Comments on: Hands Off The 401(k) http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/ A premiere personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Sat, 21 Nov 2009 16:42:00 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Miss Money http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-688 Miss Money Fri, 19 Aug 2005 01:29:17 +0000 http://wp.consumerismcommentary.com/?p=412#comment-688 Flexo: Thanks for the advice. I am changing jobs in a week and wondering what to do with my 401K. I think I will either roll it over to the new 401K or leave it where it is. I was considering a Roth IRA but I don't need to get the estate planning benefits just yet. Great advice! Flexo:

Thanks for the advice. I am changing jobs in a week and wondering what to do with my 401K. I think I will either roll it over to the new 401K or leave it where it is. I was considering a Roth IRA but I don’t need to get the estate planning benefits just yet. Great advice!

]]> By: Jason Van Steenwyk http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-687 Jason Van Steenwyk Mon, 01 Aug 2005 18:33:53 +0000 http://wp.consumerismcommentary.com/?p=412#comment-687 In most cases, you're better off rolling over to some similar funds in an IRA. If you believe you will be in a higher tax bracket in retirement, you can also think about paying taxes now and converting to a Roth. An IRA -- particularly a Roth IRA, has important estate planning advantages and succession advantages over a 401(k). For example, where your heirs may be able to stretch an inherited IRA over their entire life expectancy, your 401(k) administrator may require your heirs to empty the account within five years - potentially costing your heirs decades of tax-deferred or tax-free growth. Previously, if you were in a profession subject to frequent lawsuits (e.g., OB-GYNs, surgeons, etc.), or if you were worried about creditor protection, you stayed in a 401(k), since the 401(k) recieved additional creditor protection over the IRA (depending on state law). Not so much any more - a recent court decision upheld the argument that IRA balances designed to provide reasonable retirement income also recieved a similar protection from creditors. The only argument to stay in the 401(k), then, would be if you got exceptionally low fees in the 401(k) not available in an IRA (unlikely, if you index and know where to look), and were simply not worried about your heirs. In most cases, you’re better off rolling over to some similar funds in an IRA. If you believe you will be in a higher tax bracket in retirement, you can also think about paying taxes now and converting to a Roth.

An IRA — particularly a Roth IRA, has important estate planning advantages and succession advantages over a 401(k). For example, where your heirs may be able to stretch an inherited IRA over their entire life expectancy, your 401(k) administrator may require your heirs to empty the account within five years – potentially costing your heirs decades of tax-deferred or tax-free growth.

Previously, if you were in a profession subject to frequent lawsuits (e.g., OB-GYNs, surgeons, etc.), or if you were worried about creditor protection, you stayed in a 401(k), since the 401(k) recieved additional creditor protection over the IRA (depending on state law).

Not so much any more – a recent court decision upheld the argument that IRA balances designed to provide reasonable retirement income also recieved a similar protection from creditors.

The only argument to stay in the 401(k), then, would be if you got exceptionally low fees in the 401(k) not available in an IRA (unlikely, if you index and know where to look), and were simply not worried about your heirs.

]]> By: Steve http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-686 Steve Mon, 01 Aug 2005 15:50:14 +0000 http://wp.consumerismcommentary.com/?p=412#comment-686 It may not apply much to people switching jobs, but the 10% penalty is only for taxpayers under 59 1/2 years old. On the other hand, 401k and tax-deferred IRA cashouts are obviously taxed at both the federal and state levels. Lesson? Plan! It may not apply much to people switching jobs, but the 10% penalty is only for taxpayers under 59 1/2 years old. On the other hand, 401k and tax-deferred IRA cashouts are obviously taxed at both the federal and state levels. Lesson? Plan!

]]> By: Local Small Business Marketing & Advertising http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-689 Local Small Business Marketing & Advertising Mon, 01 Aug 2005 10:26:37 +0000 http://wp.consumerismcommentary.com/?p=412#comment-689 <strong>The Carnival of the Capitalists (Mmmmm, Capitalism!)</strong> Welcome to the August 1st, 2005 edition of The Carnival of the Capitalists. I have a confession… Each week I visit the COTC, but I’ve been a scanner. I’ll look for titles that jump out at me, titles that seem likely to tickle my fan... The Carnival of the Capitalists (Mmmmm, Capitalism!)

Welcome to the August 1st, 2005 edition of The Carnival of the Capitalists.

I have a confession…

Each week I visit the COTC, but I’ve been a scanner. I’ll look for titles that jump out at me, titles that seem likely to tickle my fan…

]]> By: Local Small Business Marketing & Advertising http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-1432 Local Small Business Marketing & Advertising Mon, 01 Aug 2005 10:26:37 +0000 http://wp.consumerismcommentary.com/?p=412#comment-1432 <strong>The Carnival of the Capitalists (Mmmmm, Capitalism!)</strong> Welcome to the August 1st, 2005 edition of The Carnival of the Capitalists. I have a confession… Each week I visit the COTC, but I’ve been a scanner. I’ll look for titles that jump out at me, titles that seem likely to tickle my fan... The Carnival of the Capitalists (Mmmmm, Capitalism!)

Welcome to the August 1st, 2005 edition of The Carnival of the Capitalists.

I have a confession…

Each week I visit the COTC, but I’ve been a scanner. I’ll look for titles that jump out at me, titles that seem likely to tickle my fan…

]]> By: Flexo http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-685 Flexo Tue, 26 Jul 2005 06:40:39 +0000 http://wp.consumerismcommentary.com/?p=412#comment-685 That would be a good solution if the new job doesn't offer as good or as inexpensive funds as I could find privately. That would be a good solution if the new job doesn’t offer as good or as inexpensive funds as I could find privately.

]]> By: Neil http://www.consumerismcommentary.com/2005/07/25/hands-off-the-401k/#comment-684 Neil Tue, 26 Jul 2005 04:02:36 +0000 http://wp.consumerismcommentary.com/?p=412#comment-684 What about moving your 401k into a Rollover IRA if you switch jobs? That way, you can choose whatever investments you want - no restrictions. What about moving your 401k into a Rollover IRA if you switch jobs? That way, you can choose whatever investments you want – no restrictions.

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