Not calling anyone stupid but if you got 3 or 4 passive / indexes to match your age/risk tolerance or just got a target fund, you’d likely do better and with less risk.
As I noted I think it’s great all have someone if that brings them satisfaction. But statistically, it doesn’t make sense so that’s what boggles my mind.
If you’re happy with your choice, then that’s all that matters. And I noted that. But in most cases, it is throwing money away.
That’s not me saying that, that’s what the facts show. No one needs to get defensive about their choices. If it’s good for you, that’s all that matters.
PS Many also use for planning. That’s different than just managing investments.
Paying for a FA often does not make sense. For couples who opt to not do so, I’d still recommend considering a retirement “investment paycheck” system like our FA set up with us. Each month there an auto-transfer from our investements/Schwab to our credit union checking account. Over time the amount has changed depending our income (phase-in on SS, pensions) and spending patterns. But it something we always discuss at quarterly planning meetings.
My DH still likes to do it himself. It is so not my wheelhouse. I told him if he dies before me I’ll kill him. He also just moved one of my IRAs so all of my non Roth IRAs are in one institution. Well it’s time to start RMDs. It’s eye opening. And he wants me to donate a lot of/most of it. We are very philanthropic but it feels hard to have earned that $ and now Give it away. Considering setting up a charitable trust. Any gurus here who can opine about that ? Thanks
We have kept DH’s 401k in the employer group, and it is a retirement benefit to continue with employer paying the administrative fee for the plan. We see no downside, and no crazy thing about change of address - we do anything directly with Empower.
I believe, but am not 100% certain, that you can aggregate your RMDs across multiple IRAs at multiple institutions and just take one RMD that represents your requirement for the full balance of all of your IRA accounts, but 401(k)s require own RMD.
I do not know why this is, and you should probably verify my sketchy recall.
It looks like we might be buying another forestry property. We seem to not be able to stop ourselves from getting these. Of course, we don’t have the money lying around, but we’re waiting for a HELOC to close. I’m thinking that I might be able to grab some money from our 401K’s briefly, not as a loan, but I believe if you put it back into an IRA within 60 days, there’s no consequence and it’s considered a rollover. Has anyone done this? Not just rolling over 401K monies into an IRA, but getting the check and then putting the money back in?
As @notrichenough responded above your comment, one reason why you might not want a balance in an IRA is if you are dealing with/planning to do backdoor Roth contributions. This would apply if you are still working and earn more than the Roth IRA contribution limit and wish to make non-deductible contributions to an IRA and then convert them via the back door Roth method to a Roth IRA.
It’s a rare situation (and almost universally advised against) because of the costs incurred if one doesn’t follow each step that’s required, but….you can do this. Carefully walk through the fine print on the withholding aspect, and figure out how you would make up the funds for replacement to avoid those costs. (This is moot in a direct rollover, but quite the additional hoop to jump for an indirect rollover for you have to “replace” more than what you’re withdrawing.)
You need to cover the 20% that’s withheld when you do make the deposit into the IRA, and then next spring you’d receive a 1099-R from the employer. When doing your taxes you report the total amount that you’ve rolled over on your tax return (which is the 80% that they sent you a check for, and the 20% that you came up with separately), and then depending on your personal tax situation, at that point you may get refund for some/all of what was withheld.
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.
How much can I roll over if taxes were withheld from my distribution?
If you have not elected a direct rollover, in the case of a distribution from a retirement plan, or you have not elected out of withholding in the case of a distribution from an IRA, your plan administrator or IRA trustee will withhold taxes from your distribution. If you later roll the distribution over within 60 days, you must use other funds to make up for the amount withheld.
Example: Jordan, age 42, received a $10,000 eligible rollover distribution from her 401(k) plan. Her employer withheld $2,000 from her distribution.
If Jordan later decides to roll over the $8,000, but not the $2,000 withheld, she will report $2,000 as taxable income, $8,000 as a nontaxable rollover, and $2,000 as taxes paid. Jordan must also pay the 10% additional tax on early distributions on the $2,000 unless she qualifies for an exception.
If Jordan decides to roll over the full $10,000, she must contribute $2,000 from other sources. Jordan will report $10,000 as a nontaxable rollover and $2,000 as taxes paid.
If you roll over the full amount of any eligible rollover distribution you receive (the actual amount received plus the 20% that was withheld - $10,000 in the example above):
Your entire distribution would be tax-free, and
You would avoid the 10% additional tax on early distributions.
That sounds right. IIRC, as long as you calculate the total amount in the non-Roth IRAs then you determine how much needs to be pulled, and it can all be pulled from one IRA.
DH kept his money with his employer when he retired. But then he wanted to use part of that 401K to start a Roth (just a regular Roth). IIRC! He could not take just part of that money (Empower) to do so…he had to roll over the account to something different. His former employer would not allow just a withdrawal from the 401K.
So, he moved it all to a different account that he could do what he wanted to do annually.
Re: RMD…I have been doing RMD for three years. And yes, your RMD can come from more than one account. In my case, one account satisfies my RMD. We saw our financial planner last week, and I’m good to go for at least a few more years. DH, OTOH, needs to take more in RMD and started to do so for 2026. It’s a first world problem…
Agree about IRAs. The distinction I was trying to make is that I think that each 401(k) account requires its own RMD. So if someone still had multiple 401(k) accounts at multiple ex-employers, each would require its own distribution. I think…
Thank you! That sounds like a potential tax trap. I knew I might have to have the 20% withheld (sounds like that’s mandatory), but I didn’t think about having to come up with 20% more when I put it back into the account., even though I had 20% withheld.
I’m not sure why you wouldn’t just return the money to the account you took it from within those 60 days.
For specific reasons, I had to take 2 distributions from an IRA in 2021. Although both were replaced within 60 days, I faced a tax penalty because you are only allowed to return one distribution per year without consequence.
Yes, that is my understanding. You total up the IRA funds on Dec 31 of each year and use the formula each tax year to to calculate how much had to be pulled.
It sounds like the deal is, for example, if you withdraw 100K, the IRS will withhold 20% and then you’ll only get 80K sent to you. But when you return the money to the rollover IRA within 60 days, you have to return 100K (unless you want to get taxed on 20K as a distribution). So you have to find that 20K from somewhere. Don’t know if it’s worth it, and maybe we’d just take it all as a distribution.
Yeah, there is that, stress with finances and yet more paperwork. We actually weren’t looking for any more properties, because we clearly have enough on our hands, but this is our neighbors, and we were already clear that we’d want it if it ever came up for sale. It’s not on the market, but he’s looking to do a deal. We could subdivide and sell my sister the portion with the house (she’d absolutely love that), and keep the rest, which would provide access to portions of our other property, and it has some massive old growth trees we’d love to put benches under and enjoy.
You can talk about options with the owner if he’s looking to do a deal. You can discuss also with your sister about a potential option for her. I would see when your financing comes through, and also if there is another property you might want to get rid of. Look at all your options. But IMHO cannot take out of 401k for a ‘rollover’ which is not really a rollover; if they send you money it will be with the 20% federal withholding. If you decide to take money from 401k and the deal happens within the 60 days IDK if you could actually put the money back if it is an employer plan.
I think you ‘thrive’ on complicated things in a way.
I can see why you want the property, but IDK all the other property/maintenance you have going on as well as how much you are leveraged with various properties (not having full ownership).
