401K rollover question...

[engleclair]

My mom's office was bought out by a *HUGE* hospital conglomerate.  She has to rollover her 401k by July 31st.  Any suggestions? 

A little about my 'rents...

They're both 56 and not planning to retire for 5-10 years.  They also don't expect to touch the money at 59 and a half. 

So what would you do?

I'm thinking of an annuity.  Would they get a decent return on that?

Any help would be appreciated.

[simser]

Roll over to an Ira. Don't cash out the money, do a direct rollover. Then they can decide their allocation. This way (if you do it right so ask the Ira firm) won't have any tax implications.

[bean29]

Sorry my reply was lost. I rolled over a pension to a vanguard etf just last month. How much does she have to invest? Anyways I am younger than your parents so I chose the total stock market fund and an S&P500 fund. They have target funds and blended funds that may be more suited to what they need. I opened my account on line. It was easy.

Sent from my MB855 using proboards

[Deleted]

An annuity that is held inside a 401k or IRA is not a good idea since one of the main benefits of an annuity is the tax advantage which you lose when the money is already tax advantaged in the first place.  It is better to roll into another 401k (is the company offering a 401k?) or an IRA and invest in a balanced portfolio of stock/bonds/cash/etc.

[The Captain]

I highly recommend Fidelity.  No fees and they did as much of the paperwork as they could for me (a few of my previous employers required me, not the investment firm, to submit the rollover paperwork).

The also make a huge amount of information and tools available to the investor in order to enable them to make informed choices about the investments available.

[jarrett1]

All good answers with partial correctness in each answer.

Rather than go to this company or that company  because they complete forms (which they all do) or choosing an investment because it offered "lower or no fees" (that's not a first tier criteria for investment choice) you need to understand what is the purpose from a performance perspective because that will rule in/out what your choices should be.

An annuity can offer downside protection at death of the IRA owner....IF your mutual funds, ETF's/ETN's go down in a declining market you have 0 downside protection....IF the IRA owner dies in a decline...you get the stepped up amount at death...not the lower market value. This is beneficial to the beneficiary    

How did they accumulate this 401K money? Was it invested in stocks and bonds?
Then I would submit that the de-cumulation period (the period where even if they don't touch the money they have to take BMD's and RMD's) that the assets be invested the very same way.

As far as Vanguard I am not a fan...why not search "Fantastic 46" and read a Morningstar report for fun and education?

I agree as far the "direct rollover" is concerned...if you screw this up and it doesn't transfer within the 60 days...the IRS is looking for these potential penalty opportunities as much as under $ or no RMD's distributions.

In so much as they are 56...that leaves 12 years (approx.) before they even are eligible for SS checks...so I would go growth and income, because as many have seen over the last few years...may not get too much income...but you can always spend growth!

[Value Buy]

Jul 10, 2013 22:38:08 GMT -5 engleclair said:

My mom's office was bought out by a *HUGE* hospital conglomerate.  She has to rollover her 401k by July 31st.  Any suggestions? 

A little about my 'rents...

They're both 56 and not planning to retire for 5-10 years.  They also don't expect to touch the money at 59 and a half. 

So what would you do?

I'm thinking of an annuity.  Would they get a decent return on that?

Any help would be appreciated.

I have to assume if they were bought out by a "conglomerate", they offer a solid 401-k.
She should look at that first.
Five to ten years is a long term financial period.
If she does not want to roll over to the 401-k, look at some Vanguard or Fidelity funds and roll over to an IRA.
Both offer some low fee accounts.

[jarrett1]

The "conglomerate" may very well offer a 401k.

You would want to see if the prototype for the plan allowed...
transfers in from other plan/401k's.

You would want to know of any and all restrictions that the plan prototype has as opposed to an IRA which is self directed and has none

You would ask whether you needed a transfer form from the resigning plan or request a transfer once you reached eligibility in the new plan.

You would want to compare what was available in the plan as oppose to one of the "many" choices you have at any company with an IRA.  

And lastly need we forget the reason why we invest...investment return and the time value of money.

Choose a money management company which has great long term returns...not one that just has low or no fees...its pretty dumb to use that as the primary criteria...just say'n