retirement

[kareengas]

I am about to retire form my current employment. Though I plan to "retire", I do not plan to stop working.
I do have a meager 401K.
Should I roll this over into a IRA of some kind?
I would like to know if I can take that and A.) pay off the remaining minimal debt I have, B.) set up a payment from it to meet my mortgage obligation and replace the withdrawal with any monies earned on the side.

[disneysteve]

How old are you? If you are at least 59-1/2, you can start taking withdrawals from your 401k without penalty.

You should not cash out your account to pay off debt. You can either leave it where it is if you are happy with the plan or roll it into an IRA.

[JustBill]

Yes, I would suggest you roll the monies to a low fee IRA, probably start by evaluating options at Vanguard.

As for the other matters, there is too much unknown about your situation to give much of a solid answer.

[bjl584]

I am about to retire form my current employment. Though I plan to "retire", I do not plan to stop working.
I do have a meager 401K.
Should I roll this over into a IRA of some kind?
I would like to know if I can take that and A.) pay off the remaining minimal debt I have, B.) set up a payment from it to meet my mortgage obligation and replace the withdrawal with any monies earned on the side.

I'm not sure I understand. You are going to continue working? In what capacity? If it's for an employer, do they offer a 401K plan that you can roll your current one into? How old are you and what is your net worth?

[kareengas]

I'll be 59 1/2 in May. I'm leaving a job I took to raise a daughter on my own. Been here 15 years in a warehouse and as my daughter is now on her own 2 feet and I never could stand working in a warehouse, I am venturing back into the world of self employment. I did this before very successfully and with the experience I've garnered in a worldwide company, I should not have any problems now.
I want the 401K to fall back on in case I have a lean month.
I also need one good car.
I would like to use the 401K to make my house payment every month and buy the car, replacing that money as it comes in.
I am married and we have her income (currently somewhat greater than mine) and I will be able to be put on her insurance (govmint insurance) for about $75 a month. We split the household expenses more or less down the middle. I pay the mortgage and she pays utilities, groceries, etc.
I have my own small co., own all the gear and I am pretty certain I can at the very least cover the aforementioned expense with money earned from this source.
I just want to be sure that, if I use money from the 401K (or, rolling it over, the IRA) I am able to put it back in if at all possible.
Should I see a financial "expert" or "advisor" to conduct these affairs? Is it something I should just save the money and figure out on my own?

Thanks again.

[kareengas]

BTW...though I ax these questions, it is really NOT my plan.
I am searching more for "whatifs" and "just in cases".
Net worth is less than 100K.
I am healthy, happy, willing, and able and this is why I will continue to work.

[bjl584]

BTW...though I ax these questions, it is really NOT my plan.
I am searching more for "whatifs" and "just in cases".
Net worth is less than 100K.
I am healthy, happy, willing, and able and this is why I will continue to work.

With a net worth of less than 100K, it will be hard to retire at 59 1/2. It depends how much your side business generates. You may want to hold off retirement until you can collect social security.

[disneysteve]

I just want to be sure that, if I use money from the 401K (or, rolling it over, the IRA) I am able to put it back in if at all possible.

If you are no longer at the job, you can not continue to contribute to the 401k so you couldn't put the money back.

With the IRA, as long as you have earned income, you can continue to contribute up to the max of $6,000/year.

[kareengas]

"Retiring" from my present job is a a done deal. Mostly for personal reasons, I can no longer stay here. Probably be sorry later but it feels pretty good right now. While I'll surely never own a Ferrari, I am a simple person who has everything he needs and wants (well...maybe a motorcycle) and I can live more cheaply than the average human.

Meeting with a financial advisor today to see about the IRA thing and all. But I was a wee bit cynical about advisors because I see them as having their own reasons for advising, usually a profit. Not against that, just the possibility of more profit than may be reasonable.

Figured I might get something more impartial from this forum.

Thank you very much to any advice offered here.

[disneysteve]

Before acting on anything the adviser tells you, I would urge you to post that advice here for impartial opinions. I think there are way too many lousy advisers out there who give really harmful advice.

[Like2Plan]

"Retiring" from my present job is a a done deal. Mostly for personal reasons, I can no longer stay here. Probably be sorry later but it feels pretty good right now. While I'll surely never own a Ferrari, I am a simple person who has everything he needs and wants (well...maybe a motorcycle) and I can live more cheaply than the average human.

Meeting with a financial advisor today to see about the IRA thing and all. But I was a wee bit cynical about advisors because I see them as having their own reasons for advising, usually a profit. Not against that, just the possibility of more profit than may be reasonable.

Figured I might get something more impartial from this forum.

Thank you very much to any advice offered here.

It is difficult to comment on whether you should keep the money in your 401K or roll it over to an IRA without knowing the specifics of your plan and all your circumstances.
For example, some 401K plans have very low expenses. My 401K has lower expenses than my Vanguard account. But, maybe you are going to pull all the money out in a short period of time and then it wouldn't matter as much?

My 401K permits penalty free withdrawls of funds for folks who retire at age 55. If the momey were rolled over to an IRA the person would have to wait until age 59.5 (I noticed that you clarified you will be 59.5 in May, so this would not be a factor for you).

My 401K is not very flexible when it comes to taking the money out. Maybe your 401K plan has rules that are more flexible.

Another question would be --do you have any other IRAs that might complicate things? Even though you may have several IRA accounts, the IRS looks at it as one combined IRA and keeping the 401K funds separate might make things less complicated.

[kareengas]

Ahhhh...life. Blew a head gasket yesterday and I am now buying a new engine (almost). Was not able to keep the app't with the advisor.

I only have the one plan (and I thank my current employer for that) which I was told I could roll over into a personal IRA. As far as withdrawing the money from the 401K to do that, or just to withdraw the money in general, I'm not real sure how that works. I've scanned various sources via the net and I reckon I just assumed, since I am of the age where I can collect, I tell the "administrators" I want my money, pay the taxes, see ya bye. Or, as told over the phone by said advisor, roll it over into the IRA thing. I was told I could withdraw as much as I want, whenever I want.

I do recall seeing some "fees" on the account which appeared to me to be mostly accounting type fees. Are there others?

What fine print stuff should I be aware of?

I think my biggest problem is language and a overall lack of knowing what is happening. I do not fully understand some of the heretofores and witherthous and whencecomeths. I get this statement (quarterly I think), scan it to see if it went up or down amount wise, and bury it in a drawer. I don't really understand what's going on and to my simple financial brain, I don't see the contributing, it goes somewhere, my employer adds his two cents, and either it makes money or it doesn't (preferably the former). So far, I've been lucky but my plan is set up more in a "safe" mode, I've only lost a wee bit which has since returned. Some folks here lost thousands.

[Petunia 100]

Ahhhh...life. Blew a head gasket yesterday and I am now buying a new engine (almost). Was not able to keep the app't with the advisor.

I only have the one plan (and I thank my current employer for that) which I was told I could roll over into a personal IRA. As far as withdrawing the money from the 401K to do that, or just to withdraw the money in general, I'm not real sure how that works. I've scanned various sources via the net and I reckon I just assumed, since I am of the age where I can collect, I tell the "administrators" I want my money, pay the taxes, see ya bye. Or, as told over the phone by said advisor, roll it over into the IRA thing. I was told I could withdraw as much as I want, whenever I want.

I do recall seeing some "fees" on the account which appeared to me to be mostly accounting type fees. Are there others?

What fine print stuff should I be aware of?

I think my biggest problem is language and a overall lack of knowing what is happening. I do not fully understand some of the heretofores and witherthous and whencecomeths. I get this statement (quarterly I think), scan it to see if it went up or down amount wise, and bury it in a drawer. I don't really understand what's going on and to my simple financial brain, I don't see the contributing, it goes somewhere, my employer adds his two cents, and either it makes money or it doesn't (preferably the former). So far, I've been lucky but my plan is set up more in a "safe" mode, I've only lost a wee bit which has since returned. Some folks here lost thousands.

Well, what sort of "advisor" are you seeing? Is this a fee-only planner? A commissioned salesperson? A life insurance salesperson? Anyone can call themselves an "advisor". What sort of letters does this person have after their name?

If you are investing in a mutual fund, you can expect to pay the on-going expense ratio. These vary a lot, from very reasonable to obscene. You should find out about the expense ratio before investing.

Many mutual fund families charge an annual custodial fee for IRAs. Some are reasonable, some are not so reasonable. Sometimes these are waived once you hit a certain account size, or if you agree to electronic delivery of statements.

If you are buying investments or (gasp) life insurance products through a commissioned salesperson, you are going to pay a load somehow as well.

There is no reason at all you couldn't skip the advisor and roll your 401k to a quality low-cost custodian such as Vanguard. Avoid commissions, high expense ratios, and annual custodial fees altogether and keep more of your money for yourself.

And yes, you can always withdraw any amount you please from your IRA, no matter who is the custodian. Taxes and possibly penalties will apply, but you certainly can.

[Like2Plan]

I ran across an interesting article titled "Avoid These 401k Rollover Mistakes" from the Oblivious Investor

Link to "Avoid These 401k Rollover Mistakes" from the Oblivious Investor

Here is a short quote from the article:

"Shouldn’t Have Rolled it Over
The first and most obvious mistake is to roll over money from an employer-sponsored plan when it would have been better to leave the money where it was. For example, you should consider keeping your money with your previous employer if:

Your employer sponsored retirement plan has lower total costs than what you would have access to elsewhere (This is the case, for instance, with federal employees who have access to the Thrift Savings Plan.),
You left the employer at age 55 or later and you want to take advantage of the resulting ability to get penalty-free access to the funds prior to age 59.5, or
Your 401(k) includes appreciated employer stock and you want to take advantage of the “net unrealized appreciation” rules. "

[kv968]

"Shouldn’t Have Rolled it Over
The first and most obvious mistake is to roll over money from an employer-sponsored plan when it would have been better to leave the money where it was. For example, you should consider keeping your money with your previous employer if:

Your employer sponsored retirement plan has lower total costs than what you would have access to elsewhere (This is the case, for instance, with federal employees who have access to the Thrift Savings Plan.)

This is one aspect of a 401k that I feel gets overlooked quite a bit. The general rule of thumb is to get your money out of an old employer's 401k because the costs are too high and the investing options limited.

The options are definitely limited compared to an IRA since with that you can invest in basically anything. However the costs aren't always necessarily cheaper, especially if you work for a bigger company that can command lower fees. My company for example offers Vanguard's Total Int'l Index with an expense ratio of 0.12%. That's 8 basis points less than Vanguard's ETF and Admiral Shares. They also offer a Fidelity S&P 500 index that has an expense of 0.025% compared to Fidelity's Advantage Class shares ratio of 0.06%, which require a $100k minimum investment, or Vanguard's S&P 500 ETF or Admiral Shares with the same expense of 0.06%.

That being said, if I had the opportunity to rollover my 401k into an IRA I would deifinitely roll most of it over for the better selection of investing options. However, I would also, if allowed, leave some in the 401k to take advantage of the lower cost of some of the funds.