Skip to comments.Taking control of your 401K
Posted on 09/16/2013 9:55:52 PM PDT by SteelTrap
Big Momma Barnhardt has an example of a form letter to send to your HR monkey to request that you can move your money to a company you trust. Trust being a relative term.
Who should care? Anyone with a retirement fund but especially folks with all their eggs in one basket. People who have worked at the same company for a while are likely to have all their eggs in one basket. Enron you say?
Go to your HR tomorrow and ask them if you can move your 401k to another location of your choosing, Be prepared for a surprise, They don't want you to move it.Ask yourself why that could be?
Most places offering 401ks also offer several different mutual funds in which people can invest their 401K funds and are able to diversify within those — the companies can’t provide everyone with a different set of investment options. If you are already over 59 1/2 or left the company, THEN you can usually roll over your 401K into a Rollover IRA, where you can invest it as you choose, at a brokerage firm or mutual fund family of your choice.
Mentioning Enron is ridiculous — people who were stupid enough to have all their retirement savings in one stock — Enron, indeed lost all their money — but people who had their 401k investment in different mutual funds offered by the company through a fiduciary, were not impacted.
All financial advisors always tell everyone to diversify.
Also — I think the way 401k-s are set up is that legally you cannot take control of it.
Also — nobody forces anyone to invest in a 401K.
I think Ann Barnhardt’s advise is unreasonable and unfeasible and also against the defined 401K rules.
Then roll your 401K into a brokerage IRA, where you can buy and sell with the click of a mouse.
This may or may not involve bridge burning. YMMV.
So at best, it is partial not the full amount. Correct me if I am wrong, but the ony way out of a 401k, as an active employee is to stop contributing, or leave the firm and proceed with a Rollover. Retired early, access before 59 & 1/2 by rule 72T aka SEPP is another matter for another day...
I don't know where Ann is going with this, but HR might start thinking your a crank if you start trying things here. Tangent to this, their have been very well informed employees have approached HR and have pursuaded them to offer more investment options and or change providers ( lower cost no load etc ), but these are rare bears for sure...
Wow, lots of almost facts here. 401(k) plans MAY have a non-hardship withdrawal feature, depending on the plan. It permits a transfer to an IRA while you are still an active employee. The NHEW can be limited, commonly with formula based on length of service. Many, but not all plans have this feature. 401(k)s are not all the same. Ask your HR folks if a non-hardship early withdrawal form is available for your plan. If it is available it will spell out your options. Please don’t do this without a little research, and for God’s sake don’t take the assets as an early distribution. Ugly, ugly, ugly.
Thanks for your take and added input, the total of our 2 post denote their is so much more to “Ann’s” Story when to try to make the rubber hit the road if you travel down her path...
Update: I found out the situation where I work. They do not have and will not permit an “in-service” withdrawal. I was told it was IRS regs and it was out of their hands. Not true but oh well.
Long story short - I no longer work there (after >10 yrs) and my 401k money will (in <45 days) no longer be where it can be vacuumed up by wall street. I hope. Those guys are sneaky.
One of my best friends went from wealthy retired to bankrupt Walmart greeter (really) after Enron so I think about what she told me years ago - do not trust them!
I take it she bet the farm in her 401k, or was all in or darn close to it with 100% in Enron Stock?
Make sure to move it as a DIRECT TRANSFER to an IRA. Do NOT take the money directly and think you have 60 days to roll it over. While that is technically true trust me, you will not be happy with what happens. Your company MUST withhold 20%, but you have 60 day to roll over 100%. Ugly.
Sorry about your friend. She had to be heavily invested in Enron stock, which was one of many choices in her 401(k). Diversification is your friend. Putting a lot of eggs in any one basket can be trouble. Especially if that basket is ONE company.
“One of my best friends went from wealthy retired to bankrupt Walmart greeter (really) after Enron so I think about what she told me years ago - do not trust them!”
The most important thing to know about investing, and it’s something all investment advisors tell you, is: DIVERSIFY! DIVERSIFY! DIVERSIFY!
People who had all their money in Enron stock did indeed lose all of it, but Enron 401Ks had options for investing in mutual funds, it’s not Enron’s fault that people didn’t have the common sense of a fly.
I hope in your attempts to “avoid Wall Street” you won’t end up falling for some scheme and lose it all — some unscrupulous people are taking advantage of exactly people like you — buy real estate in Timbuktu, etc....
I recommend rolling over your 401K into a Rollover IRA at a reputable, large brokerage firm, that offers multiple families of mutual funds and diversify among those.
Quitting contributions at the current firm wouldn't be grounds for a transfer to an IRA. However, If the firm cancelled the 401K program you could move it to an IRA.
Yes sir the farm was bet - trusted in the best and the brightest.
Diversification was the goal but what I found out was all the diversification happens within a closed ecosystem. IOW, your 401k/IRA gives you the freedom to move money around but if you stop and thing about they set the boundaries - not me. In my case, I found out the “safest” harbor is not really safe at all, My Benny Bucks are still within the reach of the casino. There really is no way to say - cash me in - I’m going home.
I’m guessing that is true for everyone but what do I know? I am new to this situation.
“There really is no way to say - cash me in - Im going home.”
Actually, I think there is, at a cost — pay your federal and state taxes and early withdrawal penalty of 10% in addition, possibly additional early withdrawal penalty to your state as well. Check with your 401k plan.
Of course, I wouldn’t recommend withdrawing your money because you won’t have much of it left.
Most 401ks do offer options of stock funds, bond funds, money market (which is cash) and those funds usually do about as well as some average funds. What makes you think you are so investment savvy that you could do better on your own?
I’ve seen many people like you who get such idea in their head, then unscrupulous people take advantage and sell them property in the moon and so on — I am being sarcastic, but they are being offered “better” investment options, then they come crying, when they find out they’ve been scammed. Even supposedly sophisticated investors fell for the Madoff scams — people get greedy, they aren’t happy with “average” return, then they end up losing it all.
Looks to me you are on your way there...
Innovative said “Actually, I think there is, at a cost pay your federal and state taxes and early withdrawal penalty of 10% in addition, possibly additional early withdrawal penalty to your state as well. Check with your 401k plan.”
Having tried to do exactly that - the answer was no. I was told it was not possible. The only way out of the plan was termination of employment.
FWIW the NO answer came from my employer and not the plan administrator. The plan administrator has actually been very forthcoming and honest.
Like I said before, I decided I couldn’t work for them any more so now I get to figure out the net present value of tax + penalty vs investment that is free from future legal changes regarding sanctioned retirement. Being free of wallstreet and .gov, at least a small arms length, does have upside as far as I can see.
I hate to say this — keep this post and look at it say 10 years from now.
My prediction is that you’ll regret it.
If you are no longer employed with that company you can roll over your 401K into a R/O IRA, at a mutual fund family or a brokerage firm where you have many choices, and where you can invest it yourself without paying the taxes.
I highly recommend this option — otherwise I predict you’ll regret it. There is nothing out there that you can invest in, without risk to make up for all the taxes and penalties you are paying to take it out from inside an IRA.
In fact, as I said, unscrupulous people are most likely to take advantage of your aversion to the usual investments and you’ll end up losing it all.
Property on the moon gives you a return of 2000% I have lots on the moon for sale for you — send me a check. (Naturally I am being sarcastic — one other word: Madoff — for those who weren’t happy with “normal” returns)
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