Fiancial Advice?

cbzdel · Apr 17, 2014

This seems to be the most savvy forum I am on when it comes to off topic threads, or at least it did when I visited more often haha..

I have financial question, my wife was recently laid off from her job a couple months back, upon leaving we get all the info on the remaining 401k she has with the company. She was fully vested so she will get 100% of it and it quite a chunk of change as well. The company worksheet says our options are as follows:
-Cash out with huge penalties (this is just plain stupid in my book unless you are desperate for cash)
-Leave it where it is and we will continue to get an annual report
-Roll over into a new retirement program like an IRA
-Roll over into new 401k (granted she lands a job with a 401k plan)

Definitely not going to cash it out. Now if you research IRAs they all say it would be in your best intensest to transfer to an IRA, but then again its a service they are providing so they are going to push it.

Any advice on how it should be handled?

solv3nt · Apr 17, 2014

I personally have my 401k at work, and a personal IRA that I can roll my 401k into when I leave. The IRA gives you more options, and for the most part, they're free. I also like not keeping all of my eggs in one basket, so the IRA gives you the ability to spread the load, not that it matters too much, but I like the peace of mind.

Morpheus · Apr 17, 2014

I'm surprised that option 2 (Leave it where it is) is on the table? Most companies force you to either roll it into an IRA right away or you have X months to roll it into an 401K at another job.

As solv3ent stated, rolling it into an IRA makes it all yours. Though, it is my understanding that is a one way door. It can go in, but can't come out.

If your wife is fortunate enough to land another job within the given time period, my personal thought would be to roll it into another 401K if possible to yield the most you can over the long term.

But going the IRA route, gives you the piece of mind that solv3nt stated.

I think the option 1, which you seem to have already eliminated is the one to avoid.

rick benjamin · Apr 17, 2014

Don't leave it where it is.
As your wife has parted from the company she can move the 401K anywhere she wants.
When I was forced out, I went to an IRA, withdrawls after age 59.5 taxed as ordinary income.
Now, I wish I'd gone to a ROTH, a hard hit up-front, but withdrawl after age 59.5 would have been tax free.
I chose Fidelity.com

OLDNEWBIE · Apr 17, 2014

Vanguard is another solid choice for your rollover.

66PonyCar · Apr 17, 2014

I agree with Oldnewbie. I rolled over my 401(k) into Vanguard. They have low fees. Make sure the money goes directly from the 401(k) administrator to the new IRA directly to avoid any tax headaches.

Caveman Jim · Apr 17, 2014

Do IRA's give you a choice to split up the stocks & invest in gold & silver?

OLDNEWBIE · Apr 17, 2014

To Roth or not to Roth is pretty complicated. Paying the taxes up front, vs how much you put in, what tax bracket at retirement, how much you figure you'll have saved by then.
Also the wife is always telling me like it's a fact! "They can't tax it again EVER if you already paid it etc.".
My thinking is this country is going down the tubes and if the govt. decides to take it they'll change the law and take it!
Lately I've been putting in less and less. If I still had a job that matched I'd limit contributing at that.
I feel it's a gamble like everything else.

Oregonhunter5 · Apr 17, 2014

Keep it where it is and keep working it.
And if the market drops much more, have it moved to the safest place that fund company has. Cause it's gonna happen here very quickly.
Or yank it out and pay off your house!
Cause in 10 years it may be worth 30% of what it was...

deen_ad · Apr 17, 2014

<Why there aren't any school shootings in Israel! Teacher with long gun slung over her shoulder!!!

My wife took her 401 and put the slightly less than 1/2 million it contained into an annuity that pays 5% forever. When we die we can will the principle to whomever.

Deen
NRA Life Member, Benefactor Level
Defender of Freedom Award
NRA Recruiter
Second Amendment Foundation Member
Washington Arms Collectors Member
Arms Collectors of SW Washington Member

"A gun is like a parachute. If you need one and don't have it, you'll probably never need one again!"

PDXSparky · Apr 17, 2014

Caveman Jim said:
Do IRA's give you a choice to split up the stocks & invest in gold & silver?

I've never heard of one that allows you to buy commodities such as precious metals, but that doesn't mean it doesn't exist. I think you can have more than 1 IRA, so if you didn't want to go all stocks and/or bonds you could split between 2 IRAs. Or you could go with a precious metals focused mutual fund.

Now I'm curious and will have to do some googling about IRAs that hold real property.

And I agree, Vanguard is a top choice for mutual funds, especially index funds, as their management fee percentages are some of the lowest in the industry. That means more return for you.

Miyamoto Musashi · Apr 17, 2014

My wife had to roll her 401K as well. She needed to make a quick decision. We tried to research what would be the best but we found that time was running out so she placed it in an IRA at USAA. You do not have any military relations to have and IRA there. The best part is that there are no fees. So we figured it would be a great place to place it while we were still researching a great earning alternative. The cash portion of the IRA was put into a Money Market and the rest was put in Stock. Its a great place to start so you can research the right place or even split it up with other institutions. Part of the IRA can be placed into a fixed rate CD and part can be in stocks/mutual funds. Here is the breakdown on Roth VS Traditional.
ROTH: Individuals that expect to be in the same or higher tax bracket after retirement and don't exceed the income limits of a Roth IRA.
TRADITIONAL: Individuals that expect to be in a lower tax bracket after retirement or that don't qualify for a Roth IRA due to income level.
You really have to look at your whole picture and decide how much time you have left to save for retirement and how much you want to have for it as well. I will definitely say do not have all of your eggs in one basket!

Caveman Jim · Apr 18, 2014

PDXSparky said:
I've never heard of one that allows you to buy commodities such as precious metals, but that doesn't mean it doesn't exist. I think you can have more than 1 IRA, so if you didn't want to go all stocks and/or bonds you could split between 2 IRAs. Or you could go with a precious metals focused mutual fund.

Now I'm curious and will have to do some googling about IRAs that hold real property.

And I agree, Vanguard is a top choice for mutual funds, especially index funds, as their management fee percentages are some of the lowest in the industry. That means more return for you.

Thanks for the replySparky, I too will be doing more investigation work on this.

NWGUNGUY · Apr 18, 2014

Yes, you can buy precious metals and even real estate in an IRA. As far as the PM IRAs go there are IRA custodian and storage fees that can be pretty steep. Here is a link to APMEX that has some information on PM IRA however, there are other PM firms that offer similar IRA products so shop around.

http://www.apmex.com/irabenefits

Certaindeaf · Apr 18, 2014

Roll it over into a "self managed" IRA account.. Vanguard is a good company. Only you can do your own personal risk analysis.. if you want "no" risk, they have guaranteed but low yield options (think money market, CD's etc.) and on the other hand you can pretty much put it all on red, gold, yadda. All is a spectrum of risk/reward.