Consult a tax attorney not just a CPA on this one. Because it will depend on how “ownership” is defined by the IRS.
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That’s a tough one. How do you make yourself less valuable? It makes me wonder how they are even going to decide who gets one offered. I definitely wouldn’t let people know that he will soon retire, anyways. If I knew who was offering the packages, maybe I’d ask some questions.
My BIL was very valuable to his company, but they offered so many packages, he got lucky and got one. No helpful hints, but good luck to your husband!
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Consult your FA or accountant, but I do believe if you are still working you do not need to withdraw the RMD amount.
I don’t think selling it to a related party would qualify as not owning more than 5%. I didn’t look into it further, but there are typically many limitations when sales are to related parties.
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During the covid shutdown, H’s large company held broad layoffs. As the head of his department, he was told he needed to lose another staff member. He was within two years of retiring and his mother (in town) was very ill. He said how about me?
CEO said, “Let me think about it.” Came back and said okay. He was able to negotiate a sweet golden parachute along with being hired as a consultant for the first 9 months of the transition. And because he was a C-suite executive he was to receive a huge bonus, regardless of if the target was met.
My takeaway was that everything is negotiable. Is it possible for him to take the layoff, but help with filling/training needed staff? Approaching it from the company’s point of view will help him strategize his ask.
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Sometimes value is not taken into account when laying off employees. My husband got laid off at 60. He asked his boss if there were going to be any layoffs, to include him. He was working in a brokerage firm as the only person doing an SEC required job and that didn’t stop them.
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Older employees are, generally, more expensive to keep. If they’ve been with the company a long time their salaries are likely higher. Depending on how any bonuses are structured (eg % of salary) those may be higher for older employees. They may have more paid vacation time because of longevity with the company. Their health insurance costs the company more by virtue of their age.
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The “no RMD if you’re still working” rule only applies to a current employer’s 401k. It does not apply to any 401ks from former employers, nor IRAs. Those have RMD requirements.
In theory if you rolled any old 401k/IRA into a current employer 401k before you reach RMD age, then those assets are now part of the “current employer” and thus shielded from RMD until you retire.
If you are “still working” for an employer that has no 401K plans, then you have to take RMDs
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You would need to look at ERISA rules. I am not a tax attorney, but I believe that selling to your wife would still be considered constructive ownership.
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@cbreeze, I have been employed by the same company for many years and would keep working for that company. If I were less than a 5% owner, I could avoid the RMDs.
But as @BunsenBurner, @oldfort, @sryrstress and @scorekeeper1 point out, it may be hard to meet the ownership threshold. It is plausible that selling the company to my wife or kids might not be viewed as independent. I suspect that there is a real possibility if I were to sell the company on an arms-length basis to the dynastry trust. I was not the grantor of the trust and control lies with a trustee who is independent and not a family member. I will need to check with accountants/lawyers what works under ERISA. In the past, I have found that carefully understanding and obeying the letter and spirit of the law can sometimes produce unexpectedly favorable outcomes.
@scorekeeper1, that is very helpful. I did use an ERISA attorney a couple of times to evaluate how companies with some common ownership had to handle pensions. It turned out that in that case, ERISA was concerned with control groups and 50/50 ownership was very different from 50.1/49.9 ownership. Here, the issue may very well be independence (i.e., the trust) versus other ownership. I’ll go back to the ERISA attorney.
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I meet this week with my Vanguard Personal Adviser. The bloom is off the rose here for various reasons. I’m unclear whether my issues are with my adviser, who is great when we talk to him, or the structure of the service. I don’t want to go into details.
My question does anyone else use this service and what do you think of it? Does Vanguard has a robo service apart from the personal advisers? Any thoughts about that?
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I moved my 401k to an IRA with Vanguard when I retired with the intent to get a personal advisor. However, after 3 or 4 months, the digital advisor was doing well and I decided to stick with it until I felt I could get better from a human. Haven’t hit that point, yet. Although, my move to Vanguard was when the market was flying high so not sure how representative that period would be. It has done fairly well with the yo/yo market, I think. I don’t have to take any $$ out for another 4.5 years so I’m not in too much of a funk over it (another yet here).
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Do you mind answereing questions on here or would you prefer DM? I’m sure all this info is somewhere on the website, but how much do they charge for the digitial adviser and are you able to go in and manipulate what they do?
I don’t recall what the time period was but I got an initial period free with no fees, when they did kick in, they were very, very minimal. As far as moving things around - it’s probably similar to what you do now, you take your risk assessment and set your ratios and boom - they take over. They do email me when they are ready to buy/sell and I have the opportunity to say no. I have just assumed they know more than I do (which they do) and let it happen - lots of bond buying right now, or so it seems from emails. Anyway - poke around on the website or go to the Boglehead website and do a search on Vanguard Digital Advisor and see what they have to offer.
What exactly do you get from your Personal Advisor? I’m still not ruling that out later on down the line.
Edit: I did actually change my risk from 60/40 to 40/60 due to volatility - might not have been a smart move but ya know, time’s moving on!
Now, see, that kind of flexibility is one thing I don’t have. Any changes have to go through the personal adviser, and they seem to have pretty strict parameters on what they will allow. For instance, per the questionnaire, my risk profile is “very aggressive,” but because of my age he said that I am not allowed to be more than 65% stocks. This number gets reset every six months if the actual stock percentage is more than 5% off of the preferred number. So, my understanding is that he’ll go in and change the allocation if I am less than 60% or more than 70%. But that isn’t happening. I’m well into the 50s, and I’ve written him and called the team and no response so I am put out about that.
But what we get is two meetings a year after the initial meeting. And you can schedule more as needed. But I was trying to not be a PITA and schedule a meeting by sending an email asking him to make needed changes or tell me why they aren’t needed. Anyway, the guy is GREAT when we talk to him, and he always is willing to go over our 30-minute call. One time we chatted for more than 90 minutes. I feel like his reasoning is sound, and he has good answers for why we are doing what we are doing. And I get that at my age his/Vanguard’s algorithm is telling me to be at 65%, but it’s my money and I don’t like being restricted in this way. And, yes, I know he is “saving me from myself” by lowering my risk, but he also knows that we hope never to touch this money. I suppose I could instruct him to make it a legacy account, and then I’d get a higher stock percentage. I’ll ask about that this week.
The deal is I don’t mind paying him the money as he’s already taught us so much about conversions, etc. But our situation is really pretty uncomplicated so I think I could go back to managing it all myself.
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We had a less than satisfying talk with our financial advisory team.
The first person you talk to is about your goals. It’s always ends with you’re doing great!
The second is with the person we have to talk to about the allocation of your indexes. Last year we had someone who I thought was great and listened. The problem is that the “team” moves around so much that we get a different person every time. The original person who we had as our FA must now be in a supervisory role because we never hear from him. Just as well because he loved to try and sell us annuities which we weren’t interested in.
This last call was not good. We talked about the uncertainty in the market, he kept reading off the script that he had. That it takes a long time for legislation to pass so nothing will change in the short term. Really? Ok! He thought we should keep our mix the same and that the team of people they have will work with the conditions.
I felt that this person and us have a very different view of the situation we have in our country.
We have fidelity btw. I think these things are hard. My in laws have a different person with a completely different view. My mom, she’s in CD ladders because she hates uncertainty.
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I’m guessing that your in-laws are at least 20 years old than you so I could see that their person would want them to be more conservative than your person would want for you. Or is their person trying to get them to take more risk?
My in laws have a very different investment strategy. It’s riskier than we are comfortable with. It’s more stock based with dividends, I don’t understand it fully but it’s been working well for them.
My in laws say they can live on their social security and don’t seem too worried about fluctuating markets.
We could switch but we are pretty happy with our current situation
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I’m responding to you again to make sure that you see this follow-up.
Met with the FA. He explained the discrepancy I was seeing between my desired/stated allocation and what it was showing. Turned out to be what I figured (accounts not managed by him threw the numbers off), but I explained my issues in trying to reach him to confirm that. Anyway, super apologetic, of course, and he managed to figure out a workaround for the percentage the algorithm wants me to have so that it’s what I actually prefer. So, I hung up happy to have gotten all my issues addressed.
I would consider dropping the service as I really think that at this point I could manage things on my own, but there’s one really valuable service he provides that I never managed to accomplish on my own: Get dh to learn about finances and take an active role. We have a little meeting leading up to the call, and then he’s in charge of taking notes during the call. After the call, we have a long debrief and discuss big issues and goals. That peace of mind is priceless. I always was afraid that I’d get hit by a bus, and dh wouldn’t know what to do. At least now he’d have this FA to turn to help him make decisions.
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That’s great! Peace of mind is everything. And, Vanguard is sooooo reasonable with their personal advisor fees, that is why I considered them to start with. Market was flying high at the time so just stuck with what was working then. What I do need to do is get someone that can help us in a little more detail beyond just the investment part. We really need to figure out what to do with assets and $$$ as we age out of things and die (that sounds really depressing!) I’ve been polking around Bogleheads but get tied up in knots with the detail and terminology…will probably look for a local person/attorney soon to help with that stuff.