I wanted to see what other people who have been (or will be) laid off are doing with their 401K plans. Do you have any suggestions about what should I do with my investments. I am assuming I have an option of keeping it with SF, moving it to my new employers 401K plan or moving it into IRA (I am not considering cashing it out as I am in my early 50s).
Please let me know.
Just wait a year. You can always move things later.
Once you stabilize at your new employer, do a good research and make your move.
Careful with 'advisers' - they are interested in charging fees not making you rich.
I left voluntarily, took it to Vangaurd. Investor owned, so not a stock company. Also not a former employer.
If you are 55+ & plan to withdraw from 401k prior to 59.5, then do NOT rollover into an IRA. There is an IRS exception that allows penalty-free withdrawals from a 401k (not an IRA) if you separate from service in the year that you turn 55.
I just turned 50, laid iff. I am not touching mine.
There are a lot of options for your 401K when leaving the Farm. There are a lot of financial service companies that will work with you directly & not take a commission. I would suggest that before you go, you should research not only the expenses you are currently paying, but also the rate of return you have received over the past quarter, year, 3 years & 5 or more years. I did that when I left and determined that while I was going to pay a higher fee (<1%) per year, the rate of return was consistently higher with the outside funds I went with. A prior poster was correct that you need to have an account set up with the other company before moving your money. SF will issue a check for the roll over which includes the other companies name so you are not penalized with taxes. Pretty easy process & I am up quite a bit even with the stock market melt down.
I reach 55 later this year (currently at a different company also having multiple RIF). My plan is to leave this 401K as-is and to time withdrawals (only if needed) to minimize the tax bite.
The 55 rule for 401k at former employer is unchanged in the new tax laws (no 10% early penalty if you leave it as-is, must wait until 59-1/2 if rolled over).
I will add that if you work for a decent employer you may be unlikely to find a better deal low cost 401K then with your current employer. Most employers will not make it clear that you don't have to do anything with your 401K, you can simply leave it alone as they show you the door. Keep in mind that your former employer will likely want you to move your 401K and might give you the impression that you have to by telling you about how to roll it over or convert it to a Roth.
Being shown the door is a stressful time and don't make it more stressful by making a quick decision. leave your 401K where it is and come back later and decide if you want to move it. Also keep in mind that investment brokers make money off of you and it is in their interest and not necessarily yours to get you to move your money.
Be careful and take any investors advice under careful consideration. If your 401k fund is a decent one with low expenses, you may be better off leaving it with your former employer. But if you can move it and your new employee will provide a match, that should be considered. My wife and I have several 401Ks with different investment firms and I tend to like that our eggs are not all in one basket.
I would recommend staying away from annuities which are essentially insurance, which you will pay for dearly. You will also have considerable default risk with an annuity and the whole annuity investment area is ripe with shady salesman. You work for an insurance agency so hopefully you understand that insurance is not an investment, neither is an annuity.
If you leave the 401K where it is, when you reach 55 and no longer at that company, I believe you can withdraw money from that 401K without penalty. You still have to pay income taxes on it, but if you have no income coming in, you can time withdrawals to minimize the tax implications.
I believe this rule still applies; check before doing this.
Replying to @RVUAtPV-1qtt.
It actually does! Only 3 years to vest here though.
I did vest in the SF pension before I left
For anyone thinking of moving their 401k to an advisor, straight from the Vanguard plan docs, ask them if they can beat this fee structure. Then make your decision. Don't cut off you nose to spite your face.
ADDITIONAL FEES AND EXPENSES INFORMATION
Asset operation expenses can include expenses of investment management and asset custody. For investment management, the ‘expense ratio’ is an
investment account operating expense expressed as a percentage of average net assets. The expense ratio includes management and operations fees.
It directly reduces the rate of return to participants. Reasonable asset operation expenses can be charged to participants. Each participant who places
some or all of their account balance in the Portfolio will pay an expense ratio equal to 0.05% (annually) (as of July 3, 2017) of the participant’s account
balance invested in the Portfolio. For example, for every $10,000 invested in the Portfolio, the annual cost is $5.00. The expense ratio history is:
• 0.06% (annually) from June 26, 2015 to July 2, 2017 • 0.0825% (annually) from August 15, 2011 to April 28, 2013
• 0.07% (annually) from April 29, 2013 to June 25, 2015 • 0.09% (annually) from September 2, 2008 – August 14, 2011
Currently, State Farm pays all other asset operation expenses, if any.
Plan operation expenses relate to the daily operation of the Plan, such as recordkeeping, web access, participant services and disbursements.
Reasonable plan operation expenses can be charged to participants although, currently, State Farm pays all of these costs. Please note that loan
origination costs are paid by participants who request loans from their 401(k) account.
Overall plan management expenses relate to managing and overseeing the plan and its service providers as a whole, such as accounting, audit,
legal, regulatory compliance, and fiduciary support. Reasonable overall plan management expenses can be charged to participants although,
currently, State Farm pays all of these costs.
@1bri - same here - 57 yo - will do a 401k w/new employer if someone makes a decision to hire me at this age. if not, it will be an ira.
I may roll it over into my next employers 401k plan. If not that then I will roll into IRA and manage it myself. I’m 55 and was impacted.
I am the OP. Thank you all - this is why I still like coming to this site, every once in a while there is a good and helpful discussion. Look at all the help I got in less than 2 hours...
I will think through options, each one has pros and cons but it's good to hear that I am not the only one with multiple views on this issue.
I am in my mid 50s and fairly conservative when it comes to investing - so, will slow down and think through this.
Again, thank you all!
I'd keep it at SF. Like it was said before. No fees and no or extremely low expenses. You're not going to find a better deal. Only reason I can think of is that you'd want different funds than the limited offered
If an advisor wants you to invest with them, ask how much money they'd make off the transfer. When I started a Roth years ago, outside of SF, they set me up with a fund with a 5.75% sales charge and around 1% in yearly expenses..and it didn't beat an S&P 500 index fund, even if it didn't have the fees/expenses. Later found out that the advisor got 5% of every dollar I put in.
Please be careful whatever you do. I have heard that if you wish to transfer it you need to do so directly to the new account - if you accept the funds in a check then put it into another account you'll pay a penalty. You should check with a financial advisor.
Can leave it with SF. They don’t charge fees that you would likely pay if you roll it ovrr.
Get it out and roll it into a Fixed Indexed Annuity. You have to ups of the market without the risk of loss. They offer a floor when the market is down. I have no more 401k’s. I became an agent after leaving SF and learned a lot about better ways to save for retirement without the market risk.
Bet your new company doesn't have a pension, hence their beefed up 401K... ;)
Roll over to your new employer’s plan.
That’s what I did and haven’t looked back.
My new company also has a real 401k match, not like the garbage $1200 at the Farm.
Your best bet is to roll it over to an IRA with your bank. Then start a new 401K with your new employer if they'll match a portion of it.