what to do with my 401k (IRA, brokerage, fund, margin)
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I have $37,000 in an ING Retirement plan through my job.
I'm leaving the company and moving cross country.
I don't plan on 'cashing out' because I don't wanna pay the fines.
I have no clue what to do.
Help.
Stupid question I know...but I need help.
The HR dept at my job isn't very helpful to say the least.
What you need to do is contact the HR department. I know you said it is less than helpful, but you gotta get the options your soon-to-be-former employer will do with your old account after you quit.
They are required by law to provide you a written statement on your options ... but in general you have some options, as summarized here:
1) Take a distribution. You will be hit with a 20% tax fee and additional fees if you are younger than 59.5 years old.
But, there is some hope if you decide not to take the distribution. If you decide within 60 days to roll over the 401(k) funds into an IRA then with the proper documentation you can get a credit. You have to pay taxes on the time that money spent out of the retirement account, so be sure to do it quickly if you make this option.
2) Immediately roll over to an IRA. You can pretty easily put it into a traditional IRA because the tax structure is nearly identical, you pay taxes on it once you start making distributions after you retire. If you roll over to a Roth IRA, you will likely have to pay taxes now on the distribution, but that's it then - you don't have to pay taxes again on that money (under current law anyway).
3) Roll over your money to your new employer's 401(k), if possible. This generally has no negative ramifications. There may be some loss of value due to buying/selling of stock and transaction fees, but that's about it. This is generally the best and most preferred option.
4) Your old employer keeps the account. This may have some negative side effects. Your old employer may decide that they will charge you a fee for maintaining the account and you likely won't be able to deposit money into it, and it goes without saying that they won't match you even if you could.
So, those are pretty much your only options. Details on what you want to invest in are up to you of course.
You don't want to cash it out, but you do want to roll it over into a IRA, which increases your investing options by a bunch. It's all about increasing control and flexibility of your finances.
Adding to what eskercurve mentioned above. Best thing to do is speak with an independent advisor who offers a free consultation. I am located in California and I may be able to walk you through the process if you are interested. Another option is too re-contact your HR department and have them give you options.
I have $37,000 in an ING Retirement plan through my job.
I'm leaving the company and moving cross country.
I don't plan on 'cashing out' because I don't wanna pay the fines.
I have no clue what to do.
Help.
Stupid question I know...but I need help.
The HR dept at my job isn't very helpful to say the least.
I think eskercurve gave a great answer.
My .02 worth...is I'd roll it over into an IRA with T. Rowe Price. They will do it for you over the phone if you have a balance over $5,000 and their people are very nice. I haven't personally done this but have helped several people do IRA rollovers with them.
I think their best fund is T. Rowe Price Capital Appreciation. It has beat the stock market (as defined by the S&P 500) by a good margin over the long run with less volatility.
You might also consider a Rollover to Vanguard. Simply go to their website, find the customer service number and they will walk you through it. Couldn't be easier. If you are an investment novice and clueless about which fund, don't worry. Have the customer service rep help you choose one of the "Target Retirement" funds. Or, you might roll the money over into a Vanguard Money Market until you can do research and figure out what other funds you like.
I could really kick myself for leaving my money investing decisions in the hands of paid advisors without taking the time to learn enough to even understand if the decisions they made on my behalf were good ones or if they were simply lining their pockets with my money under the guise of "helping me". After the market drop in 2008 and 2009, I studied hard and now understand enough to make good decisions. If you understand the funds you are investing in, you don't panic when the market drops. I particularly like the advice of Dan Wiener and subscribe to his newletter. He does not work for Vanguard, but invests almosts exclusively in Vanguard products. He has spent decades studying the funds, the fund managers, the track records of each fund etc. I take the information from his newsletters and cross-check the information with other sources to verify.
There are a number of good fund families that are no fee who will handle this for you. Vanguard, T.R. Price have been named. Fidelity is another. You can keep in their fund family or if you open a brokerage IRA account, they can do it for only no fee funds so you don't pay a load and have a wide universe of no-load and no-tranaction funds to choose from. Fidelity is the only one of these that does not have a yearly fee, but even Vanguard's and TRPrice's annual fee of about $30 is low.
Remember there is NEVER any reason to pay a fee or load. NEVER.
I am a retirement advisor and 401-k administrator and work with ING. I am reading all these responses that primarily focus on fees. What about talking to a qualified retirement advisor about all options. Let me know if I can be of assistance. Standard Benefit Administration, LLC
fees can be worth it providing you are paying for better performance.. one thing i think alot of folks who index learned is buying a bunch of index funds may turn out to be not the best way of doing things,especially when things are static or down.
as an example alot of actively managed funds blew away alot of index performance this past decade. why? because the indexes owned and were forced to own issues that were struggling or failing.
many managed funds didnt own those issues so they did alot better..
do you know apple and google make up 30% of the nasdaq qqqq index. if those have trouble look out if you own a nasdaq index fund. on the other hand a managed fund may not even own those 2 anymore.
see an advisor for a total plan, not just where to put your money.. the fees can be well worth it.
throwing money into funds without a structured plan is not a strategy either,. you may need help matching your stomach for risk with suitable investments as well.. its not always easy to do on your own as the big picture out there is usually changing and like steering a huge ship you want to nudge your porfolio along.
while i myself never paid an advisor i do subscribe to a fidelity oriented newsletter and i certainly intend to see a specialist in tax planning as we entire our retirement stage.
Last edited by mathjak107; 02-20-2011 at 11:28 AM..
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