They will do everything for you and make it as painless as possible. I like having everything there instead of umpteen different accounts and I can essentially buy whatever what I want through them.

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  5. #2680
    Lifer 01xj's Avatar
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    Re: educate me 401-k

    I would prefer to have a single account but it's not a deal breaker. New place used prudential for contributions. I have no idea how they stack up for management companies. If anyone has input on them I'd be open to it.

    Bubba, appreciate the post and there are several of your points I want to look into. I'll expand later on when I can use my laptop instead of phone.

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  6. #2681
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Something to think about guys

    I'm on the other end of this thing, where I have required minimum withdraws, instead of socking all your extra $$ away, spend your $$ now on some of the things you will want after retirement.

    The whole idea of 401k/IRA is to defer taxes, till retirement, when you are theoretically in a lower tax bracket, this will backfire on some, you will find yourself making more $$ in retirement

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    RandyO
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  7. #2682
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by RandyO View Post
    ...you will find yourself making more $$ in retirement
    I'll take "problems I'll gladly have in life" for $200, Alex.

    If for some reason I make "more" money in retirement than I do now I will gladly pay the tax.
    Honestly, I am really impressed that your RMDs exceed your highest working-age income. That's a pretty great problem to have.

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  8. #2683
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    I'll take "problems I'll gladly have in life" for $200, Alex.

    If for some reason I make "more" money in retirement than I do now I will gladly pay the tax.
    Honestly, I am really impressed that your RMDs exceed your highest working-age income. That's a pretty great problem to have.
    I am suggesting that stuffing your mattress may be better financially, sure, no interest/gains, but zero taxes no matter what rate you withdraw. or you an invest in a 10% gain over several years that might put you in the 22%tax bracket or higher, when you start mandatory minimum withdraws

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    RandyO
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  9. #2684

    Re: educate me 401-k

    Quote Originally Posted by RandyO View Post
    Something to think about guys

    I'm on the other end of this thing, where I have required minimum withdraws, instead of socking all your extra $$ away, spend your $$ now on some of the things you will want after retirement.

    The whole idea of 401k/IRA is to defer taxes, till retirement, when you are theoretically in a lower tax bracket, this will backfire on some, you will find yourself making more $$ in retirement
    That's what Roth concentration is for.

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  10. #2685
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by Vovchandr View Post
    That's what Roth concentration is for.
    ya, at least you get to withdraw the principal tax free. it's a great investment, just sayin, don't put all your eggs in one or two baskets, the mattress is liquid and untraceable, also good to invest in your retirement property before you retire

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    RandyO
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  11. #2686
    Lifer jimmycapp's Avatar
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    Re: educate me 401-k

    Principle and gains tax free from Roth after 59.5. Principle at anytime tax free.

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  12. #2687
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by jimmycapp View Post
    Principle and gains tax free from Roth after 59.5. Principle at anytime tax free.
    don't the gains become taxable, just like social security, if you have other income that kicks you over the tax free limit ?

    I am becoming very confused, I just inherited a modest annuity, and I'm still not 70, were I have to start withdrawing my IRAs, most is in a regular IRA, cause I was already 25 years into a regular IRA, when the Roth IRAs became a thing, since then, of course, I put in the Roth. I know my SS has become taxable. It will be a year before the trust is settled, and at least that much time for my dad's estate to be settled, separate from the trust, and by then, I'll be 70, still planning my retirement strategy 6 years in, still needing my accountant, when things are suppose to be simple

    I think you are confusing penalty free after 59 on the gains, with tax free, maybe I'm wrong

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    RandyO
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  13. #2688
    Lifer jimmycapp's Avatar
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    Re: educate me 401-k

    KEY TAKEAWAYS
    Earnings from a Roth IRA don’t count as income as long as withdrawals are considered qualified.
    Typically, you need to be at least 59 and the account at least five years old for a distribution to count as qualified, but there are exceptions.

    https://www.investopedia.com/ask/ans...rningsmagi.asp

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  14. #2689
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    And ROTH CONTRIBUTIONS never count as income. That money is already taxed. That's why a lot of us advocate maxing out ROTH IRAs before participating in traditional, post-tax savings if you income out of being able to deduct traditional IRA contributions. If you wind up needing the $ then you can pull the contributions back at any time tax and penalty free. If you don't you get to reap the growth tax and penalty free in retirement.

    The ROTH conversion ladder for early retirees leverages this contribution aspect as a way to get penalty free access to pre-tax accounts (ie tIRA and 401k) before traditional retirement age too. The conversions are taxed. But you can meter those conversions based on earnings to control which bracket you land in and control your tax rate.

    If you are paying for an advisor and they aren't positioning you this way then you are getting rogered.

    Even if ROTH growth were taxed in all circumstances (it isn't) it would still be better than shoving your money in a mattress because you would get to enjoy the post-tax gains. Nobody pays 100% tax. The only way the mattress wins is if the bottom falls out of the market. Otherwise the mattress strategy is a horrible choice.

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  15. #2690
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    <rant> It's Roth, not ROTH. It's named after a person; it's not an acronym. </rant>

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  16. #2691
    Super Moderator OreoGaborio's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by number9 View Post
    <rant> It's Roth, not ROTH. It's named after a person; it's not an acronym. </rant>
    Correct... but I'll never get why it was named after theeee WORST character on Friends.

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  17. #2692

    Re: educate me 401-k

    Quote Originally Posted by OreoGaborio View Post
    Correct... but I'll never get why it was named after theeee WORST character on Friends.
    These are fighting words.

    Also I don’t care. It will forever be ROTH for me

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  18. #2693
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by tsorfas View Post
    These are fighting words.

    Also I don’t care. It will forever be ROTH for me
    You're probably one of those people who says "the FED" when referring to the Federal Reserve

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  19. #2694
    Lifer loudbeard's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by number9 View Post
    You're probably one of those people who says "the FED" when referring to the Federal Reserve
    He's Greek, they don't have a federal reserve. Spent it all on lamb.

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    I went to MMI I know what Im doing here chief

  20. #2695
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    He's Greek, they don't have a federal reserve. Spent it all on lamb.
    https://www.vanityfair.com/news/2010...g-bonds-201010

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