[MNViking]

I am at least 5+ years away from retiring myself. Wife is 12 years younger. What have you all done, or what are you planning to do with your 401k's when/if you retire?

I have 4 of the, and should really combine them all for better tracking that i know. But what have you all done successfully to get this into a proper stream of income? Understanding taxation etc?

I need to research more, and have not used a financial planner, but am know starting to set myself up with my what next plan.

Useful thoughts and ideas are welcome.

[Bill14564]

Consolidating all the accounts might make it easier to track but it also makes it easier to bet wrong and lose money - sort of an eggs in one basket kind of thing. We have kept ours separate. We get to try different strategies without taking losses on the entire balance. If there is ever a problem with a particular institution, we still have money at the other.

As for withdrawal strategies, we really don’t have one. We will try hard to stay below a 4% withdrawal in hopes that the balance doesn’t decrease but we plan to take our what we need regardless.

[ltcdfancher]

I rolled 401K accounts into a single IRA. Started taking distributions to replace my SS age 62 amount. Just reached my Full Retirement Age (FRA). Will increase my distributions to replace my SS age 70 amount. My goal is to deplete the IRA before reaching 70. My wife started her benefit at FRA

[retiredguy123]

Originally Posted by ltcdfancher

I rolled 401K accounts into a single IRA. Started taking distributions to replace my SS age 62 amount. Just reached my Full Retirement Age (FRA). Will increase my distributions to replace my SS age 70 amount. My goal is to deplete the IRA before reaching 70. My wife started her benefit at FRA

I agree. Transfer all 401K's into a single IRA with Vanguard or Fidelity. That way, you have total control if your own money. I have never paid anything to a financial planner or investment advisor. Do your own research.

[tophcfa]

Agree with everyone who says consolidate all retirement accounts with Vanguard and/or Fidelity. My 401k and IRA is now one consolidated IRA (non-Roth) with Vanguard and I have a smaller IRA with Fidelity. Much of what you do before you and your wife turn 65, and become Medicare eligible, depends on what you will both do for health insurance and what your income and non retirement savings are. If you are going to get insurance through Obamacare, and you can manage your income below 400% of the Federal Poverty Level (currently $86,560 for a married couple), you will get substantial tax credits to help pay for the ridiculously expensive Obamacare health insurance. We lived off our savings and my pension before turning 65, so we didn’t elevate our income (a combination of investment income and my pension) and lose Obamacare tax credits by taking IRA withdrawals. My wife turns 65 next month and we will both be on Medicare, so starting January of next year we are both going to begin drawing Social Security and will be supplementing our income with IRA withdrawals. Although getting older sucks, but turning 65 really helps financially. Not only do you get much cheaper health insurance, but it’s substantially better coverage and a supplemental plan provides national coverage. As a bonus, we now only have to manage our income below the IRMA Medicare threshold, which is currently $218,000 for a married couple filing jointly (well above our annual living expenses). It certainly helps to have savings to live off before turning 65, when you can transition to living off taxable retirement accounts.

[jimhoward]

Consolidating is convenient but unnecessary. My one piece of advice for whatever it is worth is to pull from your after tax accounts first and wait as long as possible financially or legally to draw on the 401K. If you draw on a 401K in early retirement you may find your SSI, and interest and dividend income income from your after-tax accounts may put you in a higher tax bracket than you were in when you were working and deferred the taxes.

[Caymus]

Think deeper before you convert 401k's to IRAs. ERISA's rules cover 401k's and give them more protection against potential lawsuits. 401k's also tend to have different rules depending on your employer at the time. You may find that one of them is more beneficial to you in terms of investment and distribution options.

[retiredguy123]

In my opinion, keeping a 401K with an employer or former employer is not a good idea, especially if you have 4 of them. I would rather transfer the money to an IRA where I have total control over how and where the money is invested. Also, there is a good chance that you will lower your fees. It is not necessary to consolidate the accounts, but it sure makes it easier when you start making RMDs. Both Vanguard and Fidelity have excellent programs to keep track of your IRA investments and RMDs. My entire IRA is invested with Vanguard.

[Riverview]

If you roll a Roth 401k to a Roth IRA the employer contribution MUST go into a regular IRA or you will be tax on that amount as a distribution.

[JoelJohnson]

I had one of the major financial companies manage our investments for about 10 years ( I was not interested in managing them myself). I finnaly decided to put everything into a self managed accounts, but I also kept it simple. No more than 10 ETFs. We have her ROTH and my ROTH, a self directed cash management account (CMA) and 2 checking accounts (if you lived throught the banking crisis in RI in 1980, you would understand). Keep it simple for my wife when I pass.

[retiredguy123]

Originally Posted by Bill14564

Consolidating all the accounts might make it easier to track but it also makes it easier to bet wrong and lose money - sort of an eggs in one basket kind of thing. We have kept ours separate. We get to try different strategies without taking losses on the entire balance. If there is ever a problem with a particular institution, we still have money at the other.

As for withdrawal strategies, we really don’t have one. We will try hard to stay below a 4% withdrawal in hopes that the balance doesn’t decrease but we plan to take our what we need regardless.

Note that institutions like Fidelity and Vanguard never actually take ownership of any of your investments. They are brokers and caretakers of investments that you own, not them. You can actually move individual investments from Fidelity to Vanguard or the other way around. That being said, I do have a accounts with both Fidelity and Vanguard, but all of my IRA investments are with Vanguard.

[Bill14564]

Originally Posted by retiredguy123

Note that institutions like Fidelity and Vanguard never actually take ownership of any of your investments. They are brokers and caretakers of investments that you own, not them. You can actually move individual investments from Fidelity to Vanguard or the other way around. That being said, I do have an accounts with both Fidelity and Vanguard, but all of my IRA investments are with Vanguard.

Do you get a commission for every new account coming from the Villages?

Neither is supporting your accounts and trades for free. If your money flows to/through them then they touch it and there is the potential that it will be affected by their business status. You are likely very safe dealing with a large company like that but you still have all your eggs in (flowing through) one basket.

[retiredguy123]

Originally Posted by Bill14564

Do you get a commission for every new account coming from the Villages?

Neither is supporting your accounts and trades for free. If your money flows to/through them then they touch it and there is the potential that it will be affected by their business status. You are likely very safe dealing with a large company like that but you still have all your eggs in (flowing through) one basket.

My basic point is that, if Vanguard or Fidelity were to file for bankruptcy, their clients investments could not be used to pay creditors. This is not true with some other investment companies, such as insurance companies who sell annuities.

[collie1228]

There are possible downsides to converting a 401(k) to an IRA depending on your circumstances. For instance, 401(K)s have strong federal protections from creditors which are not extended to IRA’s depending on the state you live in. The early withdrawal penalties are better with a 401(k) too. I did not convert my 401(k) to an IRA as my former employer allows me to have a self-directed investment account under Empower, which gives me the freedom of using a brokerage account where I’m not restricted to the smaller universe of investments allowed under the 401(k). I’ve never regretted keeping my 401(k) in place.

[MNViking]

Originally Posted by ltcdfancher

I rolled 401K accounts into a single IRA. Started taking distributions to replace my SS age 62 amount. Just reached my Full Retirement Age (FRA). Will increase my distributions to replace my SS age 70 amount. My goal is to deplete the IRA before reaching 70. My wife started her benefit at FRA

The rollover to an IRA is a taxable event here? I am as mentioned looking at all this am some have advised starting a Roth IRA as well?