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Space Gopher posted:That sounds like a great way to lock people in, or screw them later. There are enough real things to complain about with 401k providers that it isn't necessary to get mad at an imaginary scenario that won't happen.
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Jan 7, 2015 07:29
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So I had to rollover my 401k into a Vanguard IRA because the existing servicer and funds were total crap. I created the account, got it rolled over, and now it's sitting in a target retirement fund. I'm now ready to start investing again after changing companies and getting some finances in order. The 401k I have access to at my company is garbage. The fees are off the chart and the funds are all actively managed and underperforming. I have no matching and I don't really have any desire to work with the group my company chose. What are my options? I'm basically investing after tax-money at this point. Should I open a Roth IRA with vanguard and have money directly deposited every month? Should I have money directly deposited to my Regular IRA that's already open (what happens to the taxes as this point, since I've already technically paid the taxes?)
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Jan 7, 2015 19:43
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If your 401k options are terrible, don't contribute. You have to choose between giving your money to Uncle Sam (taxes!) or the 401k providers (fees!). Easy choice in my opinion - taxes at least try to do some good, while fees can get hosed.
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Jan 7, 2015 19:49
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UndyingShadow posted:
First option (imo) is to reach out to your 401k committee and ask for some cheaper funds. Link them stuff on this thread, the frontline documentary, etc and try to get some better options. They are employees who work in the same company who are (hopefully) trying to do right by the company but they'll usually get a lot of bad information, guidance, etc. The 18k+ you can shelter in a 401k is awesome, so don't just give up on it just because your current options suck.
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Jan 7, 2015 20:50
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Hey cool, while we're on rollover talk I have a question. I've posted a few times in the past here about how much my company's plan sucks and how it's driving me crazy and no matter how much I push and prod to get better funds the answer I get is always "we'll look into it" and then nothing happens because that's the answer that placates people for a while and lets them continue to not try to improve the plan. So I've been trying to find an escape plan and I've been reading about in-service distributions. Obviously worst case I could cash the entire thing out and pay the taxes and penalties on the taxable portion (mine's a Roth 401k so my contributions are mine regardless, right). But, is it possible to rollover only my contributions into my Roth IRA and leave the gains in the 401k? Or would I only be able to cash out my contributions without penalty and leave the gains? I'd be ok with that; the gains are depressing and my account has only gained about 2% total over the past 3 years. I've read my plans SPD and it just goes over the usual hardship distributions, beneficiary distributions, or age 59 1/2 rollover/distributions, but doesn't talk about these special case. From everything I have read of my plan it seems to follow the trend of most other companies with what you are and are not allowed to do, and those are usually pretty good with the cases I mentioned about using them as an escape plan so I figure my odds are pretty good, but I'm really not very sure what I can do based on the documents vs. what i've read from googling around a bit. But hey, destiny willing I could just as well not be employed here in 6 months and free to gently caress off with the money so it would all be moot anyway. But more options are always better.
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Jan 7, 2015 21:01
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Vilgan posted:First option (imo) is to reach out to your 401k committee and ask for some cheaper funds. Link them stuff on this thread, the frontline documentary, etc and try to get some better options. They are employees who work in the same company who are (hopefully) trying to do right by the company but they'll usually get a lot of bad information, guidance, etc. The 18k+ you can shelter in a 401k is awesome, so don't just give up on it just because your current options suck. I've done this. There is no 401k committee. The HR department consists of one person who doesn't want to be bothered with all of this. She found a company who promised to handle all of it and handle they did (handle themselves a bunch of a funds with super high fees.) Right now it's just not feasible.
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Jan 7, 2015 21:07
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UndyingShadow posted:I've done this. There is no 401k committee. The HR department consists of one person who doesn't want to be bothered with all of this. She found a company who promised to handle all of it and handle they did (handle themselves a bunch of a funds with super high fees.) Right now it's just not feasible. I would do direct deposit to a Roth IRA, and hope your income is ~40k so you can still max your 15%.... If you have more income, it may be worth dealing with the lovely 401k.
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Jan 7, 2015 21:57
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SeaWolf posted:So I've been trying to find an escape plan and I've been reading about in-service distributions. In service distributions are legal but the plan would have to allow it. Some plans allow it for for people who are 55+. No plan I've ever heard of allows unrestricted in-service distributions for young people, because the providers want to keep your money trapped in their lovely funds.
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Jan 7, 2015 22:09
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Droo posted:In service distributions are legal but the plan would have to allow it. Some plans allow it for for people who are 55+. No plan I've ever heard of allows unrestricted in-service distributions for young people, because the providers want to keep your money trapped in their lovely funds. Unrestricted in-service distributions for young people are restricted by law, without a qualifying event they aren't supposed to be distributed. This is for the good of people who want to cash out their 401k to go to Vegas or buy a boat (real common issue according to HR person I talked to). If you have traditional after-tax contributions available (not the same as Roth), they will frequently have unrestricted in-service distributions because they don't have the same legal requirement.
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Jan 7, 2015 22:33
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Vilgan posted:Unrestricted in-service distributions for young people are restricted by law, without a qualifying event they aren't supposed to be distributed. This is for the good of people who want to cash out their 401k to go to Vegas or buy a boat (real common issue according to HR person I talked to). If you have traditional after-tax contributions available (not the same as Roth), they will frequently have unrestricted in-service distributions because they don't have the same legal requirement. I am not sure what you are trying to say exactly. From this article at Forbes (http://www.forbes.com/forbes/2008/0225/046.html) it appears as though young people are legally able to withdraw everything except pre-tax employee contributions to a 401k. The OP stated that he had a Roth 401k, and while the article doesn't explicitly list Roth 401k contributions, I assume those fall into "employee aftertax contributions". The important part is that only 16% of companies, at least in this survey, allow it anyway. So it is unlikely that SeaWolf's plan allows it. quote:As for younger folks, the law permits them to get in-service distributions of money rolled over from previous 401(k)s; of employer (but not employee) pretax contributions; of employee aftertax contributions; and of account earnings. Here companies are less accommodating–only 16% allow this option, the 2006 survey found. Note that if a younger worker spends the cash, instead of rolling it over, he’ll owe an extra 10% penalty on the taxable amount, just as he would if he got a “hardship” distribution from his 401(k) or took a loan from his 401(k) and switched jobs without repaying the loan. Edit: After looking more Roth 401k contributions are also not allowed to be withdrawn. So you theoretically could take out any money in there minus what you personally contributed from your paychecks, but you don't need to worry about it anyway since your employer still likely doesn't allow it. I have no idea why anyone would make a post-tax, non-roth contribution to a 401k, but I guess some people must. Droo fucked around with this message at 23:12 on Jan 7, 2015 |
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Jan 7, 2015 22:47
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Droo posted:I have no idea why anyone would make a post-tax, non-roth contribution to a 401k, but I guess some people must. The mega backdoor Roth. If you can do in-service rollovers of your after-tax, non-Roth contributions, you can contribute like 30k to a Roth IRA in one year.
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Jan 7, 2015 23:34
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Chaucer posted:The mega backdoor Roth. If you can do in-service rollovers of your after-tax, non-Roth contributions, you can contribute like 30k to a Roth IRA in one year. Bingo. Using traditional after-tax rollovers into your Roth IRA you can get up to $58,500 into tax sheltered status in 2015 instead of the standard $23,500 (18k 401k + 5500 Roth IRA) Vilgan fucked around with this message at 00:43 on Jan 8, 2015 |
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Jan 8, 2015 00:41
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Hi all, I'm very new to investing and I would like to make sure that I am handling my 401(k) correctly. I was googling around, and I found a post on bogleheads by a person who works for the same company I do and is about the same age as I am (25). Bogleheads recommended: Fund Name ---- Expense Ratio ---- Allocation Vanguard Employee Benefit Index ---- 0.17% ---- 50% Vanguard Extended Market Idx InstlPlus ---- 0.06% ---- 13% Vanguard Total Intl Stock Idx InstlPls ---- 0.10% ---- 27% Vanguard Total Bond Market Idx InstlPls ---- 0.05% ---- 10% I feel like this matches up with what I have read so far in this thread, but I wanted to run it by you all before changing anything. Thanks everyone 
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Jan 8, 2015 00:44
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Vilgan posted:Bingo. Using traditional after-tax rollovers into your Roth IRA you can get up to $58,500 into tax sheltered status in 2015 instead of the standard $23,500 (18k 401k + 5500 Roth IRA) Do you know if this rollover is subject to the same issue that exists if you have other traditional IRA or 401k money? For example, if you have a longstanding traditional 401k with $100,000 in it, and a longstanding traditional IRA with another $100,00 in it - do either of those accounts cause problems/prevent the backdoor rollover in the same fashion as a traditional IRA screws up a backdoor roth IRA contribution?
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Jan 8, 2015 00:47
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Vilgan posted:Using after-tax rollovers into your Roth IRA you can get up to $58,500 into tax sheltered in 2015 Droo posted:Do you know if this rollover is subject to the same issue that exists if you have other traditional IRA or 401k money?
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Jan 8, 2015 01:01
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I finally moved my money out of Edward Jones so I can avoid their fees, and instead opened up my Vanguard account. Unfortunately, I now realized I have no clue what I'm doing. My 401(k) is invested through my company's provider at City National Bank and is just in a Target fund for 2045 or 2050 (I am 28 now). I'm not even sure I have many other options there. In the Vanguard account, I actually have two accounts: a Roth IRA funded in 2013 and a traditional IRA funded last year (I didn't qualify for Roth starting in 2014). I will be funding the max IRA contributions to these accounts for now, as I'm keeping a lot in cash savings (0.9% at Ally) because I plan to put a down payment on a house in the fairly near future. I was going to go with one of the lazy portfolios linked in the OP, but I was just wondering if there are ones that are better/worse for me at my current age. Also, when I'm building these funds, are there any real considerations between the Investor shares and the ETFs?
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Jan 8, 2015 19:33
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RFX posted:I finally moved my money out of Edward Jones so I can avoid their fees, and instead opened up my Vanguard account. Unfortunately, I now realized I have no clue what I'm doing. There is a fair bit of increasingly complicated fund choice advice that you can get here, but the simplest is to put your money in the target funds and then read some of stuff in the OP, especially the books.
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Jan 8, 2015 20:13
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RFX posted:I was going to go with one of the lazy portfolios linked in the OP, but I was just wondering if there are ones that are better/worse for me at my current age. Also, when I'm building these funds, are there any real considerations between the Investor shares and the ETFs? ETFs tend to have lower investment amounts vs. mutual funds. I also tend prefer ETFs in general since they have slightly higher tax efficiency than mutual funds.
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Jan 9, 2015 00:01
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How do ETF dividends work with auto-reinvest, anyway? ETFs have to be purchased in full increments of 1.0, right? What if the dividend is equal to 0.87 shares of an ETF?
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Jan 9, 2015 00:17
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etalian posted:ETFs tend to have lower investment amounts vs. mutual funds. With Vanguard index funds, the ETF's and corresponding index funds have the exact same tax efficiency.
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Jan 9, 2015 00:46
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GoGoGadgetChris posted:How do ETF dividends work with auto-reinvest, anyway? ETFs have to be purchased in full increments of 1.0, right? What if the dividend is equal to 0.87 shares of an ETF? Reinvested amounts will purchase fractional shares at Vanguard. When you sell the entire holding, you sell whole number of shares and the leftover fractional amounts will sell automatically, sometimes a day later.
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Jan 9, 2015 00:47
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GoGoGadgetChris posted:How do ETF dividends work with auto-reinvest, anyway? ETFs have to be purchased in full increments of 1.0, right? What if the dividend is equal to 0.87 shares of an ETF? It's the same as regular stocks, so it is possible to do fractional shares. example: 
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Jan 10, 2015 20:03
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I am planning to invest a large amount (~$60,000) with a 7-10 year time horizon and have decided on a high yield dividend fund. I can't decide between the fund and the ETF. I don't plan on trading this for years until the end when I'll likely sell it all at once. Fund: VHDYX ETF: VYM Normally I'd just do the mutual fund but I noticed the ETF has basically half the expense ratio. Because I don't plan on trading, bid/ask penalty should be tiny. Thoughts? Edit: Thanks! This will be the first time I have ever traded something that is not calculated at a settlement price post market close. Should I just place a limit order? I thought I read a few times this is a sucker's move and I should place a limit order instead. app fucked around with this message at 21:14 on Jan 10, 2015 |
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Jan 10, 2015 20:19
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The bid/ask spread on the ETF is a couple hundredths of a percent, you can trade it commission free at Vanguard, and the ER is lower - seems pretty clear cut to me.
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Jan 10, 2015 20:34
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I set up a Vanguard account and am going to be moving over a Roth IRA and money market account from Edward Jones (dad set it up for me back in my early 20's, when I was content to ignore money as long as I had it). Do I have to worry about any tax liabilities or getting hit with big fees when I do this, or it just "fill out forms online, wait 5-7 days, beep boop money is now at Vanguard"?
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Jan 10, 2015 21:34
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Pompous Rhombus posted:I set up a Vanguard account and am going to be moving over a Roth IRA and money market account from Edward Jones (dad set it up for me back in my early 20's, when I was content to ignore money as long as I had it). Do I have to worry about any tax liabilities or getting hit with big fees when I do this, or it just "fill out forms online, wait 5-7 days, beep boop money is now at Vanguard"? As far as I know, as long as the transfer is between custodians without you touching it, you are good to go if you are transferring like to like and not changing from traditional to Roth or something.
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Jan 10, 2015 21:36
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Pompous Rhombus posted:I set up a Vanguard account and am going to be moving over a Roth IRA and money market account from Edward Jones (dad set it up for me back in my early 20's, when I was content to ignore money as long as I had it). Do I have to worry about any tax liabilities or getting hit with big fees when I do this, or it just "fill out forms online, wait 5-7 days, beep boop money is now at Vanguard"? No what you are doing is a called a custodian to custodian transfer. Basically your current custodian (Edward Jones) directly sends over the money to Vanguard. From a IRS perspective it's not considered a early withdrawal from the account. The other option is to cash out and you have 60 days to deposit the money in the new retirement plan. I prefer to use the direct rollover method since it avoids many tax problems and many places offer fairly fast electronic rollovers from your old provider. Basically as easily as giving the new retirement manager account information from the original place.
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Jan 10, 2015 22:09
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I currently have been maxing out my 401k for several years since I was 21. I have not yet opened up a Roth IRA. How much am I hurting myself by not maxing out a roth IRA before maxing the 401k? I'm kinda happy with what 17500 contribution a year until I'm 60 is going to do. Would it be better to split that up between a Roth IRA and a 401k or just keep on track with what I am doing?
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Jan 12, 2015 16:48
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The only difference for you is likely your 401k investment options. If they are low fee and you like the variety in your 401k, it's perfectly fine. You're also conflating a Roth IRA (Post-tax in, untaxed out) with a Traditional IRA (Pre-tax in, taxed out). The traditional is similar to the 401k (Pre-tax in, taxed out) in that they both use pre-tax income and have withdrawal restrictions. If you actually mean Roth, it's not so much 401k versus IRA, it's "Do I want to pay taxes now rather than pay them when I withdrawal from the account". The answer is generally "No, no you don't" if you are in your "earning" years. Edit: It's also normal (if not recommended) that you roll over your 401k into a personal Traditional IRA once you leave your job. It's unlikely you'll be working at the same place until you're 60 so you'll probably end up with one anyway.
Bhodi fucked around with this message at 17:09 on Jan 12, 2015 |
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Jan 12, 2015 17:05
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Bhodi posted:The only difference for you is likely your 401k investment options. If they are low fee and you like the variety in your 401k, it's perfectly fine. Thanks for the response. Sorry, I forgot to say that I was wondering about the general rules from the OP: 1. Match employer contribution 401k 2. Max Roth IRA 3. Max 401k I skipped step 2.
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Jan 12, 2015 18:07
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Some people think it's good to mix pre-tax and post-tax contributions, because who knows what THE GOVERNMENT will do to taxes in the future. I personally split my retirement savings between Roth IRA and 401k.
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Jan 12, 2015 18:10
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Typically, your (limitless) options in an IRA or Roth IRA are better than the 10 to 50 funds you're limited to in a 401k, so it's worth maxing out an IRA first. For example, my 401k plan offers a S&P 500 index fund with a 0.37% expense ratio. It's worth my while to get the full employer 401k match (which more than offsets the high expenses), and then buy Vanguard's 500 index fund at 0.05% in my IRA, and then commit to the 401k afterward.
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Jan 12, 2015 18:11
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You're fine, assuming expense ratios aren't more than 0.50% on any of the 401k investment options you selected (though, the lower the better). It's not worth worrying about, revisit when you leave the company.
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Jan 12, 2015 18:11
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A big reason for rule #2 is that a lot of people's 401k options kind of suck. Maybe that doesn't apply to you. Another reason is that it might be a good idea to split retirement contributions between pre-tax and post-tax (traditional vs Roth) - but you can often do that in a 401k, nowadays, if you want to. Or not worry about it. Overall if you have decent fund options in your 401k there's no reason to get excited about changing things up.
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Jan 12, 2015 18:11
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Cool, thanks for the responses.
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Jan 12, 2015 18:14
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My company used to have a 401K run through our paycheck processor, but we've since been bought out by a company that does not offer a 401K, so now I'm left with a 401K plan that I don't appear to be able to put any more money into. I presume that I'll be getting an IRA (of some flavor), but what should I do with the 401K money? Stick in the IRA or let it stew where it is?
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Jan 12, 2015 18:30
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dupersaurus posted:My company used to have a 401K run through our paycheck processor, but we've since been bought out by a company that does not offer a 401K, so now I'm left with a 401K plan that I don't appear to be able to put any more money into. I presume that I'll be getting an IRA (of some flavor), but what should I do with the 401K money? Stick in the IRA or let it stew where it is? roll it over into an IRA, which will almost doubtlessly provide you with better investment options than your 401k
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Jan 12, 2015 18:50
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Mr. Glass posted:roll it over into an IRA, which will almost doubtlessly provide you with better investment options than your 401k A quick study suggests that Roth is the way to go (income limits aren't a problem). I'll have to pay taxes on the amount I roll over, yes? Should I do this before or after this year's taxes, or will that all be handled for me? I was planning on using USAA for this since I'm already using them for a bunch of other things.
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Jan 12, 2015 19:42
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dupersaurus posted:A quick study suggests that Roth is the way to go (income limits aren't a problem). I'll have to pay taxes on the amount I roll over, yes? Should I do this before or after this year's taxes, or will that all be handled for me? I was planning on using USAA for this since I'm already using them for a bunch of other things. i (along with most people here, i would wager) would recommend vanguard. can't speak to the tax questions
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Jan 12, 2015 19:48
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dupersaurus posted:I was planning on using USAA for this since I'm already using them for a bunch of other things. I actually moved my IRA out of USAA a few years back despite the extra hassle. USAA hasn't got a very good mutual fund selection for a passive portfolio. Basically they have target retirement funds and an S&P500 index, all several time more expensive than Vanguard. It's ok, but if you are willing to deal with two providers Vanguard has many better options.
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Jan 12, 2015 20:24
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