401k Rollover

Discussion in 'UPS Discussions' started by taeyk4, Feb 25, 2009.

  1. taeyk4

    taeyk4 New Member

    I heard about 401k rollover lately.
    Is it good idea to rollover my 401k?
    They advise me to keep my 401k for company matchup and withdraw some of it to rollover to annuity.
    Last year was terrible for my 401k, stock brokers said that the bottom is near since last year and I don't think the market is going well.
  2. raceanoncr

    raceanoncr Well-Known Member

    Where are you going to roll it over to? EVERYTHING is tanking the last few months. Keep it in there. Put in the max. Ride it out. Tax benefit is still there. 401 match is not, at least for non-union people here anymore.
  3. rod

    rod retired and happy

    I personally don't think ANYONE knows what the economy is really going to do. It is all a crap shoot but if history is a good judge- the markets will come back---------------------------------if a person has anything left in it to come back with. My financial Guru told me a year ago last Feburary that the markets would be on a rolly-coaster until about October of 08, then they should level off and go up from there. And to think I pay this guy money for wisdom like that:peaceful:
  4. mountaingoat

    mountaingoat New Member

    Basically, the government rules are that you can take the money out of your 401K but then you have to roll it into and IRA within 60 days. If that doesn't happen, you must pay the taxes on the amount that you withdrew in addition to a 10% penalty.

    That being said, what are you going to roll it into? If you are like most other people, you have watched the value in your 401K decrease over the last year. If you're rolling over your 401K to purchase another fund outside your 401k, you are selling low (and hopefully you are buying that other fund low as well). And if the plan is to move it into a safe fund (or a .5% savings account), you have just sold your 401K at a loss an put it into something that will not give you the higher returns that you need when the economy comes back.

    Rod is right - noone is sure what is going to happen in this economy. Wall Street hates uncertainty, and that is exactly what this economy is right now. As a country, we could pull out of this later next year, or we could pull out of this in a decade (remember Japan's "lost decade?"). Noone knows.

    My suggestion at this point is to keep your cash flow positive. If that means ceasing your contributions to your 401K, so be it. My personal opinion is that you should continue to put money into the 401K at this point when the funds are low. Depending on your time horizon, this could be a golden opportunity to purchase funds at prices not seen in 12 years!
  5. brownmonster

    brownmonster Man of Great Wisdom

    People set up their 401ks for the long term and then when things in the economy change they want to change their strategy. Stay the course and quit looking at it everyday. If you are young you are buying low. If you are retirement age you probably should have had half your money in something safe. I'm trying to remain optimistic as I watched years of saving go down the drain. Keep the faith. BM
  6. taeyk4

    taeyk4 New Member

    I'm thinking to rolling over to IRA - Index Annuity.
    They offer promotional bonus for 10 years term.
    Also min 2% APR upto 12%.
    It sounds good deal isn't it?
    However, I will keep my 401k contribution.
    I'm just thinking to withdraw some of my 401 contributions for safe Index Annuity.
  7. gandydancer

    gandydancer New Member

    My impression has been that my 401(k) has been a dog, up market or down, with the managers doing better than I have. And as an hourly, no match. Saw an ad on this site by some lawyers trolling for members in a potential class action against the trustee for allowing excessive fees and kickbacks, and the allegations sound plausible to me, so I've asked for more info.
  8. brownmonster

    brownmonster Man of Great Wisdom

    Maybe that's why we are now with a new company, Prudential.
  9. barnyard

    barnyard KTM rider Staff Member

    Why would you sell your shares at the bottom of the market????? Right now, you will take a loss on anything you sell (when you roll over, you are selling your current shares and buying shares in a new account.)

    Anyone in the money business well tell you, "buy low, sell high."

    I increased my 401k deduction and am now also putting money into a Roth IRA and buying UPS stock (it is still a 5% discount.) I am saving about 18%. The market may continue to go down for a while, but history says, it will go up again.

    I feel like I am doing one of the smartest things I have done in a while.

  10. 1989

    1989 Well-Known Member

    If you roll it over into a roth now you will save the fees that you would incure just leaving in the 401K. You will have more control and flexibility. And will pay tax on it now, not when the bill is due on this great debt of ours. I believe we will be paying higher taxes in the future.

    You can get a 4+% discount (on todays price) on UPS stock in the market. And control those share on March 23rd. Or you can go out a few months and get a 10-15% discount. Besides what good is it to own something that you can't control?
  11. raceanoncr

    raceanoncr Well-Known Member

    1989, I kinda hafta respectfully take issue with this.

    With a Roth, you can only invest up to $5000, if you're over 50, a year. With a 401K, you can invest up to, what is it this year, $15000. Control? Well, what's not to control in your 401. There are alot of different funds to move it around in. Sure there are alot of different funds in Roth also. I say, "What's the diff"? Besides, in today's economy, NOTHING is gonna work.

    Taxes? Right now, I want all the tax-deferment I can get. I have been maxing 401 for a number of yrs and it's worked great on taxes. Taxed at a higher rate later on? That much higher to make a diff? I don't think so.

    The last few yrs, even with 401 maxing out, I've been taxed at 35%. Last yr, because of being out on dis for alot of months, and my income being slashed, I was taxed at 15%. I figured that when I retire (hopefully within the yr), with pension, early SS, wife's income, we'll be right at what I made last yr on dis, 15%, and I can make it on that just fine. Even if it jumps to 20% or 25%, it's still better than the 35% I was getting hit with working all year.

    Do what you must, but in my case, this works just fine. Well, when the economy works just fine, that is.
  12. pissedoffmanager

    pissedoffmanager New Member

    You can start a Roth, the company I have mine in is paying a bonus of 6.9% the first year, 3.9% after that, locked in rates. The nice thing about a Roth is that it is tax deferred, and when you retire, you pay no taxes on that money. Roth is a great thing to have as a backup plan, even if you just contribute the min of 500 a year with the right company, you will be glad you did.
  13. wily_old_vet

    wily_old_vet New Member

    Those of you saying how great the Roth is are putting a lot of faith in the Congress. When the bills start coming due on this mess we're in do you trust Congress not to say never mind we are going to tax the money you withdraw from the Roth. I'm not that trusting.:knockedout:
  14. wily_old_vet

    wily_old_vet New Member

    I could be wrong but I believe annuities are a tax deferred vehicle on their own and having one inside a IRA gains nothing.
  15. raceanoncr

    raceanoncr Well-Known Member

    Hmmm...that's a good point too. Never thot o that. I'm with you, don't trust what the govt can and will do.

    My finance guy told me when I first started Roth (which, by the way, is just additional, not only investments), that since the govt screws us in so many ways, this was one way they said, "We're sorry for every screw we put in you, we'll take one out". They can very easily put it back in.
  16. Dfigtree

    Dfigtree New Member

    It's like opening an unbrella indoors.

    An annuity is an insurance contract laden with lots of expenses, charges and fees.

  17. Bubblehead

    Bubblehead My Senior Picture

    My 401K is now a 104K. So much for retirement.
  18. pissedoffmanager

    pissedoffmanager New Member

    A Roth is contributed to with after tax money, they cannot tax the money twice, because you have already made tax contributions and claimed it as such, that is why it is tax free when you retire. That is how a Roth is different than any other investment vehicle, it is made after tax. If you are putting money into a traditional IRA, it money put in before taxes, that is why you pay taxes on it when you withdraw. Right now a Roth is the best bet, even for your kids college education since the 529 College Plans are bleeding money.

    A Roth annuity is tax deferred, but to answer another posters question, you still don't have to pay taxes on the interest gained, and when you cash it out you still don't have to pay taxes as long as you are older than 59 1/2. That is the great thing about a Roth, and Dave Ramsey and others tout it for a good reason.
  19. pissedoffmanager

    pissedoffmanager New Member

    Great you posted to a fool.com website, did you realize that your 401K shares those same fees and expenses as well as an annuity, plus a yearly tax on that money? The same surrender charges and fees apply to a 401K just like they do to an annuity. The expenses and charges are all the same if it is a 401K or annuity, educate yourself before you try to post to fool.com, they are some of the worst idiots out there.
  20. pissedoffmanager

    pissedoffmanager New Member

    Here is the other thing to consider with an annuity, the money is paid out right when you pass away to your beneficiaries, with a 401k that all has to be named in your will costing you extra money for a lawyer. Plus, you have to consider probate or estate courts, which in my state are 9 months after you pass if you have a 401k set up in a will. Here is the other thing 401k's, cd's, and other things are subject to estate tax, on top of the income tax...Roth's are not subject to estate tax!