401k to an IRA at 59.5 years old

[Harpy Eagle]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

 

[JackOfNoTrades]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

No downside at all. Diversify, re-balance, and then increase your after-tax savings. I can't do that yet so I have to settle for more after tax savings and maxing out 401K.
You now get a whole lot more choices in what to invest your money in and have a more firm grip on risk.

 

[odanny]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

My 401K has had a "self brokerage" option, as well as their defined plans, which allocate your risk dependent on how many years you have until retirement age, which they defaulted to 65, even though I retired at 56.

If you don't have that option than you can trust a money manager with your money if you choose, I have left mine where it was and have 55% in cash and 45% in my self brokerage account, so I can still sell and buy when I want to. I talked to a few investment dudes but saw no need to move anything.

 

[Cellblock2429]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

/----/ Yes. I did this the first chance I got. BTW, I would never let anyone, not even a financial planner, manage my money. No one cares more about my financial security than me. Do your homework and make your own decisions.
Besides, a Certified FP is limited in how he/she can manage your money.
The rules changed in 2018. You might want to read this:

New Rules for Financial Advisers May Provide Better Consumer Protection

New rules will require certified financial planners to put your interests first at all times. But, as Consumer Reports explains, you still need to ask questions before hiring a financial adviser.

www.consumerreports.org

 

[Harpy Eagle]

My 401K has had a "self brokerage" option, as well as their defined plans, which allocate your risk dependent on how many years you have until retirement age, which they defaulted to 65, even though I retired at 56.

If you don't have that option than you can trust a money manager with your money if you choose, I have left mine where it was and have 55% in cash and 45% in my self brokerage account, so I can still sell and buy when I want to. I talked to a few investment dudes but saw no need to move anything.

We do not have that option. We do have one we trust, he already has most of our non-401k investment money and has done a great job with it.

 

[Harpy Eagle]

/----/ Yes. I did this the first chance I got. BTW, I would never let anyone, not even a financial planner, manage my money. No one cares more about my financial security than me. Do your homework and make your own decisions.
Besides, a Certified FP is limited in how he/she can manage your money.
The rules changed in 2018. You might want to read this:

New Rules for Financial Advisers May Provide Better Consumer Protection

New rules will require certified financial planners to put your interests first at all times. But, as Consumer Reports explains, you still need to ask questions before hiring a financial adviser.

www.consumerreports.org

I get what you are saying, and it is true that no one cares more about my financial security than me but at the same time I do not have access to all the data and analysis my financial planner does, nor the 1000s of manhours his company puts into researching 1000s of options out there. Also, he does not make any significant changes without getting our prior approval.

But I am also a big fan or using professionals to do the job they are trained to do. There are a great many things I could do myself, but choose not to.

I was on the fence for a while about a specialized retirement planner but after talking with one I decided that I can do a much better job of that one myself since it does not require explaining our plans to someone else that does not seem to understand why we are making the choices we are.

 

[WorldWatcher]

We've been preparing for retirement for decades.

Now we are trying to plan for the transition from working to retirement in the next year or two.

What I'm having a problem with is this: "What are the options for access your retirement savings?"

What I'm finding (in my case) is that as long as the money is in the employer plan, they have control how to access your money. And I have a problem with that. In my ignorance I thought it would be like a "Super Savings" account where when needed, we could login, execute an electronic funds transfer from our 401K to our credit union, then of course they would issue a 1099-R at the end of the year.

What was explained to me recently is that as long as I'm in the employer 401K it goes more like this:

• Get a form form the account rep.
• Complete the form.
• The rep sends the form to the Plan Manager (Ex-employer) who has to approve it.
• Employer sends the form back to the rep.
• Rep submits the completed form to the funds financial department for the transfer.

This process can take a few weeks.

Not happy with it. What they try to do is push you into either a Contract Payment over a set time or into an annuity.

Not a happy camper right now, appears like we will have to role the money out of the employer sponsored plan.

WW

 

[Missourian]

I use a Keogh. Don't think that will help you though in this situation...

Keogh vs. IRA: What's the Difference?

A Keogh, or HR10, is an employer-funded, tax-deferred retirement plan for unincorporated businesses or the self-employed. An IRA is funded by employees.

www.investopedia.com

 

[Harpy Eagle]

We've been preparing for retirement for decades.

Now we are trying to plan for the transition from working to retirement in the next year or two.

What I'm having a problem with is this: "What are the options for access your retirement savings?"

What I'm finding (in my case) is that as long as the money is in the employer plan, they have control how to access your money. And I have a problem with that. In my ignorance I thought it would be like a "Super Savings" account where when needed, we could login, execute an electronic funds transfer from our 401K to our credit union, then of course they would issue a 1099-R at the end of the year.

What was explained to me recently is that as long as I'm in the employer 401K it goes more like this:

• Get a form form the account rep.
• Complete the form.
• The rep sends the form to the Plan Manager (Ex-employer) who has to approve it.
• Employer sends the form back to the rep.
• Rep submits the completed form to the funds financial department for the transfer.

This process can take a few weeks.

Not happy with it. What they try to do is push you into either a Contract Payment over a set time or into an annuity.

Not a happy camper right now, appears like we will have to role the money out of the employer sponsored plan.

WW

One more reason to move it away from your company to an IRA with someone else.

My wife has the TSP and we will move hers when she is old enough, as it is near impossible to get money out of the TSP from overseas and we plan to be ex-pats when we retire.

It is good you have been planning for decades, I am a tad ashamed to admit we did not really start till about 10 years ago, but we have made great strides and are ahead of where most people are.

 

[Toddsterpatriot]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

You could have done that at any age.

 

[Harpy Eagle]

You could have done that at any age.

It is my understand is if you do it before 59.5 there is a penalty involved and you lose money.

 

[Toddsterpatriot]

It is my understand is if you do it before 59.5 there is a penalty involved and you lose money.

Rollovers at any age are penalty free.

 

[Blaster]

I am now past the mythical 59.5 years old and can pull the money out of my employee 401k and put into an IRA with my personal investment broker with no penalties or fees other than the tad bit higher maintenance fee.

I cannot really see a downside doing this as the options with the 401k are so limited.

Has anyone else done this?

Anyone think of a good reason not to do so?

My dad did this and it has worked out very well.

 

[WorldWatcher]

It is my understand is if you do it before 59.5 there is a penalty involved and you lose money.

Not if you are rolling one tax deferred account into another tax deferred account directly. (Meaning it never passes through your hands.) For example you leave one employer for another one, you can "rollover" your old employers 401K to the new employers plan with no penalty. But it VERY important that the transfer occurs directly between the financial institutions at your request. If your old provider issues you a check personally, then taxes and penalties apply.

The limitation pre-59.5 may be a plan limitation while you are employed. Once you leave employment things can be different.

WW

 

[Cellblock2429]

It is my understand is if you do it before 59.5 there is a penalty involved and you lose money.

/——/ I believe you can transfer it without penalty. Better check with the fund manager.

 

[Harpy Eagle]

/——/ I believe you can transfer it without penalty. Better check with the fund manager.

either way I am not past that age so it is a moot point I guess. I will have to look into it for my wife's TSP, they have odd rules and far less options for her

 

[Cellblock2429]

We've been preparing for retirement for decades.

Now we are trying to plan for the transition from working to retirement in the next year or two.

What I'm having a problem with is this: "What are the options for access your retirement savings?"

What I'm finding (in my case) is that as long as the money is in the employer plan, they have control how to access your money. And I have a problem with that. In my ignorance I thought it would be like a "Super Savings" account where when needed, we could login, execute an electronic funds transfer from our 401K to our credit union, then of course they would issue a 1099-R at the end of the year.

What was explained to me recently is that as long as I'm in the employer 401K it goes more like this:

• Get a form form the account rep.
• Complete the form.
• The rep sends the form to the Plan Manager (Ex-employer) who has to approve it.
• Employer sends the form back to the rep.
• Rep submits the completed form to the funds financial department for the transfer.

This process can take a few weeks.

Not happy with it. What they try to do is push you into either a Contract Payment over a set time or into an annuity.

Not a happy camper right now, appears like we will have to role the money out of the employer sponsored plan.

WW

/——/ Avoid annuities at all costs.

 

[Harpy Eagle]

/——/ Avoid annuities at all costs.

yeah, it is hard to find many good points to them and I did a lot of digging on them.

 

[Cellblock2429]

either way I am not past that age so it is a moot point I guess. I will have to look into it for my wife's TSP, they have odd rules and far less options for her

/——/ My SIL has a FP who put him into loaded mutual funds then charges him a fee. You have to be careful. Bad Advice From Financial Advisors

 

[WorldWatcher]

/——/ Avoid annuities at all costs.

I'm not a money person.

I can see where annuities can be attractive to provide a fixed monthly income.

However, we (my wife and I) will have multiple revenue streams in retirement and may not need to touch are 401K's. I was hoping to "let it ride" and continue to grow based on inertia (dividends/interest) for as long as possible. Providing a funding source for later in life with health events, assisted living, long term care, etc. (Or hell pulling it all out and taking one hell of a trip to Vegas.)

RMD's (when we get there) would be, pull the required amount, pay the taxes, then stuff the remainder into a sister non-tax deferred account with a similar profile.

WW