Answers in Retirement Plans

Ross First, I think your HR person/dept need to know that there are other 401k providers that provide a nice gauranteeed account without hefty fees. As a matter of Fiduciary reponsibilty they need to benchmark their 401k plan relative to investment options and plan expenses. They should first pull there benchmark report from Brightscope and see how it is rated. You should call the the Advisor on the plan as he/she gets paid to help assist with education and asset allocation advice. Although they normally can' t provide specific fund recommendation's they can assist in developing a startegy for your situation.

Second, you can stop your 401k deferral and contribute to an IRA(limited to $5,000/$6,000 depending on age) - you need to ask your tax person if it will be deductable or not or if it is better to do a Roth IRA. You may want to consider the Roth and 401K(check income limits). If married and you have a 401k available the income limit to dedcut a traditional IRA is $110,000 so most likely a Roth. Next, check with your plan sponsor(employer) wether the plan allows in service distributions while you are still working at the company. Normally it is only allowed after 59 1/2 but some plans just don't allow it.I hope this helps and don't be afraid to ask questions. Mark Schreiber CPA

Your first question to HR or your benefits line should be whether your plan has a brokerage window feature. If so, you could invest in individual stocks without moving out of the plan. If the answer is no, then the second question should be whether the plan permits in-service withdrawals (and if you are over 59 1/2) so that you could move money out to a rollover IRA and invest in individual stocks. If these are not available, you could make deductible contributions to an IRA if you are not an "active participant" in the 401(k) plan. Be careful with this, because you are an active participant if you are receiving employer contributions of any kind, even though there is no match. Employer contributions include profit sharing, safe-harbor, or even allocation to you of forfeitures from non-vested terminated employees. If none of these work, you might still be able to create a Roth IRA and do what you want, as long as your income is below the minimums for doing that.

In this day and age a good rule of thumb if you are managing the withdrrawals yourself is to withdraw no more than 4% a year. In recent years though there have been a number of excellent annuity products that have come to the market that provide access to upside moves in the markets using "lock in" provisions along with some type or Guaranteed Lifetime Income Rider. These riders have an associated fee, but may give you more than the 4% withdrawal rate and provide a place to put a portion of your retirment assets to provide a stable base of income which can go up over time. Contact an independent insurance agent or financial planner in your area to find out more including all the fees involved.

Here is another thought. If your company allows "in service distributions" you can roll part of your 401K to an IRA and then convert that to a Roth IRA. You will owe taxes and it is best to pay the taxes I think out of your own pocket that to pay the taxes out of the converted IRA.

So contact the HR department and find out about the availability of "in service distibutions".

I agree you should look deeper at your specific circumstances given the complex interaction of variables. In addition to after-tax analysis and determining what type of accounts your assets are held, the original "4% rule" research paper and subsequent updates point out another key variable - inflation. Interestingly, this tough cycle we just went through is not as severe as one would expect given the very low inflation rates. Recall what the 4 in the "4% rule" is: you only use it in year 1 to withdraw 4% of your original balance. Each subsequent year's withdrawal is calculated in dollar terms only by increasing the previous year's amount by actual inflation. But that assumes your income needs are smooth each year Perhaps you will be visiting the grandkids more in your early years of retirement and adjust the flows accordingly. Make sure to factor in the cost of ice cream! Enjoy.

Your current employer can establish a ROTH 401(k) in tandem with your Traditional 401(k). At that time you may transfer from the traditional to the Roth 401(k), or you can run both plans at once. Adding new contributions to the Roth plan. Best of luck, Angela Thomson

Naren I do not think you will be allowed to convert your currentl 401K to a Roth IRA. Even if the plan has the Roth deferral feature it would be for future contributions only.The existing plan would have to allow "In service distribtuions", but normally this is after attaining age 50. You can check with the plan administrator or HR person to see if "In Service Distributions" are allowed and when. It is a Company plan rule not a Federal Rule. Godo Luck. Mark Schreiber

The Plan Administrator will probably not show you a copy of your ex-husbands T Rowe Price statement. Such information would have to be requested by your attorney to your ex-husbands attorney. But the way a QDRO is handled, depending on the plan document provisions, when the QDRO is written and approved by your attorney, it will be submitted to the court where it will be stamped and added to your divorce document file and you will get a copy. Before the plan can act upon upon the directions contained in it, the plan administrator must review the QDRO thoroughly to determine that it meets all the requirements of a QDRO. If it is ruled that it contains all the proper information that is required to be in a QDRO, it will be approved and the Plan Administrator will set up a separate plan account in your name to hold 50% of your husbands account that is transferred from your ex-husbands account to your account. You will then be able to have control over your 50% in your account as provided in the QDRO and the provisions of the companies 401(k) Plan document.

You can search through the Department of Labor, Employee Benefits Security Administration, for free.

Or, you can try a free ERISA search. You can search old 5500 filings for the name of your former employer at various free ERISA search websites. If you can find a Form 5500 for your plan, you should find the contact information.

Or, you can check with The National Registry to see if your former employer has listed you as a missing participant. The registry is a secure database listing retirement plan account balances that have been left unclaimed.

Good luck!

Hi Ty, I understand your concern about cost. However, I would recommend to consider also a plan offers the best for your employees. The total return on your 401k plan is also how happy your employees are with their retirement plan and benefits, which can impact your business as a whole. I have seen business owners make this mistake and the effects on the overall when employees are not happy.

After an exhaustive search, I finally found an excellent 401(k) platform that I can unreservedly recommend. It provides excellent no-load investment choices, automated portfolio management options and the lowest overall, very transparent, administrative costs. It is offered by CUNA Mutual through their CPI marketing arm. (CUNA is a non-profit credit union organization.)

Contact your plan recordkeeper. The number should be on your 401k statements. They will have the forms necessary to take out your funds which are called "Rollover" forms. Your Company Human Resource department/person will have to be involved so you may wan tto start with there. Good luck in Retirement.

Congratulations on your retirement, Soledad.

It may be possible to take a distribution now, depending on your age and the terms of the plan. But shortly after your retirement date you should be given an option to roll over your 401k account to an IRA. Typically the rollover must be initiated through your plan administrator, using their documentation. The first step is to set up the IRA so that you will have the custodian name and an account number, which will be required on the withdrawal /rollover forms. It's also critically important that your address and other information with the plan's record keeper are correct, since the plan will generally mail a check only to the address of record. If you plan to work with an advisor, the advisor should set up the IRA and provide you with all of the details you will need. They should also be willing to help you complete the 401k withdrawal / rollover forms.

If you plan to manage the account on your own, I recommend opening the IRA with a brand-name custodian, such as Vanguard (if you intend to manage your portfolio with funds) or Schwab (if you intend to use funds, ETFs, and/or other individual securities). The customer service department of either firm can help you. Scottrade, TD Ameritrade, ETrade, and Fidelity would also be reasonable options.

A few issues and potential pitfalls to keep in mind:

(1) Many 401k plans offer a custom menu of investments and do not permit in-kind rollovers to an IRA. This presents two potential problems. First, if your account balance is large and you initiate a full transfer during a volatile period, your account may miss out on a rally because it is allocated entirely to cash during the transfer period. You also could avoid a loss by being in cash, so it's just something to be aware of. There are ways to mitigate this risk, but they are too involved to go into here. Second, some plans have attractive investment options, such as low-cost, institutional share classes that are not available to retail investors and/or stable value funds that offer an attractive risk/return profile. There is no guarantee that you will reduce your fees and expenses or improve your investment lineup by exiting the 401k plan, especially if you are new to self-directed investing.

(2) If you are over age 70, you should compare your required minimum distribution (RMD) schedule for the 401k plan vs. an IRA. Depending on your exact retirement date, your age at the time of retirement, and the timing of the rollover, you may be able to affect the timing of a significant tax liability to your advantage. While the rules for RMDs from IRAs and 401k plans are substantially similar, there are a few differences in some cases.

(3) Be sure to make eligible IRA or ROTH IRA contributions this year, while you have earned income. Depending on your current mix of IRAs, ROTHs, 401k plan accounts, other tax deferred accounts, and taxable accounts, you may be able to make backdoor ROTH contributions (or direct ROTH contributions) that would save on taxes and increase the terminal value of your portfolio. Or looking at the issue another way, the amount you could save on taxes with sound planning could pay for the cost of professional financial advice several times over!

Good luck with your retirement and do not hesitate to post back with any questions or comments.

Congratulations on your impending retirement! Now that retirement is literally just around the corner, I think it is best for you to identify a fee-only advisor that can help you make the transition. Working with a fee-only advisor, preferably one who is a Registered Investment Advisor will ensure that your interests are at the forefront of any investment decision being made on your behalf. You can learn more about some of the questions you should ask by clicking here: http://www.fidelisim.com/home/what-we-do-for-you/ (Top five questions to ask your advisor).

Upon identifying a competent advisor, he/she will open up an account for you to facilitate an IRA rollover. This account will enable you to take distributions from your retirement savings and maintain the tax deferred status while in the IRA rollover. Please note that as long as you are over 59.5 you will not face any penalties for taking distributions from your account. If you are under 59.5, that is a completely different situation. You should be able to set up your IRA rollover so that withdrawals from your account can be directly deposited into your bank account.

Once you have set up your IRA rollover, you need to identify the person at your company that is responsible for the administration of your plan. He/she will be able to provide guidance on how to complete the distribution from your plan in the form of a direct rollover to your newly established IRA rollover. You will need the account number from your newly set up IRA rollover to facilitate this transaction. Once the money transfers, your advisor will invest the money in an investment strategy that matches your income needs and risk profile and enables you to take regular distributions.

If you have further questions, please feel free to shoot me an email. keegan@fidelisim.com