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How and where should I rollover my 403K plan with VOYA (ex-ING)?

I have been recently retired. I am looking for a place with a less handling fee. My friend recommends VANGUARD. How much do they charge for managing the account?

Dec 15, 2014 by Timothy in  |  Flag
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Hi Tim,

I hope my reply finds you doing well. I am not sure how much Vanguard will charge you to manage your rollover funds. Vanguard is known for being the "low cost provider" and from 20 years investing experience I can tell you that cost shouldn't be the primary reason who you should or should not use Vanguard. I use Vanguard in 401(K)s plans that I set up for some of our clients and even in those situations Vanguard does not provide the best performance returns, despite the low cost expense ratio.

In fact, there are other low cost funds that offer excellent portfolio management such as Dimensional Fund Advisors (DFA - www.dimensional.com) and not every financial advisor have been approved to offer DFA funds.

Basically, I think you should shop around. There is a balance between cost, service, performance, etc. A mentor once told me that "cost should only be an issue in the absence of value." My advice: Seek out a firm that offers the best value based on your personal values, needs and goals. If such a firm appreciates you enough to provide quality advice that reflect your needs and goals, then they shouldn't mind being flexible with the investment management fees that they charge you.

If you would like to discuss your needs further, feel free to contact my firm. Our website is: www.wcfingroup.com and my email and phone is: msmith@wcfingroup.com | (240) 245-3434.

Thanks for submitting your question.

Take care, Martin

Comment   |  Flag   |  Dec 15, 2014 from Bethesda, MD

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Hi Timothy! Here are some questions to think about. Who do you call to put out a fire? A fireman. Who do you see when you break your leg? A doctor. Who should you listen to regarding your retirement? A financial planner.

Your friend may have some good ideas on managing retirement funds, however, unless s/he is a financial planner, they likely will not be able to give you comprehensive information regarding your retirement. While I personally love Vanguard, there are other considerations to make, such as an appropriate asset allocation for your risk comfort level, annual withdrawals, long term medical needs, and social security impacts.

Take some time out to talk to a financial planner and get a full overview of your finances during retirement. You may find more questions than answers to start with, but you should end up with a comfort level for your future retirement.

Comment   |  Flag   |  Dec 15, 2014 from River Hills, SC

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Hi Timothy,

Congratulations on your recent retirement. I hope you have some good plans to enjoy your time.

You are asking a great question about where to rollover your 401k (or 403B), as there are many choices available. I think the bigger question and key take away will be what advisor would you like to work with if anyone at all.

There are many options when it comes to custodians (the company that holds the assets) for IRA rollovers and each one has pros and cons, but the main question would be your overall goals and needs for accessing the funds. Are you looking for an income stream from this account during retirement? Are you looking to defer these funds and access in the future? How long will they be deferred?

Also, looking at what other assets you have and what other income you are earning will determine your best overall approach.

When it comes to managing your investments in a self directed fashion, the question I ask my clients is, "Do you want to be looking at the market regularly and following it to make the changes needed as the market changes or would you rather hire someone to do this for you, so you can enjoy retirement?" If you enjoy this type of involvement, then a self directed account like a Vanguard or Fidelity or Schwab could work, but if you are looking for more assistance, consider finding a fee based advisor that meets your needs and connects best with you for management.

As for your question about Vanguard's fees, depending on if you work with vanguard direct and do the investment options yourself or if you work with one of their tele-advisors the fee will range, but even if you work with other advisory firms or custodians, you will probably see fees ranging from 0.75% to 1.5% depending how many assets are involved and what level of service as well as what kind of advisor you are working with.

Remember, the advisor is juts one fee, there are also the underlying investment fees, such as Mutual Fund fees, Exchange Traded Fund Fees, even there trading fees if any. These all add up and are reason you should research all possible options.

I hope this helps shed some light and if I can answer any other questions or be of further assistance please don't hesitate to reach out.



Comment   |  Flag   |  Dec 15, 2014 from Carlsbad, CA

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Vanguard is the low cost leader, if low cost is indeed what you are looking for. For a small additional fee, they will even provide some very generic asset allocation advice. Of course, if you want cheap and generic you could just buy a Target Date fund which is supposed to be invested based on the companies opinion of how the average person your age should invest. But is that what you need? Do you have a plan for retirement? How much can you withdraw each month (so you won't run out of money? How much should you set aside for taxes? There are all kinds of questions which you should be asking at this point - and you may not find this broad, personal, specific advice available from Vanguard.

A good financial planner can steer you in the right direction, but you will need to pay him / her in some way for the advice. You can find a Certified Financial Planner in your area through the CFP Board (www.letsmakeaplan.org. Some planners work on commission, but may do some basic planning for no charge - others work for fees (you pay for the advice, but they won't be selling any product) others work for some combination of the two methods (fee based).

Which compensation method is best is a matter of preference - but if the planner is a CFP they have taken a fiduciary oath to act in their clients' best interest, and they have demonstrated the experience and knowledge necessary to guide you on the right path.

1 Comment   |  Flag   |  Dec 16, 2014 from Bridgewater, NJ
James D. Kinney, CFP®

In addition, I will add to Bretts comments on "whether you should self direct your accounts" - do you know what you would do if the market turned against you and your accounts fell by 25% in 3 months? Would you sell and go to cash? Would you stick with the program? Would you use sleep? Would you trust your own instincts so you could sleep at night? Or would it be comforting to have a professional involved, who has been through this before? If you don't know what you would do, or if you are unsure, or if you really don't know how much your portfolio might lose in a bad year - then I would strongly advise that you need to have a professional who you trust involved in the management of your investments.

Flag |  Dec 16, 2014 near Bridgewater, NJ

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Hello Timothy,

A few extra thoughts to go along with the above great advice. There are some differences between 401(k)s and IRAs. One major difference is the early retirement withdraw ability from a 401(k) at age 55, as opposed to the traditional IRA withdraw age of 59.5 (to avoid penalties). This may be a factor in determining whether you should keep your 401(k) for a few more years, or roll the account into an IRA, contingent on your age.

In regards to custodians, the above advisors have done a great job addressing that question pertaining to the management fees of the funds (whether ETF or mutual fund). One other factor to consider is the commissions that each custodian charges for every trade you place. For example, Scottrade is known to have extremely low trading fees for each trade placed. However, if you put your money at Charles Schwab or Vanguard and you use the respective custodians’ funds then the trades will be free. This may not be material if you have $1,000,000 and you utilize 5 different funds, but if your account is around $250,000 and you invest in 10 different funds and rebalance once or twice a year then those trading fees add up on an annual basis.

Hope this helps!

Adam McCurdy

Comment   |  Flag   |  Feb 27, 2015 from Chicago, IL

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