What to do with my 401k
- Thread starter Ryan
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I see there is a Raymond James rep in my town. Have no idea how to invest. Have a TDAmeritrade account from back in the dot.com days. Have Navy Federal as my primary bank. Use USAA for my insurance. My roth IRA is with my local bank. I just mention this.....cause it would be nice not to have another company to deal with. But have no idea if any of these institutes deal with 401k.
BARRACUDA1968
Well-Known Member
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- May 4, 2011
- Messages
- 1,270
What you do with it will depend on your goals and age.
I had a 401K from a previous job and I left it with them for 8 years after leaving. It did well so why mess with it. 2 years ago I decided to get all my finances with one company so the bank my business deals with has an investment branch so I gave it to them. I'm 44 so I have a few years before I can touch it. I have it invested moderately with the hopes of a 9% return annually for now. This year was 6%
Watch the fee's closely, they won't invest your money for free. I pay 1.25% annually and no initial fee to start up. Some companies will want a percentage of your money the day they get it.
If you are closer to retirement than I am you may want to stay safe in the market. You can also use one of the investment trading sites and avoid the annual fee you will have with a money manager. These sites will guide you if you're willing to do the homework. I am not willing to do that and I'm gambling that an actual money manager can make up for the percentage I pay them in returns by knowing what they are doing.
Just be very careful who you deal with and make them show you ALL costs involved and explain in detail how it's paid to them and when. By law you will get a prospectus from your investment company to read. It will be as thick as a phone book so you won't read it and if you did you won't understand it. If you can understand it then you don't need a money manager. The prospectus will give you all the details of the fee's/risk/ responsibilities of all parties etc. I didn't read my prospectus 15 years ago and it cost me $30,000 but there was nothing I could do because by law that was the only responsibility the agent had. My verbal understanding didn't mean squat. My agent at the time misled me on the fees and got away with it. I had plenty of time to recoup my mistake but maybe you don't so be careful!
I had a 401K from a previous job and I left it with them for 8 years after leaving. It did well so why mess with it. 2 years ago I decided to get all my finances with one company so the bank my business deals with has an investment branch so I gave it to them. I'm 44 so I have a few years before I can touch it. I have it invested moderately with the hopes of a 9% return annually for now. This year was 6%
Watch the fee's closely, they won't invest your money for free. I pay 1.25% annually and no initial fee to start up. Some companies will want a percentage of your money the day they get it.
If you are closer to retirement than I am you may want to stay safe in the market. You can also use one of the investment trading sites and avoid the annual fee you will have with a money manager. These sites will guide you if you're willing to do the homework. I am not willing to do that and I'm gambling that an actual money manager can make up for the percentage I pay them in returns by knowing what they are doing.
Just be very careful who you deal with and make them show you ALL costs involved and explain in detail how it's paid to them and when. By law you will get a prospectus from your investment company to read. It will be as thick as a phone book so you won't read it and if you did you won't understand it. If you can understand it then you don't need a money manager. The prospectus will give you all the details of the fee's/risk/ responsibilities of all parties etc. I didn't read my prospectus 15 years ago and it cost me $30,000 but there was nothing I could do because by law that was the only responsibility the agent had. My verbal understanding didn't mean squat. My agent at the time misled me on the fees and got away with it. I had plenty of time to recoup my mistake but maybe you don't so be careful!
20psiofevil
Active Member
- Joined
- Feb 10, 2013
- Messages
- 628
You could roll it over into my account 
But seriously you should answer these three questions. Age, goal, financial situation? I can tell you this, I cashed in a 401k in my early 20's and 20k I had to pay back $1500 in taxes at the end of the year. So if you do plan on cashing in wait til after the first of the year and make sure your next job you claim enough to cover what taxes you may have to pay in 2016. Then there is always hardship withdraws. If you are close to loosing your home or you or a spouse are sick and have medical bills you may be eligible.
But seriously you should answer these three questions. Age, goal, financial situation? I can tell you this, I cashed in a 401k in my early 20's and 20k I had to pay back $1500 in taxes at the end of the year. So if you do plan on cashing in wait til after the first of the year and make sure your next job you claim enough to cover what taxes you may have to pay in 2016. Then there is always hardship withdraws. If you are close to loosing your home or you or a spouse are sick and have medical bills you may be eligible.
Im 43, Retired Military. Moving overseas. May not have a job for a while. My wife may have to work for a while. May open up a small mom and pop shop...who knows. Don't think my 401k is very big.....Think it was at $30k but i was only with the company for 3years and may not be fully vested. Not exactly sure what that means..... bottom line is..... not expecting the full $30k.
20psiofevil
Active Member
- Joined
- Feb 10, 2013
- Messages
- 628
Most companies require 5 years of service before you are fully vested. That means you do not keep the money the company put in/ matched you.
Vesting is how much of the money the company put in you own. It usually goes up by 20% per year so after 1 year you keep 20% and they take back 80%, after 2 years you keep 40%, up to 5 years where you now get to keep it all. This is only for money they put in, you always keep 100% of the money you put in. First, do you have the option of leaving it where it is? Some companies say yes, some say no. If you can, and you are happy with the investment choices they offer and the fees they charge, leave it there at least for now. If you get another job with a 401k plan you can roll it over to that plan. You can also roll it over to an IRA at basically any financial institution you choose, now if you have to move it immediately or any time later you decide to. As others said, look at the investment choices and the fees. If you roll it over, always have the 401k plan send it directly to the new place, DO NOT have them send you a check. If they do, you have a limited time to get it to an IRA or the IRS comes after you for taxes and penalty.
I'd roll it over into a self-managed IRA and stay with Vanguard. Most company plans have very limited options, not to mention they can (and often do) change providers at will. In a self-managed IRA you have access to all funds in Vanguard and even a way to buy funds/stocks from the outside.
