I have been with the Farm 25+ years and am now age 52. If I get shoved out the door prior to age 55 I lose my subsidized health insurance. What are my options with my vested 401k?
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You don’t have to move the money to get access to those great, low cost Vanguard funds. All of the target date options (e.g. 2060 Portfolio) in the SF 401k are composed of multiple Vanguard index funds.
However you generally are better off rolling over into a Traditional IRA somewhere else because that will give you more freedom to do what you want. Roll over to Vanguard, Fidelity, Charles Schwab, etc and you can invest in anything the offer (including stocks if you’d like, not necessarily recommended for novice investors), rather than the small set offered in your 401k.
You can actually withdraw money early (before 59.5) from either a 401k or IRA by using a 72(t) withdrawal. However, from what I’ve heard, this calculation can be tricky and fraught with peril (taxes and penalties) if you mess up.
If you are fortunate to leave or get let go after you turn 55, then you might want to keep your money in the SF 401k because you can withdraw from it penalty free (not tax free, of course, as money is contributed pre-tax). It’s allowed but only from the 401k of the company you leave after age 55. So you might even consider rolling over other 401ks into it if you think you’ll need to access the money.
You don't want to make a mistake on that, so I'd suggest you might want to talk to a company that works with those. There are a couple financial planners in town that really know the state farm plan and severance options.
You may consider rolling the 401K to Vanguard. State Farm's 401K program have some serious issues. There is not enough diversification (e.g. no money market option), the performance has been sub par (per https://www.barrons.com/articles/barrons-best-fund-families-1520657747). Vanguard is inexpensive and offers a diversified offering.
StkpNcx-bcu, there are additional requirements around hire date that dictates if you get health insurance, whether it is subsidized or you pay full price or it isn't available at all.
I believe you need 15 years seniority to get insurance.
You only qualify for health insurance if you retire at 55 or later, and immediately start collecting the pension.
If you leave the company the year you turn 55 or older, you qualify for penalty free distributions from the 401K. To maintain this penalty free distribution option, I wouldn’t do an IRA rollover until 59-1/2, the penalty free age for that investment vehicle.
Insurance, pension and 401k all have their separate rules. I answered what you could do with 401k.
You need to research with HR about pension and health insurance.
But what about the insurance at 55? If I roll it over to somewhere else will I still get the insurance at 55 or is that gone when you leave the company?
Don't leave it with the farm!!! Listen to @StkpNcx-hns with the exception of leaving it as you will be able to better diversify your money elsewhere.
So you can leave it at SF and roll over somewhere when you turn 55 to get the insurance? If you roll it over do you get the insurance at 55 still?
You can leave it at State Farm, roll it over to your new employer, roll it over to a company like fidelity or scwhab or give it to me. Or cash it out and pay huge taxes and fees
You can leave it at State Farm, roll it over to your new employer, roll it over to a company like fidelity or scwhab or give it to me.