Biggest financial mistake I ever made was with my 401k. My company had a Roth 401k when my kids were in college, but I didn't actually start contributing until year 3 of the 6 years I had kids in college. Because I was helping them with expenses, I was entitled to the tax credits, so my effective tax rate was extremely low. That is the time you NEED to be in a roth! i still retired with about $350k in my 401k.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
I totally agree; I am 66 years old, recently retired, with approximately $1.2 million in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, I didn't do all this alone, but with the help of a financial advisor. Having one is currently the best way to trade in the stock market, especially for people nearing retirement.
Sonya lee Mitchell is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you so much! This is exactly what I needed right now. I wrote her an email and am waiting for her reply. Hopefully, she responds soon. I plan to start the year on a strong financial note.
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@leoma-l7r The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $875k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the name of the advisor who has been assisting you in navigating these financial challenges?
@@EricLamptey-v1p Cynthia Alexandra Jackson is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
*Cynthia Alexandra Jackson* a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Planning retirement has never been this confusing! First SVB, then Signature bank and now First republic, these are all the signs of yet another 2008 market crash and recession 2.0, so my question is do I still save in the United States dollar, or could this be a good time to buy stocks? So I’m left wondering what 2023 has in store for us investors, I’ve been sitting on over $745K equity from a home sale and I’m not sure where to go from here,
Everyone needs a different stream of income , unfortunately having a job doesn't mean security due to the high rate of tax , one needs to move ahead their expectation, I would recommend refraining from investing in stocks for now. Instead, it would be prudent to consider retaining a portion of your assets in gold. Alternatively, seeking advice from a financial advisor could provide valuable guidance in this matter.
@@freedomisEexpensive-08 true, A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
@@MrGravity304 Do you mind sharing info on the adviser who assisted you? been saving for pension since age 18 - company scheme. along the way I hit higher tax, so I added to my company pension with a SIPP (tax benefits) I'm 46 now and would love to grow my finance more aggressively, there are a few cars I still wish to drive, a few mega holidays, etc.
@@NotyourBusiness-urto6 My advisor is NICOLE DESIREE SIMON , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
@@MrGravity304 she actually appears to be well-read and educated. I just did a Google search for her name and found her webpage, I appreciate you sharing
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
@@TheDjcarter1966 Our effective tax rate was less than 10 percent last year, and not having to wait for a refund check rolling over to an IRA and then withdrawing with a 10 percent instead of 20 percent withholding was a rational decision.
Husband is retiring next March he will be 64.5 his company will not let his 401k stay with them. It is a modest 401k of 165k. We know nothing about investing dose a IRA come with a advisor and do they charge a monthly fee to care for our account? We live in Texas with the 401k, social security and a modest pension...This will be our livelihood. We have lost money before in the 90’s and investing scares us to death. Thank you for any advice. Alice
The concern is when the advisor isn’t worth the fee. There are sadly advisors who don’t do much else besides reinvest a client’s account into more complicated and expensive versions of what the client already had in their 401(k). That’s when rollovers are bad because the only one who really benefits is the advisor
im 43, still have 22-25 yrs to ponder for this lifetime before retirement; i need an advice for my 401k from my previous employer, is it ideal to move it to rollover ira?
I want to rollover a 401k for a job I no longer have. Complexity is I want to change the provider. The 401K holder now is cagey about how to get the money out!
They can’t prevent you from taking your money out if you’ve since left. They may try to make it difficult, but they can’t stop you. If they keep trying to block you, tell them you’ll inform the Department of Labor about it
The timing of rolling over the 401(k) to an IRA? No, it doesn't really matter. If your 401(k) and IRA are at the same custodian, they may possibly be able to transfer over your investments as-is, in which case you don't have to sell anything in your 401(k) to roll it to the IRA. In which case there is zero timing element involved. But more likely, in order to roll your 401(k) to an IRA, your 401(k) will have to liquidate everything in your 401(k) to cash, and then that cash will be distributed out via paper check to be deposited into your IRA. The timing involved there is that while the money is sitting in cash, it is not invested. That could end up being good or bad. It's good if the market goes during the time and you miss those down days by not being invested. It's bad if the market goes up those few days and you miss out on not being invested during the time. But it's honestly a crap shoot what the market will do over those few days, so don't let it stop you. Just be aware that you'll be uninvested while the rollover is happening.
Thanks. This info is always good to consider. I'm in NY State. What law or rule allowed me to take my money from my 401k at 55yo? My 401k says i would have a penalty prior to 59.5yo. ?
It's an IRS rule that overrides the default treatment mentioned by your 401(k). Check out the "Separation from Service" row at the bottom of the table here: www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions#:~:text=Generally%2C%20the%20amounts%20an%20individual,tax%20unless%20an%20exception%20applies.
I just retired today! My 401K is managed by Fidelity, and has performed well historically. I am going to turn 54 next month, and do not see a need to touch my retirement funds for the next 10 years. Would you recommend leaving the investment in the 401K or transferring it to a ROTH IRA?
Doh! I am thinking it would have been wise to consult with a professional at least six months before retirement. Imagine how nice it would have been to have pulled off a mega backdoor Roth IRA rollover.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Prioritizing effective personal finance management holds greater significance than the sheer amount saved, irrespective of income source. Consulting a certified financial advisor can offer tailored strategies to optimize financial results by reducing expenses and enhancing income, regardless of whether it's earned through employment or investments.
I wholeheartedly concur. At 60 years old and newly retired, my external retirement funds total around One million two hundred fifty thousand dollars.. With no debt and minimal retirement fund allocation relative to my portfolio's value over the last three years, I recognize the importance of a financial advisor. Neglecting them isn't an option; however, thorough research is vital to find a trustworthy fiduciary advisor.
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Natalie Lynn Fisk‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
I have 401k in the company I’m working for. I’m near 65 and plan to retire soon. Some people said if after retired and still leave money in that 401k then I won’t be able to withdraw some money out when needed unless move it to IRA. Is it right?
It all depends on your employer's plan and how they chose to allow distributions. Some plans allow you to only make one single distribution after you leave. That basically means you have to take the entire thing out in one shot; other as a rollover to an IRA or as a normal distribution. Other plans allow multiple distributions, but perhaps limit it to only a few per year. Other plans are a lot more flexible and allow even more frequent withdrawals. You'll have to ask your 401(k) administrator and see what the rules are for your particular plan
Returning back to previous job after being let go due to COVID. Upon return, I was asked if I would like to roll over my 401k to an IRA. Not retiring for 10 years min. Not a savy investor, just saved really well (200k). Roll it or keep it. TIA
Contact the administrator of that old 401(k) and tell them you’d like to roll your balance over. They will walk you through the next steps. You’ll first have to have somewhere to receive the rollover: either an IRA or your current employer’s retirement plan (if you’re still working and they offer a retirement plan that allows you to roll in outside money). Have that account info in hand when doing the rollover from your old 401(k)
I saw a women on TikTok who makes videos on it's IRA rollovers and such. She said that ira rollover do not have contribution limits like a Roth IRA has a 6k limit or 7k for 50nand older, is this true?
Correct, there is no limit on how much you can rollover from one qualified plan to another. Whereas contributions DO have annual limits. There are similarly no limits on how much you can rollover from one Roth qualified plan (like a Roth 401(k)) to another Roth qualified plan (like a Roth IRA).
No, but be sure to do it as a “direct” rollover www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
Husband has an annuity they offered him a lump sum of 60k or lifetime( his family lives in their 100’s) payment of $303 a month. Is taking the $303. Monthly the best plan?
There are a lot of things to consider and there isn't necessarily going to be a definitively right answer unfortunately. Here's a summary of the main things to think about when deciding between taking the lump sum or monthly income: ruclips.net/video/Yz6aTCEA8_0/видео.html
I would take the 60k and invest it in a basket of stocks that will give you an average dividend yield of 6 percent. That will provide $300 per month while your sitting on 60k vs getting $303 per month and sitting on Zero. Yes there would be risk but well worth it.
I recently left a company after 18yrs for another company. Im undecided if i should rollover my 401k into an ira or just leave it. I cannot rollover into my current company plan. Any advice?
Great question, but there are too many potential things to consider in making that decision. It may be worth reaching out to a fee-only hourly financial planner. Your best bet to find one of those would be to search on www.GarrettPlanningNetwork.com
Interesting. For me, only one of the pros (potentially) pertains to me and none of the cons. But it's still important to explore the subject. Thanks for this video.
Fact is, though the 401k, IRA, name it are one of the safest retirement plans, they are not particularly good options. Better strategy; Live below your means, Invest 20-30% of your income into the stock market but of course, be well informed about where you want to put your money... I made my first million earlier this year from stocks alone with about 550k after I dissolved my 401k and added little cash (through the help of a pro though). Greatest decision I ever made.
@@the_jean_mum Wow I know this little lady. Once attended a seminar she was also in attendance here in Texas,, Great speaker. I still think the 401k or putting it in a high yield savings account is the more reasonable option, given the economy,,
This was very helpful. Thank you. I also heard that if you have company stock in your 401k and have made significant unrealized capital gains in it that there is a caveat that allows you to tax the company stocks at ordinary income for the cost of the stock and capital gains on realized gain once taken.
I’m planning to retire at full retirement age 66 1/2. Would like to take my 401k out to put as down payment on a house. How with this affect my taxes if I move to a no income tax state (CA to TX)? I understand that if I roll it over an IRA, I have to wait 5 years before I can take money out, is this correct?
I assume the 401(k) is all pre-tax money? Assuming so, you can roll it to an IRA and then wouldn't be any waiting period to then take money out of it. Since you're over 59 1/2, there won't be the 10% penalty on withdrawals. But all withdrawals will be taxed or ordinary income federally. And depending what state you're living in when you make the withdrawals, there could be state income tax, too (CA, yes. TX, no). So, taking a large amount of money out of a tax-deferred account like a 401(k) or IRA to make a downpayment on a house isn't ideal, because you will have to pay a lot of tax on it. For example, taking $300k out in one year will lead to a lot more tax than taking $50k out per year for six years. But, if that's your only source of assets and you need to to take money from somewhere and don't have any other options, perhaps that's your only choice, even though the taxability of that withdrawal could be quite high. And furthermore, the spike in income from taking a large distribution could very well jack up your Medicare premiums for a year, in two years.
My wife left her job over 10 years ago and has $40$ sitting in a 401k from that old employer. Just to be clear, I should be able to roll that over to an IRA, correct? There is very limited investment opportunities in the 401k. Thanks for the video!
@@RetirementPlanningEducation if his wife is unemployed and between the ages of 55 & 59.5, can she take some money out tax free & put it into Roth? What is a backdoor Roth IRA?
Good day. I was wondering if there's a one-year rule pertaining to the 401(k) to IRA rollover. I have an old 401(k) account, and I wanted to split its distribution - half money will go to company 1 IRA and half will go to company 2 IRA. They sent me two check so I can deposit them into those accounts. I understand that I have to deposit them within 60 days. But regarding the "one 60-day indirect rollover per year" rule, do I have to pay tax and penalty fees in this case?
Were the checks made payable to you, or payable to the new custodians fbo your IRAs? If the latter, those are still direct rollovers and aren't limited to one per 12 months
@@RetirementPlanningEducation Thank you. This is the first time I did this, and I thought I had to pay huge penalty fees for splitting the money into two different IRA accounts. The checks were made to the new company FBO my IRA.
I retired this year at 55 and would like to rollover my 403B to an IRA. Will Roth conversions from the new IRA be penalty free if I pay the taxes from my taxable account?
Conversions thankfully aren't subject to the 10% penalty, regardless what age you are. But yes, any pre-tax money you convert will be taxable in the year of the conversion
Check with the administrator of your particular 401(k) plan. But it's not likely. Or at least, you'd have to either pay back the loan before rolling it over, or they'd only let you roll over the amount that's not the loan. IRAs are not allowed to have loans against them, so there is definitely no way you can rollover a loan to an IRA. But check to see if your plan will let you rollover anything at all if you have a loan outstanding; they may first require full repayment of the loan before they'll allow ANY amount of money to be rolled out to an IRA.
Markets and rates definitely change! At the time I recorded this (about four years ago), clients' stable value funds were paying around 2%, give or take, while other principal-protected things like money market funds, T Bills, high yield savings accounts, etc were all paying well under 1%. Now though, yes, those things are paying noticeably more than stable value funds.
Yeah, that's a great point. I struggled with including that and decided not to. In hindsight, I probably should have. Yes, you're right; for those who are doing backdoor Roth IRA contributions, keeping pre-tax money in your 401(k) and out of your IRA could definitely make sense. I left it out because it was fairly technical and I thought it wouldn't apply to most people. So I didn't want to risk making it too confusing. But if/when I redo that video, I'll include it. Thanks!
It all depends on the advisor, how he or she is regulated, what products or services he or she sells and how he or she chooses to structure fees. If the advisor just focuses on managing investments, chances are they will charge a percentage of the assets they oversee, and that percentage is typically about 1% per year. If the advisor is ultimately just an insurance salesperson, there is typically no outright fee to the client, because the person gets paid a commission on the product(s) he or she sells to you. If the advisor is just an advice-giver and doesn't manage investments or sell commissioned products, the fee could be hourly (typically $200-$400/hr) or a fixed ongoing annual fee of a typically anywhere up to about $10k or so per year.
Not sure about other states, but Maryland allows preferential tax treatment on 401k distributions in some circumstances. This does not apply to IRA distributions.
@@RetirementPlanningEducation It is due to a 401k being an employer sponsored defined contribution pension plan vs. an IRA. An employer sponsored defined benefit pension plan would also have the preferential tax treatment.
I have a Mutual of America 401k and 403b. I left the company years ago. Do I need to consolidate the mutual funds into one before trustee transfer? I can do both in one year since it won't be a rollover...NO?? Thanx for any help
Check with Mutual of America, but I wouldn't think you need to consolidate the 401(k) and 403(b) before rolling either or both out to outside qualified accounts (such as an IRA). If you do "direct" rollovers from both plans, yes, you can do them in the same year. A direct rollover is where the cash proceeds of the 401(k) and/or 403(b) is made payable to your IRA custodian for the benefit of you. It is NOT made payable to you directly...that would be an "indirect" rollover. If you do an indirect rollover, that's where you can only do one every 12 months.
Depends what your employer allows. Employers can customize their restrictions around your ability to take withdrawals. Some employers may only allow you to roll out the entire thing in one shot...they may not allow partial distributions. You'd have to check with your plan administrator and see what they say
If you leave it in a 401k they have to deduct 20% withholding to the IRS- even if you only only need to withhold 12%. You get it back a year later but you still need to give the government an interest free loan in doing so.....
@@dantheman6607 The good news is that you got bad (or, at least, incomplete) advice. Here’s a quote from the IRS guidance: “Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.”
@@Stashmo yes I understand that if I roll my 401k into a roll-over IRA there will be no deduction taken. Currently it’s still in my 401k and if left there I will face the 20% deduction
@@dantheman6607 Not sure what you mean. If you leave it in the 401k, and don’t take withdrawals/RMDs, you pay no taxes. If you do want/have to take some $ out, first move the account to an IRA (which doesn’t trigger taxes) and the take $ out from that IRA-again with no mandatory 20% taxes.
There's another con - if you are doing annual backdoor Roth conversions, you are going to wind up with a big tax liability if you roll the pre-tax 401(k) funds into your IRA account.
I mean none of these videos even CONSIDER the fact that retires want INCOME from their 401k money! NONE! Roll over, keep it - whatever - but none talk about how a retiree is expected to LIVE, pay bills! NONE!
I find that the creditor protection is often overlooked. Although it may be a rare occurrence, losing your total IRA to a lawsuit would be devastating. Keeping your 401K may be cheap insurance against such a loss.
I’m 59 1/2 and my employer does not allow me to take monthly distributions and work part time. If I quit my job and roll over my 401k to an IRA and start getting monthly withdraws and go back to work with my former employer are there any consequences? Thank you
I have both a Trad 401(k) and a Roth 401(k) at a company I will leave AFTER turning age 55. Can I specify which account any withdrawals come from under the Rule of 55? Can I rollover my Roth 401(k) assets (opened 5+ years ago) into my Roth IRA that I opened and funded over 10 years ago and leave my Trad 401(K) with the previous employer? (the options are good enough I just want to control the Roth assets in one basket so I can "sip" off them and control my marginal tax rate).
I am 58 & was layed off. If I withdraw funds tax free from 401K, can I put them in a Roth IRA without paying taxes? Is there an annual limit? I am in Cal. Great video - thx!
Biggest financial mistake I ever made was with my 401k. My company had a Roth 401k when my kids were in college, but I didn't actually start contributing until year 3 of the 6 years I had kids in college. Because I was helping them with expenses, I was entitled to the tax credits, so my effective tax rate was extremely low. That is the time you NEED to be in a roth! i still retired with about $350k in my 401k.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
I totally agree; I am 66 years old, recently retired, with approximately $1.2 million in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, I didn't do all this alone, but with the help of a financial advisor. Having one is currently the best way to trade in the stock market, especially for people nearing retirement.
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Sonya lee Mitchell is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you so much! This is exactly what I needed right now. I wrote her an email and am waiting for her reply. Hopefully, she responds soon. I plan to start the year on a strong financial note.
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@leoma-l7r That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@Elliot-Ivan My advisor is Victoria Carmen Santaella;
You can look her up online
@@leoma-l7r The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $875k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
That's quite remarkable! I'm genuinely interested in benefiting from the guidance of such experienced advisors, especially considering the current state of my struggling portfolio. May I know the name of the advisor who has been assisting you in navigating these financial challenges?
@@EricLamptey-v1p Cynthia Alexandra Jackson is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
*Cynthia Alexandra Jackson* a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Planning retirement has never been this confusing! First SVB, then Signature bank and now First republic, these are all the signs of yet another 2008 market crash and recession 2.0, so my question is do I still save in the United States dollar, or could this be a good time to buy stocks? So I’m left wondering what 2023 has in store for us investors, I’ve been sitting on over $745K equity from a home sale and I’m not sure where to go from here,
Everyone needs a different stream of income , unfortunately having a job doesn't mean security due to the high rate of tax , one needs to move ahead their expectation, I would recommend refraining from investing in stocks for now. Instead, it would be prudent to consider retaining a portion of your assets in gold. Alternatively, seeking advice from a financial advisor could provide valuable guidance in this matter.
@@freedomisEexpensive-08 true, A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
@@MrGravity304 Do you mind sharing info on the adviser who assisted you? been saving for pension since age 18 - company scheme. along the way I hit higher tax, so I added to my company pension with a SIPP (tax benefits) I'm 46 now and would love to grow my finance more aggressively, there are a few cars I still wish to drive, a few mega holidays, etc.
@@NotyourBusiness-urto6 My advisor is NICOLE DESIREE SIMON , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
@@MrGravity304 she actually appears to be well-read and educated. I just did a Google search for her name and found her webpage, I appreciate you sharing
Thank you for a simple straight forward explanation. I’m in the process of rolling over from 401k to IRA
I'm glad you found it helpful, thank you!
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months...by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
But you still pay the taxes probably net 15-20%, the withholding is just to make sure you don't travel a big tax bill at the end of the year
@@TheDjcarter1966 Our effective tax rate was less than 10 percent last year, and not having to wait for a refund check rolling over to an IRA and then withdrawing with a 10 percent instead of 20 percent withholding was a rational decision.
Fantastic info. Several financial advisors have told me I have to take equal payments for five years. 🙃
Under 72t “Substantially Equal Periodic Payments” you have to take equal payments for at least five years
@RetirementPlanningEducation but this doesn't apply to the rule of 55. I've already called Fidelity who holds my 401k.
Great video! Earned a sub. 👍🏻
Thank you!
Husband is retiring next March he will be 64.5 his company will not let his 401k stay with them. It is a modest 401k of 165k. We know nothing about investing dose a IRA come with a advisor and do they charge a monthly fee to care for our account? We live in Texas with the 401k, social security and a modest pension...This will be our livelihood. We have lost money before in the 90’s and investing scares us to death. Thank you for any advice. Alice
Excellent video! Thanks!
Glad you liked it!
Why is paying a financial advisor a concern? The bigger concern is whether or not the financial advisor is worth the fees?
The concern is when the advisor isn’t worth the fee. There are sadly advisors who don’t do much else besides reinvest a client’s account into more complicated and expensive versions of what the client already had in their 401(k). That’s when rollovers are bad because the only one who really benefits is the advisor
Thanks for going into some of the more subtle pros and cons.
I'm planning rollover my 401k to Roth IRA. What about the RMDs??
Roth IRAs don’t have RMDs (unless it’s an inherited Roth IRA, in which case it might)
Thank you. Very helpful.
My pleasure, I'm glad it was helpful!
Good info, thanks!
Thanks for sharing this! I'm going to roll over my 401K to IRA as the company I work for doesn't offer 401 and I would like lower account fees.
im 43, still have 22-25 yrs to ponder for this lifetime before retirement; i need an advice for my 401k from my previous employer, is it ideal to move it to rollover ira?
Here's a more comprehensive list of pros and cons: retirementplanningeducation.com/blog/f/pros-and-cons-of-employer-plan-to-ira-rollovers
@@RetirementPlanningEducation thank you sir!
I want to rollover a 401k for a job I no longer have. Complexity is I want to change the provider. The 401K holder now is cagey about how to get the money out!
They can’t prevent you from taking your money out if you’ve since left. They may try to make it difficult, but they can’t stop you. If they keep trying to block you, tell them you’ll inform the Department of Labor about it
each wants a paper form sent to them and then somehow i'll get notified . sounds antiquated or avoidant.
Does the timing matter? The market is currently down and i have been losing money. I wonder if i should wait till the market goes up?
The timing of rolling over the 401(k) to an IRA? No, it doesn't really matter.
If your 401(k) and IRA are at the same custodian, they may possibly be able to transfer over your investments as-is, in which case you don't have to sell anything in your 401(k) to roll it to the IRA. In which case there is zero timing element involved.
But more likely, in order to roll your 401(k) to an IRA, your 401(k) will have to liquidate everything in your 401(k) to cash, and then that cash will be distributed out via paper check to be deposited into your IRA. The timing involved there is that while the money is sitting in cash, it is not invested. That could end up being good or bad. It's good if the market goes during the time and you miss those down days by not being invested. It's bad if the market goes up those few days and you miss out on not being invested during the time. But it's honestly a crap shoot what the market will do over those few days, so don't let it stop you. Just be aware that you'll be uninvested while the rollover is happening.
@@RetirementPlanningEducation wow thank you so much for the detailed explanation. Really appreciate it!
Thanks. This info is always good to consider. I'm in NY State. What law or rule allowed me to take my money from my 401k at 55yo? My 401k says i would have a penalty prior to 59.5yo. ?
It's an IRS rule that overrides the default treatment mentioned by your 401(k). Check out the "Separation from Service" row at the bottom of the table here: www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions#:~:text=Generally%2C%20the%20amounts%20an%20individual,tax%20unless%20an%20exception%20applies.
I just retired today! My 401K is managed by Fidelity, and has performed well historically. I am going to turn 54 next month, and do not see a need to touch my retirement funds for the next 10 years. Would you recommend leaving the investment in the 401K or transferring it to a ROTH IRA?
Doh! I am thinking it would have been wise to consult with a professional at least six months before retirement. Imagine how nice it would have been to have pulled off a mega backdoor Roth IRA rollover.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Prioritizing effective personal finance management holds greater significance than the sheer amount saved, irrespective of income source. Consulting a certified financial advisor can offer tailored strategies to optimize financial results by reducing expenses and enhancing income, regardless of whether it's earned through employment or investments.
I wholeheartedly concur. At 60 years old and newly retired, my external retirement funds total around One million two hundred fifty thousand dollars.. With no debt and minimal retirement fund allocation relative to my portfolio's value over the last three years, I recognize the importance of a financial advisor. Neglecting them isn't an option; however, thorough research is vital to find a trustworthy fiduciary advisor.
This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Natalie Lynn Fisk‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
The bass in the intro music lol
It's not as good as the bass scene out of Miami in the 90's, but it's close!
If you have stocks in a 401K, can they be directly transferred into an IRA or will they be sold and the money moved?
Check with the 401k and see what they allow.
I have 401k in the company I’m working for. I’m near 65 and plan to retire soon. Some people said if after retired and still leave money in that 401k then I won’t be able to withdraw some money out when needed unless move it to IRA. Is it right?
It all depends on your employer's plan and how they chose to allow distributions. Some plans allow you to only make one single distribution after you leave. That basically means you have to take the entire thing out in one shot; other as a rollover to an IRA or as a normal distribution. Other plans allow multiple distributions, but perhaps limit it to only a few per year. Other plans are a lot more flexible and allow even more frequent withdrawals. You'll have to ask your 401(k) administrator and see what the rules are for your particular plan
When can you start taking money out on your 401K? Amount?
Thank you.
Returning back to previous job after being let go due to COVID. Upon return, I was asked if I would like to roll over my 401k to an IRA. Not retiring for 10 years min. Not a savy investor, just saved really well (200k). Roll it or keep it. TIA
Probably best to roll the IRA to a company like Schwab, unless your company offers excellent low-cost mutual fund investment options.
I have a 401K from an old employer (no longer work there) with only $3,077.89. How can I rollover this amount without any penalties or problems?
Contact the administrator of that old 401(k) and tell them you’d like to roll your balance over. They will walk you through the next steps.
You’ll first have to have somewhere to receive the rollover: either an IRA or your current employer’s retirement plan (if you’re still working and they offer a retirement plan that allows you to roll in outside money). Have that account info in hand when doing the rollover from your old 401(k)
I saw a women on TikTok who makes videos on it's IRA rollovers and such. She said that ira rollover do not have contribution limits like a Roth IRA has a 6k limit or 7k for 50nand older, is this true?
Correct, there is no limit on how much you can rollover from one qualified plan to another. Whereas contributions DO have annual limits.
There are similarly no limits on how much you can rollover from one Roth qualified plan (like a Roth 401(k)) to another Roth qualified plan (like a Roth IRA).
Thank you for posting this helpful video
Will I owe tax when I rollover a 401k to IRA? I am not anywhere near retirement age (28).
No, but be sure to do it as a “direct” rollover
www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
Thank you so much for the information.
Husband has an annuity they offered him a lump sum of 60k or lifetime( his family lives in their 100’s) payment of $303 a month. Is taking the $303. Monthly the best plan?
There are a lot of things to consider and there isn't necessarily going to be a definitively right answer unfortunately. Here's a summary of the main things to think about when deciding between taking the lump sum or monthly income: ruclips.net/video/Yz6aTCEA8_0/видео.html
I would take the 60k and invest it in a basket of stocks that will give you an average dividend yield of 6 percent. That will provide $300 per month while your sitting on 60k vs getting $303 per month and sitting on Zero. Yes there would be risk but well worth it.
@@davidleonard4925 Rather than individual stocks, I suggest a low-cost stock mutual fund.
A lot more talking about 401 K so much !!! On youtube.I would like some information about 403 B PLEASE !!!!
I recently left a company after 18yrs for another company. Im undecided if i should rollover my 401k into an ira or just leave it. I cannot rollover into my current company plan. Any advice?
Great question, but there are too many potential things to consider in making that decision. It may be worth reaching out to a fee-only hourly financial planner. Your best bet to find one of those would be to search on www.GarrettPlanningNetwork.com
Almost always better to roll it to an IRA at a major brokerage like Schwab, Fidelity, or Vanguard. More investment choices at lower costs.
Interesting. For me, only one of the pros (potentially) pertains to me and none of the cons. But it's still important to explore the subject. Thanks for this video.
Excellent video.
Thanks!
I’m 59 1/2, recently laid off, I have 75,000 vested in a 401k. What do I do now?
Peanuts 🥜
I thought the age limit for penalty free withdraws on an IRA was 55. At the end of the video he made it sound like that wasn’t the case?
It’s 59 1/2, unless an exception applies
thank you!!
Fact is, though the 401k, IRA, name it are one of the safest retirement plans, they are not particularly good options. Better strategy; Live below your means, Invest 20-30% of your income into the stock market but of course, be well informed about where you want to put your money... I made my first million earlier this year from stocks alone with about 550k after I dissolved my 401k and added little cash (through the help of a pro though). Greatest decision I ever made.
Now you have my attention sir How did you do this? Who's the knight in shinning armour? I am slowly giving up on all of these
@@the_jean_mum Low Blow right there ma'am. You didn't have to pull the gender card. Wasnt necessary. Thanks still. Ill check her out
@@the_jean_mum Wow I know this little lady. Once attended a seminar she was also in attendance here in Texas,, Great speaker. I still think the 401k or putting it in a high yield savings account is the more reasonable option, given the economy,,
@@archiemcdougald5466 This right here is the second time I am coming across this name in a week. Came across her podcast and it was lit
Thank you, Andy, for another great video!
thanks!
This was very helpful. Thank you. I also heard that if you have company stock in your 401k and have made significant unrealized capital gains in it that there is a caveat that allows you to tax the company stocks at ordinary income for the cost of the stock and capital gains on realized gain once taken.
Right on...it's called Net Unrealized Appreciation: ruclips.net/video/88ClUv1a660/видео.html
Very good point, main reason I left my 401k with my employer
@@RetirementPlanningEducation does this apply to any stocks in the 401k or just the employer's stock?
@@campbecd Just the employer's
I’m planning to retire at full retirement age 66 1/2. Would like to take my 401k out to put as down payment on a house. How with this affect my taxes if I move to a no income tax state (CA to TX)? I understand that if I roll it over an IRA, I have to wait 5 years before I can take money out, is this correct?
I assume the 401(k) is all pre-tax money? Assuming so, you can roll it to an IRA and then wouldn't be any waiting period to then take money out of it. Since you're over 59 1/2, there won't be the 10% penalty on withdrawals. But all withdrawals will be taxed or ordinary income federally. And depending what state you're living in when you make the withdrawals, there could be state income tax, too (CA, yes. TX, no).
So, taking a large amount of money out of a tax-deferred account like a 401(k) or IRA to make a downpayment on a house isn't ideal, because you will have to pay a lot of tax on it. For example, taking $300k out in one year will lead to a lot more tax than taking $50k out per year for six years.
But, if that's your only source of assets and you need to to take money from somewhere and don't have any other options, perhaps that's your only choice, even though the taxability of that withdrawal could be quite high.
And furthermore, the spike in income from taking a large distribution could very well jack up your Medicare premiums for a year, in two years.
@@RetirementPlanningEducation thank you for your reply. So is the same whether I take it or roll it over, I still have to pay taxes.
@@SCSC-qz7rr correct. Tax is owed on distributions regardless.
@@SCSC-qz7rrOnly if you take the $ out. No tax on the rollover to non-Roth IRA. Putting all that $ into a house is probably not financially prudent.
My wife left her job over 10 years ago and has $40$ sitting in a 401k from that old employer. Just to be clear, I should be able to roll that over to an IRA, correct? There is very limited investment opportunities in the 401k. Thanks for the video!
Yes, she should be able to roll that into her IRA.
@@RetirementPlanningEducation if his wife is unemployed and between the ages of 55 & 59.5, can she take some money out tax free & put it into Roth? What is a backdoor Roth IRA?
Yes, roll over
@@Mahryon91No. Likely taxed if rolled/converted to Roth.
@@susisteiner7769 Unfortunately, you’re confusing different options. A back-door Roth is not related to a 401k rollover.
Good day. I was wondering if there's a one-year rule pertaining to the 401(k) to IRA rollover. I have an old 401(k) account, and I wanted to split its distribution - half money will go to company 1 IRA and half will go to company 2 IRA. They sent me two check so I can deposit them into those accounts. I understand that I have to deposit them within 60 days. But regarding the "one 60-day indirect rollover per year" rule, do I have to pay tax and penalty fees in this case?
Were the checks made payable to you, or payable to the new custodians fbo your IRAs? If the latter, those are still direct rollovers and aren't limited to one per 12 months
@@RetirementPlanningEducation Thank you. This is the first time I did this, and I thought I had to pay huge penalty fees for splitting the money into two different IRA accounts. The checks were made to the new company FBO my IRA.
Thank you for the video and the time it takes to make them!
I retired this year at 55 and would like to rollover my 403B to an IRA. Will Roth conversions from the new IRA be penalty free if I pay the taxes from my taxable account?
Conversions thankfully aren't subject to the 10% penalty, regardless what age you are. But yes, any pre-tax money you convert will be taxable in the year of the conversion
If you have an outstanding loan against your 401k, can I still rollover to an IRA?
Check with the administrator of your particular 401(k) plan. But it's not likely. Or at least, you'd have to either pay back the loan before rolling it over, or they'd only let you roll over the amount that's not the loan.
IRAs are not allowed to have loans against them, so there is definitely no way you can rollover a loan to an IRA. But check to see if your plan will let you rollover anything at all if you have a loan outstanding; they may first require full repayment of the loan before they'll allow ANY amount of money to be rolled out to an IRA.
Great video. Inmy case, it looks like there are more pros than cons to doing a rollover.
#1 a money market account/stable fund pays about 1% versus 5% + in a IRA. MOST not all 401k are thieves
Markets and rates definitely change! At the time I recorded this (about four years ago), clients' stable value funds were paying around 2%, give or take, while other principal-protected things like money market funds, T Bills, high yield savings accounts, etc were all paying well under 1%. Now though, yes, those things are paying noticeably more than stable value funds.
Great information Just the protection alone tells me to leave in current 401K Thanks
Only if the 401k plan offers excellent low-cost mutual fund options.
Hi. Have been following and love the content. Don’t see the pro rata rule as a con, for back door roth contributions. Am I missing something?
Yeah, that's a great point. I struggled with including that and decided not to. In hindsight, I probably should have. Yes, you're right; for those who are doing backdoor Roth IRA contributions, keeping pre-tax money in your 401(k) and out of your IRA could definitely make sense.
I left it out because it was fairly technical and I thought it wouldn't apply to most people. So I didn't want to risk making it too confusing. But if/when I redo that video, I'll include it. Thanks!
What and how is a financial advusor cost or jet in fees
It all depends on the advisor, how he or she is regulated, what products or services he or she sells and how he or she chooses to structure fees.
If the advisor just focuses on managing investments, chances are they will charge a percentage of the assets they oversee, and that percentage is typically about 1% per year.
If the advisor is ultimately just an insurance salesperson, there is typically no outright fee to the client, because the person gets paid a commission on the product(s) he or she sells to you.
If the advisor is just an advice-giver and doesn't manage investments or sell commissioned products, the fee could be hourly (typically $200-$400/hr) or a fixed ongoing annual fee of a typically anywhere up to about $10k or so per year.
Not sure about other states, but Maryland allows preferential tax treatment on 401k distributions in some circumstances. This does not apply to IRA distributions.
Interesting, thanks! State taxes always have their own unique twists and differences in treatment compared to federal taxes
@@RetirementPlanningEducation It is due to a 401k being an employer sponsored defined contribution pension plan vs. an IRA. An employer sponsored defined benefit
pension plan would also have the preferential tax treatment.
I have a Mutual of America 401k and 403b. I left the company years ago. Do I need to consolidate the mutual funds into one before trustee transfer? I can do both in one year since it won't be a rollover...NO??
Thanx for any help
Check with Mutual of America, but I wouldn't think you need to consolidate the 401(k) and 403(b) before rolling either or both out to outside qualified accounts (such as an IRA). If you do "direct" rollovers from both plans, yes, you can do them in the same year. A direct rollover is where the cash proceeds of the 401(k) and/or 403(b) is made payable to your IRA custodian for the benefit of you. It is NOT made payable to you directly...that would be an "indirect" rollover. If you do an indirect rollover, that's where you can only do one every 12 months.
Cool, so i can I transfer half the 401k to ira?
Depends what your employer allows. Employers can customize their restrictions around your ability to take withdrawals. Some employers may only allow you to roll out the entire thing in one shot...they may not allow partial distributions. You'd have to check with your plan administrator and see what they say
Closure fees???
Yes, 401(k) plans usually have some kind of distribution and/closure fee. Typically about $50, give or take, in my experience.
If you leave it in a 401k they have to deduct 20% withholding to the IRS- even if you only only need to withhold 12%. You get it back a year later but you still need to give the government an interest free loan in doing so.....
No, you’re totally wrong. No tax if left in the plan. And no tax if rolled into a non-Roth IRA.
@@Stashmoyou’re wrong I called my 401k admin and they said they automatically deduct 20% for tax purposes
@@dantheman6607 The good news is that you got bad (or, at least, incomplete) advice. Here’s a quote from the IRS guidance:
“Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.”
@@Stashmo yes I understand that if I roll my 401k into a roll-over IRA there will be no deduction taken. Currently it’s still in my 401k and if left there I will face the 20% deduction
@@dantheman6607 Not sure what you mean. If you leave it in the 401k, and don’t take withdrawals/RMDs, you pay no taxes. If you do want/have to take some $ out, first move the account to an IRA (which doesn’t trigger taxes) and the take $ out from that IRA-again with no mandatory 20% taxes.
There's another con - if you are doing annual backdoor Roth conversions, you are going to wind up with a big tax liability if you roll the pre-tax 401(k) funds into your IRA account.
Subscribed.
Excellent video with clear and important information. Thanks!
thank you very much!
I mean none of these videos even CONSIDER the fact that retires want INCOME from their 401k money! NONE!
Roll over, keep it - whatever - but none talk about how a retiree is expected to LIVE, pay bills! NONE!
Annuities were mentioned at about 1:30 in the video. And it said they’re good for safe and stable income
I find that the creditor protection is often overlooked. Although it may be a rare occurrence, losing your total IRA to a lawsuit would be devastating. Keeping your 401K may be cheap insurance against such a loss.
I’m 59 1/2 and my employer does not allow me to take monthly distributions and work part time. If I quit my job and roll over my 401k to an IRA and start getting monthly withdraws and go back to work with my former employer are there any consequences? Thank you
Straight up good info. Thanks.
I have both a Trad 401(k) and a Roth 401(k) at a company I will leave AFTER turning age 55. Can I specify which account any withdrawals come from under the Rule of 55? Can I rollover my Roth 401(k) assets (opened 5+ years ago) into my Roth IRA that I opened and funded over 10 years ago and leave my Trad 401(K) with the previous employer? (the options are good enough I just want to control the Roth assets in one basket so I can "sip" off them and control my marginal tax rate).
Sip? Best to leave the Roth alone as long as possible.
If I'm 80 ,I'm spending it. Lol
I am 58 & was layed off. If I withdraw funds tax free from 401K, can I put them in a Roth IRA without paying taxes? Is there an annual limit? I am in Cal. Great video - thx!
Q1 No
Q2 No
50 / 50 hmmmm.