Lost my job, what do I do with my 401k? - Mothering Forums

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#1 of 18 Old 06-14-2012, 08:48 AM - Thread Starter
 
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I know I'm supposed to roll it over into an IRA or something... what do I do to open an IRA? Are they all the same or are certain IRAs better than others? What should I be looking for? And does anyone know if this is time-sensitive? Like do I have 30 days to roll it over or something??? I'm so clueless. I'm not going to be able to continue contributing to the IRA (may even need to cash it out at some point if finances get any tighter) so I don't know if with fees etc. it will even be worth it???

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#2 of 18 Old 06-14-2012, 10:25 AM
 
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You need a roll over IRA since you are rolling over the funds.  You need to look and see what you are invested in with your 401k to see if you can do a direct roll over (to see if those investments are held at the new firm) or if the banker will need to liquidate and you will need to reinvest in new assets.

 

The best place to start is your last 401k statement, that will show your holdings, or your investments.  You may be able to directly go with the firm that they are with (for example if they are all 'american funds' you can get an account with american funds)

  

Most places have a small annual fee, I think mine is $25/year.  Other fees depend on the type of investments you have.


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#3 of 18 Old 06-14-2012, 10:56 AM
 
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basically you can

 

1.  Leave it where it is.  If you like the investment choices and the fees are very low/nonexistant that make sense.

2. You can roll it over to a rollover IRA.  You can only add money to a rollover IRA only if you have more money from another 401k/403b from any other jobs you have had or will have

3.  I would avoid cashing it out if at all possible (unless you are actually retired ;).  You will owe taxes on it as regular income and you will also pay a 10% penalty.   

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#4 of 18 Old 06-14-2012, 11:54 AM
 
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If you want to handle it yourself ING / Sharebuilder has a rollover IRA.


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#5 of 18 Old 06-15-2012, 03:10 PM
 
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Roll it over into a rollover IRA, as PP suggested. If you leave it in your company's 401k, they could access the money (not likely, but it leaves a door open). NONE of my IRAs (and I have several, having done this many times with company 401ks) charge even a nominal annual fee. Check the bigger houses like Fidelity, American Century, Charles Schwab, etc. No fees. The last thing you need when you've lost your job is to pay anything you don't have to, even if it's only $25.

 

Sorry you're in this situation. I hope something better comes down the pike soon.
 

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#6 of 18 Old 07-02-2012, 06:33 PM - Thread Starter
 
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Swd12422 (or anyone else who wants to chime in!!) -- What are the normal fees for an IRA? So I found a no-fee IRA with ING Sharebuilder (plus a bonus if I open the account by tomorrow!) but there is a $4/investment fee?? I don't know what that means. I don't understand investing at all. Is this a good deal? Is there a better option out there???? All I want to do is roll the money over into somewhere that I won't have to think about it or deal with it and it will grow with no extra fees. Possible???? Help!

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#7 of 18 Old 07-02-2012, 07:10 PM
 
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I don't know much about the ING Shareholder account, but I rolled my 401K into an IRA for Vanguard. I was happy with my experience. I did everything online.

 

Whatever you do, make sure you know which funds you'll actually be buying. Make sure the funds at least have a 10 year track record. I wouldn't put all your 401K money into a fund that had less than a track record than that. Also check the expense ratios for the funds you'll be buying. You want these to be low.

 

I did find this online, and it appears that the Shareholder account may still have fees.

 

http://www.getrichslowly.org/blog/2007/12/06/the-pros-and-cons-of-sharebuilder/

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#8 of 18 Old 07-02-2012, 08:38 PM
 
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Originally Posted by crunchy_mommy View Post

Swd12422 (or anyone else who wants to chime in!!) -- What are the normal fees for an IRA? So I found a no-fee IRA with ING Sharebuilder (plus a bonus if I open the account by tomorrow!) but there is a $4/investment fee?? I don't know what that means. I don't understand investing at all. Is this a good deal? Is there a better option out there???? All I want to do is roll the money over into somewhere that I won't have to think about it or deal with it and it will grow with no extra fees. Possible???? Help!

 

Money doesn't earn interest (or very little) or grow in an IRA (or 401); one must invest it into a stock, or mutual fund or ETF or bond...etc for it to keep up with inflation, at the least, WITHIN the IRA. I assume your 401 money is already invested in something (I dont no much about 401s) -  find that out. And then find out if ING has the same fund, so it can be rolled over into it.

I hear 4 dollars per investment is a reasonable/low fee ...(another fund I had charged 3.5% for every transaction).  If you intend to make monthly investments, that might add up and then y ou may look into the membership. If you plan to make quarterly investments, 4 dollars is low.

You should find out how much it costs to withdraw the money too.

Mutual funds have maintenance fees (taken out of dividends or something similar - you don't see the fee) - a small percentage that goes to the person/company that is managing the fund. Vanguard Mutual Funds toot the lowest maintenance fees (no experience with them, just hearsay)

Stocks have no maintenance fees.

 

Another option, if your 401K is already invested in a vanguard mutual fund, then  you may just roll it over to Vanguard - open an account there.


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#9 of 18 Old 07-03-2012, 03:50 AM
 
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Yes, you should roll it over and you should do so immediately so you do not forget because there are penalties if you do not.  There is a time limit to do so, but I don't remember what the limit is.  If you call up the 800 number at Vanguard or another place like that (I currently have an account at t. rowe price and I am very happy with it but I tend to hear that Vanguard is many people's favorite), they will tell you exactly what to do.  Once you have moved the money, you will need to pick your investments.  Many people just pick the fund that is targeting for the year they want to retire.  They are usually just called something like 2035 fund or something.  I believe that the investments in these funds become more conservative (less risky) as the target date approaches.  But you can diversify your investments as well.  And there are some funds doing pretty well right now.  I am averaging about 10% on my investments, so don't believe the bad financial news.  The well managed funds seem pretty stable, although obviously they took a giant hit in 2008.

 

Main thing: do not wait at all because it is very, very easy for time pass and for you to forget and they you are not only paying taxes but also a 10% penalty (and there are reasons for withdrawal that do not deliver the penalty or you could get a loan if things get really bad - only saying this so you are not tempted, I don't believe that money should ever be removed from an IRA until needed for retirement)

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#10 of 18 Old 07-03-2012, 08:07 AM - Thread Starter
 
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OK I'm still a bit confused. I don't know what $4/investment means. I pretty much plan to put the money in the account and ignore it. So I would pay $4 for each investment I choose when I open the account, and then no fees after that because it will just sit there???

Does Vanguard have annual fees?

Why is this so confusing to me??

I don't plan to cash out my 401k. However, we are living off of savings right now, and it's possible we will run out of savings before I'm able to work again. So if it comes down to feeding my family today vs. continuing to save the 401k, obviously I will feed them!!

I checked with my current plan and I don't recognize the funds they're invested in -- things like 2025 Fund, 2035 Fund... I didn't really choose the funds with any thought so I don't care about keeping them in the same fund. If I don't rollover the money, they will automatically set up a rollover IRA with Bancorp. Is that good??? My head is spinning. And the incentive for doing this with ING is making me feel pressured to decide today.

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#11 of 18 Old 07-03-2012, 08:40 AM
 
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Sorry to confuse... if you are adding cash to the ING IRA account and then you move the cash into a fund that is where the 4 dollar charge applies. Each time you move cash into a fund you are charged 4 dollars. Some people set this up as a monthly occurrence or quarterly or one time.

 

BUT you are trying to rollover a 401K ... that may be a different one time cost although you pointed out that it was free @ ING, which is an incentive.

 

 

"2025 Fund", "2035 Fund" sound like target age retirement funds, such as retiring in year 2025, 2035.

 

The way to find out if Bancorp is good, versus any other fund management company, is to compare maintenance fees that each company charges.

 

You should deal with your 401K, but other then that, there is no RUSH to invest in one stock or fund right now due to a crazy market at this time.  Like the PP suggested, an easy investment is the target retirement date funds.


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#12 of 18 Old 07-03-2012, 09:58 AM
 
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I can personally say that I did not like shareholders.  I don't know if I just picked bad investments or I was doing something wrong (possible) but I finally rolled the money into a t rowe price account and now am making a nice increase in the investment.  As pp mentioned, sounds as if you have funds targeting for particular retirement dates.  you should be able to go the the companies website and check out the return, compare it to the targeted return of another company such as Vanguard.  Morningstar shows a great deal of data and rates the investment.  The 2035 Bancorp rate got 3 stars.  http://performance.morningstar.com/stock/performance-return.action?t=USB&region=USA&culture=en-US

 

Morningstar ratings go up to 5 stars.  I use their ratings because other's do but I don't know how good they are, really.  The Vanguard 2035 fund has a 5 star rating: http://quote.morningstar.com/fund/f.aspx?t=VTTHX

 

When I was learning this stuff, I just called the 800 number and always got a lot of help on the "How" to do it. THey walked me right through everything. I wouldn't trust the reps on the investment advice really.  Once you have completed the rollover, you can move money around into different investment vehicles.  Leave the money in the target fund, or try something else.  You can read a bit on diversification later. 

 

Don't think about incentives from any company to invest, look at the bottom line.  I mean a bank that gave you $50 to start a checking account but charges $10 a month to use it would lose you money in the end over a bank that had free checking all of the time.  A second rate investment house could cost you thousands of dollars in the end.
 

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#13 of 18 Old 07-03-2012, 09:59 AM
 
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First off, there is no time limit to roll over your 401k. It can be done whenever without penalty. Just don't cash it out. That's when the time limit will start. If you want to roll over the 401K into an IRA do a direct rollover, don't cash out the 401K first. So don't feel rushed, there's plenty of time to make a well researched decision.

 

Vanguard has no fees if you have more than $10,000 in your account and you sign up to get your stuff emailed to you rather than snail mail. Expense ratios are really low cost too.

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#14 of 18 Old 07-03-2012, 10:17 AM
 
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Originally Posted by dejagerw View Post

First off, there is no time limit to roll over your 401k. It can be done whenever without penalty. Just don't cash it out. That's when the time limit will start. If you want to roll over the 401K into an IRA do a direct rollover, don't cash out the 401K first. So don't feel rushed, there's plenty of time to make a well researched decision.

 

Vanguard has no fees if you have more than $10,000 in your account and you sign up to get your stuff emailed to you rather than snail mail. Expense ratios are really low cost too.

When I read the first post, I had the impression you had already done a pay out, but if you haven't you should be able to just leave everything in place until you feel more comfortable. 

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#15 of 18 Old 07-03-2012, 10:27 AM - Thread Starter
 
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No I haven't done a payout, it's still in the 401k.

Vanguard is sounding pretty good.

The ING Shareholders incentive is $176 for $10K+ or $276 for $25K+... which sounds like a good incentive to me but not if I'm going to be racking up fees each month!

If I can keep it where it's at for a while I guess that's what I should do, and not let incentives rush me into the wrong decision. I just wish I understood this stuff better. I'm super confident with saving, budgeting, being frugal, etc. but it's like my brain shuts down at even the hint of the word 'investment'!! I'm terrified I'll lose all my money!

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#16 of 18 Old 07-03-2012, 02:03 PM
 
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Don't be too afraid.  You can totally figure it all out and you might find it fun - Once I started investing my own money in my own funds, I really started enjoying it. 
 

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#17 of 18 Old 07-04-2012, 04:21 PM
 
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Crunchy, I'm not positive, but it sounds like the $4/investment fee is for each time you move money around in there, like a trade fee. If that's the case, and you don't plan to move much around, that's a good deal (I pay $8/trade in my mutual fund that I have with Fidelity). The no-fee/no-load funds are what you want -- no annual "management" or "maintenance" fees. Several PPs have mentioned Vanguard here and I'd highly recommend them, too. I have a SEP IRA there from another former employer and their index funds have done well historically, and no fees there. I would call up a company you like/recognize like Vanguard and ask specific questions about how the fees work, or if you're in a decent-sized town, walk into their offices. If the customer service reps can't answer your questions easily AND in terms you can understand, walk away. I had a great experience at Fidelity in my hometown and felt very comfortable with the people helping me there. But then I moved to a smaller town and when I lost my job I went into the local office to get my 401k rolled over and it was VERY confusing. No one could give me an answer to my questions that I could completely understand, and it was uncomfortable. As a result, I'm moving my account out of there as soon as I find someplace I'm happier with. The most important thing right now is to get it rolled into an IRA account so it's no longer part of your company's account. As a PP said, you can keep the same exact investments that you have in your 401k and just change it to an IRA instead. Then when you have the time, you can contact Vanguard or Schwab or whoever and pick a different account that has investments  and policies (and fees, or rather lack thereof) that you are comfortable with.

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#18 of 18 Old 07-04-2012, 05:42 PM
 
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$4 is indeed a trade fee. Sorry if I'm explaining something you already understand, but I wasn't sure if you understood it - the 401(k) is a tax shelter, but it is not in and of itself an investment. You have to put the money into an investment inside the 401(k) for it to grow, otherwise it will sit earning absolutely nothing (which apparently actually happens all the time, because people do not understand that 401(k) is not an investment but just a tax shelter). The tax shelter part means that your dividends are taxed a certain favorable way, which it wouldn't be if it wasn't inside the shelter. But it doesn't give you dividends all by itself. It needs to be invested.

 

Those investments could be stocks, bonds, money markets, etc. It sounds like your money is (hopefully!!!) invested already in the 401(k). Let's say you have it in a bond fund, a blue chip stock fund, and maybe a specific stock, just for example. You will need to pay trade fees on those three investments. Probably a trade fee out (from wherever you are) and a trade fee in (to your next brokerage). The fees could be a flat fee or a percentage. What's best usually depends on how much money you are trading.

 

In my limited experience, I don't think you have a time constraint. I used to be a manager and I had an employee with a 401(k) roll it over a year or so after he left. My company does not run a tight ship or anything (startup) but it was no problem. Also, I recall hearing of some people who find out about long-forgotten 401(k) plans and get them rolled over many many many years later.

 

I do not know if there is any possible danger, i.e. if your old company goes out of business or something. It just does seem to me that this is probably something you can put on the back burner for now. It probably wouldn't hurt to call the HR dept or whoever managed the benefits and confirm that it can wait.


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