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401K Question

Posted: Jun 15, 2015

I'm going to be 59-1/2 in a few months and am wondering if I should withdraw part or all of my 401K and put it into a safer spot that won't be affected by the stock market or just a CD type of deposit or regular savings account or whatever options are out there. Any advice from anyone? TYIA.

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My experience - anonie

[ In Reply To ..]
Unfortunately for me, my company broke up and we had no place at that time to put our 401Ks. They didn't have anywhere so I took a hefty hit because I was under 59-1/2, but got my money out and had to spend it till I got another job. I hated this, but I would definitely get it out of the stock market.

Savings accounts don't earn much and CDs are flat. I don't know if bonds would be much different so I defer to someone who knows about that part of finance.

All I know is that I had a good start on my retirement till our company went out of business and there was no place to put it. This was a lot of years ago and before the 401Ks went down in value. I don't think if you have a situation like mine where you had no place to put it that they should make you pay a penalty for being under 59-1/2. This was an unusual situation that they didn't factor in. Guess the government just got more from me than they would have.

Within your 401K account - see message

[ In Reply To ..]
I think most companies have an investment firm overseeing the funds. Usually, within your account, you have several investment options to choose from. Usually you can choose a bond fund, a stock fund, mutual fund, or just a plain old interest bearing fund. Most retirement funds have a web site where you can study the funds and choose.

There really is no problem when changing jobs--you just transfer your 401k to a different manager. I have moved jobs several times and have transferred my old 401Ks into bank IRA where I choose my investment options. You actually have like 6 months to do this when changing jobs, I believe, without paying any sort of a penalty.

You have to decide the amount of risk you want to take--dividend paying stocks are most likely more secure than other stocks, bonds probably more secure than stocks, interest/CDs most secure, but less financial gain.

I am hoping to delay any withdrawals until I am very close to Social Security so I can delay SS as long as possible to increase the monthly payment.

401K - withdrawal

[ In Reply To ..]
First thing to do is look at your 401K documents about the rules for withdrawals. Mine won't let me withdraw until I am separated from the parent corporation.

Next is find out if you can roll over into an IRA. most of the time you can directly roll over into an IRA. There are sometimes some rules about that, too. My parent company will let me roll over my contributions but not theirs.

If you can avoid a withdrawal, you'll do better taxwise Generally 401K conrtributions are pre tax and you pay the income tax when you withdraw but if you roll over into an IRA, you won't.

if you have a good financial advisor, talk to that person. Mine is thru Edward Jones and he's very good and gave me good advice.

Oops, it is 60 days - see message

[ In Reply To ..]
You have 60 days to roll over the 401K without penalty if you withdraw and are under 59-1/2. Of course, if you are over 59-1/2 there is no penalty. but you may have taxes depending on your personal situation.

Another major concern on where to invest is to look at the "management fees". Some funds have higher fees than others. So although the fund may look better as far as gains, you should consider how much the management fee is when comparing funds. This amount can be very well hidden in all the financial gobbleydegook.

Diversify - sm

[ In Reply To ..]
In my current employer 401K account I have my money split into about 4 different funds. Each month a certain percent goes into "safe" funds and part goes to more riskier, higher gain funds such as international stocks.

One rule of thumb is never invest your retirement funds in the same company as your job. If you employer goes belly-up, you not only lose your job, but you can lose your retirement funds as well.

I rolled my old 401Ks from past jobs into an IRA to keep track of them and make it easier to invest. When the Bush financial debacle occurred in 2007/08 when Lehman Brothers and Bear Sterns collapsed, I got nervous and pulled all my money out of risky investments and stuck it into interest bearing accounts. When I thought the crisis was over, I started moving back into stocks at low prices and actually did quite well during the depression.

Good luck to you.

401K - see msg

[ In Reply To ..]
Your 401K is "in something." Unless you have all of the investment in the company you are working for, it shouldn't be affected and you shouldn't have had to cash it out early. You need to speak to a financial advisor type.

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