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I have a 401k and 457 that was sponsored by my employer through Nationwide. I retired 6 months ago and recently made a withdrawal and it got me thinking.
The two accounts are invested very conservatively as at my age, I have no tolerance for risk. There is less than 100k left between the two accounts so they are not really making any money for me.
I am thinking of just taking all the money out, pay the taxes and close the account. I'd put it in my bank savings where it would be more accessible.
Other than the +-$40 I would lose in interest each year, is there another downside I am not aware of?
The withdrawal may push you into a higher tax bracket so keep that in mind. If you really want to do what you're proposing, split the withdrawals over tax years. For example take some on Dec 26, then again on Jan 3rd.
How accessible do you really need that money?
I'd consider rolling them to say Fidelity or other custodian where access to money is much faster. I can withdraw money from mine and have it in my brick and mortar bank account in days.
I have a 401k and 457 that was sponsored by my employer through Nationwide. I retired 6 months ago and recently made a withdrawal and it got me thinking.
The two accounts are invested very conservatively as at my age, I have no tolerance for risk. There is less than 100k left between the two accounts so they are not really making any money for me.
I am thinking of just taking all the money out, pay the taxes and close the account. I'd put it in my bank savings where it would be more accessible.
Other than the +-$40 I would lose in interest each year, is there another downside I am not aware of?
Thanks
You can convert those accounts to an IRA and put in a local bank account without withdrawing - most banks will set up IRAs in your name and oversee the transfer. I suggest draw out over several years - drawing out all at once can trigger other things like IRMAA (Medicare premium increases) in addition to increased taxes.
I have a 401k and 457 that was sponsored by my employer through Nationwide. I retired 6 months ago and recently made a withdrawal and it got me thinking.
The two accounts are invested very conservatively as at my age, I have no tolerance for risk. There is less than 100k left between the two accounts so they are not really making any money for me.
I am thinking of just taking all the money out, pay the taxes and close the account. I'd put it in my bank savings where it would be more accessible.
Other than the +-$40 I would lose in interest each year, is there another downside I am not aware of?
Thanks
You retired 6 months ago. Not sure if there is any yearend bonus, profit sharing, due to you if you stick it out till the end of the year? So what is the prospect of any money added to the account? Also don't know if there are any vesting rules for all the money to be yours? Last chance for any free money.
In that case may be time to do rollover. Ask what rate your $100,000 will make. some banks pay more for larger sums. Also check to see if they have any higher rate programs. You may have to tie up money for 5 years?
If you do rollover there may be a small portion pre-tax to save or spend as you wish. The remainder can be rolled over so you don't pay tax. If you wish maybe get paid monthly interest & pay tax on that.
Big reason is to get money away from Nationwide. Also you want to get money away from your employer. Now you have more control over the money.
Look into a Fixed Indexed Annuity (FIA). there's a lot more detail to it but it works like this:
put money into account for a fixed number of years.
if the market goes up, you go up to a fixed %.
if the market goes down, you don't lose money but you also don't gain any money that year either (basically dead money).
After the term, you can start collecting or roll it over to another FIA.
Talk to a financial advisor and do your research. the term "financial advisor" isn't regulated, so ask your friends if they happen to know one.
Can you put it in a saving account where it is?
Take a little out each year so you do not increase your tax bracket.
BUT
You are probably too conservative. You could live another 50 years. I think you have to figure out how you will need the money over the rest of your life and the money you do not need in the next few years goes into stocks.
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