Advice pls
 

Now that I've finally retired what do I do with my 401k. Don't anticipate needing the money but don't want to lose it either. Appreciate your inputs.

Check with your plan administration last year mine changed from when you turn 70 + 6 months now mine is 72 + 6 months

My 401K provider allows me to keep the money with them and continue to manage it. I cannot make further contributions (I'm retired after all) but I don't need to move it.

You can also move it to another managed IRA, perhaps with a financial planner or investment adviser. Just be careful about how you move the money so it doesn't get taxed along the way.

At some point you need to take out a portion each year and pay tax on it. They deferred it this year but probably will reinstate it in 2021

If you are referring to the new law that changed the required minimum distribution starting age, it changed from 70-1/2 years to 72 years, not 72-1/2 years.

I would suggest that you set up an IRA account with Vanguard or another low cost investment company. Then, do a direct transfer of all assets from the 401K account into the IRA, and maintain a similar asset allocation. I would not feel comfortable leaving my money in a 401K plan when an IRA allows me to totally control the assets and how they are invested. And, you will probably save money on the management fees. It was one of the first things I did when I retired.

Rollover into IRA at Vanguard-Vanguard Target Retirement 2020 VTWNX with expense ratio 0.13%; mine making almost 11% this year. Its balanced, so if there is a crash it won't be so painful.

If the Stock Market crashes "EVERYTHING" crashes. In 2008 Crash, all Bonds, all stocks, all gold, all REIT's, everything crashed. In a crash diversity does not protect you. Just saying. Only Chickens have real value. I will let you figure out why.

Thanks everyone. IRA conversion confirmed my thinking. Appreciate the input.

If you turn 72 after July 1, 2021...you can defer your first RMD until April 1, 2022. However, you must also take your second RMD before the end of the year 2022. This could possibly put you in a higher tax bracket because you've taken two distributions in one year. :)

Huh? The way I understand the rule, you must take the RMD in the year that you turn 72. So, if you turn 72 in 2021, you must take the RMD starting in 2021, and every year thereafter. It doesn't matter when you take it during year, it is taxable income for the 2021 tax year. The RMD was waived for 2020 because of COVID.

I did the same thing, that's the way to go, convert it to an IRA. Eventually you will need to make withdrawals, when you do , if you don't need the $$$, put it into a Roth IRA. That way you can keep it invested and it's tax-free from that point on - after you pay taxes on the amount you convert of course.

Normally, you can do a ROTH conversion with Traditional IRA money. But, if it is an RMD withdrawal, you can't put that money into a ROTH IRA.

Education
 

I highly recommend the Ric Edelman book “The Truth About Retirement Plans”. I am in multiple groups, attend all sorts of seminars and this book has been the most comprehensive source to educate me. I did something right retiring at 59.

You can keep your funds in your 401K or roll-over to an IRA or a Roth IRA. Do check out the philosophy of whatever company you decide to go with, and what amenities they offer. I went with T Rowe Price because I loved their philosophy in that we are there for the long-haul, and not for short-term trading, their funds have always done me well, they do offer a good mixture of funds from other companies, and they offer amenities, such as providing me with a financial advisor, at no charge, to help me decide how to balance my portfolio for my needs and risk comfort. I have actually only taken advantage of that option one time in the last twelve years but it is nice to know they are there for me.

401k Distribution
 

If your taxable income this year without a 401k distribution is below $80,250, you may want to consider taking a distribution this year to bring your TI up to $80,250. The withdrawal will be taxed at the 12% rate level. It's unlikely you will be able to withdraw at that low rate in the foreseeable future. Rolling it into a Roth would seem to be a wise move.

Agree with this approach (with caveat that we don’t know all the particulars of your situation, and suggest that a CFM can better help you sort this out). If you believe that capital gains taxes are going to increase in coming years, roll the 401k over into a Roth this upcoming tax season, pay the lower tax rate on the gains, then enjoy tax-free withdrawals at RMD (or earlier).

From the question asked, I would recommend a CFP
 

As a long time corporate finance manager, your question indicates that you would probably benefit from a Certified Financial Planner, CFP. That way, the CFP could explain the investment risks and strategies, tax implications, and how a trust(s) would help your entire estate.

An employer sponsored 401(k) has limited options, and moving to a self directed IRA will provide more investment options, able to be tailored to your risk profile, which is the reason why posters recommend you change custodians or financial service companies.

However, without understanding the size of your estate and investments, there are tax favorable strategies for taking larger distributions than the minimum at different times. If you don't need the money, then leaving a distribution in a taxable account with proper investment strategy is a future step

But get some professional tax and investment help

Hire a financial advisor. I wouldnt take advice from random people

Ditto
 

Did the same in 2014. Moved 401K into IRA. Had a financial advisor. Never looked back. IRA opens up everything to you. 401K locks you into what your company's group selected for you to invest into.

401K advice
 

Be careful with the advice of everyone here on converting your 401K. That is not always the best advice depending on your specific options for investment with who your past company has managing as well as the fees. Example, i converted my 401K to an IRA and have an outside management company managing it. We left my wife's with Fidelity who was the management company of her 401k from work. There are many investment options including targeted funds like the 2020 vangard fund mentioned. The fees are a flat $6.00 per quarter. There are no advisors that are going to charge you so low, example i pay .75% and most of the companies i interviewed charged 1% to 1.5% depending on the size of your 401k. So my IRA now had to make almost .74% more that her 401k before they are even.
The other side of this is what is included for the management fee they charge. My IRA is with Personal Capital and they provide other services that were important to me like current/long term spending planning, prior tax year review as well as current planning, estate planning, etc. Think about what types of services you want to include for what you are going to pay. Interview at least 3 or 4 and not only ones here in The Villages. There are good advisors that do more over Zoom and occasional onsite meetings and that is why I went with Personal Capital. Been over a year and they seem to be doing more than what I expected.

we have good luck with Fidelity, & use managed accounts. this can earn xtra $$, but whatever you earn is considered income by the IRS. is something to keep in mind, but sometimes that $$ can make all the difference in keeping up with unexpected expenses.

I have a 401K in the same status; I agree with the response issued in the above post.

Get a Financial Advisor
 

If you are asking here it would seem that you need a qualified financial advisor. This group will perform heart surgery if you ask about it! You might want to ask about recommendations for a FA and you should get a sufficient number of good suggestions to start your interviewing process.

FA's are worth their weight in gold as they can suggest the appropriate way to grow the money, protect from taxes, and consider heirs in the planning based on your personal situation.

that was why i mentioned Fidelity. their advisors can answer all kinds of questions we can't here. it would be wise for OP to do constructive investigating before making any financial decisions.

401k
 

excellent answer. we did that and then when we moved here we went to A financial planner and put everything in an annuity, sorry we did.

Enlist the aid of a financial advisor who charges you a straight fee for review of your portfolio and options and does not receive any commission from any investment scenarios he/she might suggest. Asking in this site for financial advice is well.......

This may the worst place that you should seek advice about your financial well-being.

I’d suggest opening an account with a full-service broker/financial advisor. If you go to the website of the firm and office where you’d like your account, most will list all of their advisors showing their experience and professional qualifications. Pick one, call and make an appointment. Then decide if you’d be comfortable with the advice that person will provide. Of course, you can also rely on the referrals of advisors from close friends, whose advice you might feel comfortable with.

Just make sure all transfers are completed in 30 days or less to avoid taxes. Good luck.

When I need my shoes fixed - I go to a shoemaker - when I want financial advice I do not go to totv

While it may be a good idea to hire a "financial advisor" if you need assistance with your money, not all of them are the same. Anyone can call themselves a financial advisor, but many are actually a life insurance salesperson or stock broker in disguise. For example, I have known many people who have been advised by a life insurance salesperson to transfer all of their money into an annuity, which yields a huge commission for the "advisor", and is usually a bad investment. They didn't even realize that the annuity product they purchased was a life insurance product because the advisor told them that it was a retirement investment, and never used the word annuity or insurance. If you hire a financial advisor, you should get a signed statement from him/her that they are acting as a "fiduciary" for you. This will provide some legal protection, but you should also ask a lot of questions and get more than one opinion. You should also ask the advisor how they make money, by commission or by charging you a fee for their time.

This from the IRS website:

Beginning date for your first required minimum distribution

IRAs (including SEPs and SIMPLE IRAs)
April 1 of the year following the calendar year in which you reach age 70½, if you were born before July 1, 1949.
April 1 of the year following the calendar year in which you reach age 72, if you were born after Jun 30, 1949.

1. Go to the Chas. Schwab office at Lake Sumter. You will be assigned an advisor, who will be a registered broker. All Schwab advisors are salaried and do not receive commissions. Convert the 401K to an IRA. The advisor will have all the forms and will do all the work.

2. Schwab charges next to nothing for trades when you use its website. It has mutual funds of every variety (i.e. Dow 30, S&P 500, Emerging Markets etc). If you do nothing else, put your money in an "index fund" which mirrors the market. On average, the S&P 500 has gained 10%/yr over our lifetimes and there is no reason to believe this will change.

3. Depending on your other income, your Federal Tax rate, and the size of your expected estate, you will need to consider converting some or all of your funds to a Roth IRA. The Roth IRA is the only "gift" taxpayers have ever been given by the government. For any part of your 401K or regular IRA which you convert to a Roth, that amount will have to be included in your taxable income for the year of the conversion. However, once your money is in a Roth, any increase in the value of the account and any distribution you take is free of all taxes. Finally, any amount in a Roth which goes to a beneficiary on your death, he/she receives free of income tax, although there are time limits, roughly 10 years, within which the beneficiary must withdraw the money from the Roth.

4. Schwab's advisor will walk you through all this. You will be shocked to learn what the administrator/manager/advisor of your 401K has been charging you and what you will save by placing your account at Schwab. I learned this lesson 30 years ago when a new partner joined our firm. He had been a stockbroker. At the time, our pension/profit sharing fund was managed by Manulife. I and the other partners regularly worked 10-12 hr/day. At the end of the year, Manulife calculated the amount we could contribute to the fund and we sent a check. Until the new partner pointed out what we were paying Manulife, none of us had a clue. We changed to a self-directed fund and moved the money to Chas. Schwab, saving large amounts each year thereafter. Over the remaining course of my career, the total savings were significant.

A 401K has one advantage over an IRA if you were 55 or older when separated from your last employer you can
cash out from the 401K without incurring the extra 10% income tax penalty
(obviously it would be taxable income, but not penalized). You can't do that if you convert the 401K funds to an IRA.

Transfer to Paul at Raymond James in Brownwood. Then buy silver & gold. Silver doubled since I bought it.

Thanks, that is correct. But, to clarify, the April 1 deadline for taking the RMD only applies for the first year that you have an RMD. For all following years, you are required to make the RMD by December 31 of the RMD year.

I totally agree with you.I have invested with Vanguard for 40 years now,
they are a great company,owned by the shareholders.

Hape2Bhr is correct. I copied the following text from the 2019 IRS publication 590-B Distributions from Individual Retirement Account (IRAs):

What’s New for 2020
Required minimum distributions (RMDs). For distributions required to be made after December 31, 2019, the age for beginning mandatory distributions is changed to age 72 for IRA owners reaching age 70 ½ after December 31, 2019. The required beginning date for IRA owners who haven't reached age 70 1/2 by the end of 2019 is April 1st of the year following the year of the owner’s 72nd birthday.

For long term ETF stocks are good with a reserve of cash for future trades. Negotiate with investment advisors but do your homework on mutual funds and avoid bonds except corporate for solid corps

As far as the withdrawal I invest in a utility which is a safe investment and dividend covers what I am forces to remove.
Plus it went up in value 20% over the past 4 months.