Thanks for all your replies. I now see your collective point. I guess I
was placing too much importance on the fact that I may not end up with the
same funds I had before after my assets are rolled over into the new
company's plan (or whatever). But as you all reminded me, if the funds in my
current plan go down in value, chances are other funds have gone down too
and prices will be cheaper when the new custodian buys 'em -- an obvious
fact I overlooked. I agree with Ed that the real potential danger is the
possibility of a market rally during the period of time that my assets are
in "cash limbo" while the rollover takes place.

Thanks again.

Ryan

What would help here is knowing how the acquiring company will handle the
transfer and what your current options are to minimize the risk.

One play might be if you are satisfied with the current plan, to use the
rollover and get into an IRA that is administered by the same people.

If you give a little more detail, we can see what your risk factors could
be.


"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote in message
news:be1lnb029ud[at]enews2.newsguy.com...
- quote -

In article <vg7aqdg5pb44af[at]corp.supernews.com> , "Ryan Williams"
<ryan[at]NOSPAM.com> writes:

- quote -

No. If you have a long-term investment plan and you are happy with it, you
should remain with substantially the same investment plan. If the market is low
when the funds are transferred to the new 401(k), the custodians will be
selling low and buying low. If the market is high, the custodians will be
selling high and buying high. What you will miss out is market action from the
time the first custodian sells and the second custodian buys, but an
interruption in the market exposure is not the same thing as suddenly having a
short investment horizon.

What you should do after the funds are transferred is to make sure the money
gets invested in the investment vehicles that best fit your investment plan. It
is likely that some of the specfic investments will be different, so you may
have to do some reading of what the new 401(k) offers and select appropriately,
maybe doing some fine tining of your plan based on what the new 401(k) offers
or doesn't offer.

Generally, it is good to view all investments towards a particular goal as
belonging to the same "portfolio," so all your investments intended to fund
your retirement should be viewed together. So, if the 401(k) is lacking in a
particular area, you might be able to compensate by having exposure to that
area in your non-401(k) investments. (For example, my 403(b) is lacking small
caps and is weak in foreign exposure, so my Roth IRA and some of my taxable
investments compensate by over-exposure in those areas so my overall retirement
portfolio is more diversified than my 403(b) alone.)

Mark A. Young

Ryan Williams wrote:
- quote -

Addressing only the short/long-term question...when you match the term
of an investment to the term of a goal, you define the time frame of
that goal strictly in terms of "the day you turn the investment into cash."

While a 401k withdrawal in six months qualifies as a short-term goal,
for which short-term investments are appropriate, a 401k rollover in six
months does not. In a sense you don't care what the value of your
account is at the time of the rollover. You'll still be sitting on the
investments for another 20 years or whatever before you actually begin
converting them to cash. If you go to cash between now and the rollover,
you're taking on the risk that the market will rally between now and the
time of reinvestment in the new plan.

Imagine that you had all your 401k money in a stock index fund and you
got a letter saying "as of Sept 1, the custodian for your stock index
fund will switch from X to Y, and the name of your fund will change from
the X index fund to the Y index fund." You wouldn't change your
investments, right?

-Tad

Ryan Williams wrote:

- quote -

Well, it depends on exactly how the transition is handled, but the real
risk is that you are forced to sell your investment at a low price, are
in cash for some period, and before you can buy back in the price of
that investment (or the comparable investment in the new plan) goes up.
Of course, if you cash out now you run a similar risk of being "out"
of an upward move in the price of the investment.

For instance, let's say you are in an S&P 500 index fund that is selling
right now at 100 per share. If the price crashes the day before you are
converted to cash down to $50 that, in and of itself, may not be a
problem if you would have been in that investment anyway. However, the
problem is if you have to stay "in cash" for a week and during that week
the price were to fully recover and you bought the same investment, then
you'd end up reinvested owning only half of what you did before (and,
therefore, would be significantly worse off than if the plan hadn't
changed).

But note the same is true if you sell today for $100 and, while waiting
for the new plan to come into place, the price moves up to $200. While
psychologically it may not "feel" as bad <grin> , you still only own half
as many shares as you did before. And should it turn out the $200 run
up was a temporary bubble and the price goes back to $100 you are back
in the same exact position as the first case.

The real problem isn't a *drop* in the near term since that also means
the price to get "back in" has gone down at the same time--the true risk
is if there is a run-up in price after you cash out and before you can
get back into your "regular" investment. And, arguably, if you go
conservative right now you actually are increasing that risk.

--
Ed Zollars, CPA
Phoenix, Arizona

"BMS" <mcfared[at]comcast.net> wrote in message
news:enUMa.3058$Ey6.1195[at]rwcrnsc52.ops.asp.att.net...
- quote -


Right, I understand that. But my point is, since the Enron 401k will soon
be liquidated, in essence, and moved into something else, shouldn't it be
thought of as a short-term investment? Shares of the funds inside my 401k
will have to be sold and turned to cash before the assets can be rolled
over, right? So under the circumstances, shouldn't the goal be to preserve
what assets I have by holding more conservative investments until that
happens? Normally, in a long-term retirement vehicle, the short-term ups
and downs of the stock market wouldn't worry me, but I'd hate to see my
assets dwindle right before I need to roll those assets into something else.

Am I right, or am I missing something?



- quote -

I work for a subsidiary of (ehem!) Enron. My company will soon be sold to
another entity or perhaps distributed to creditors in the form of stock. My
question is, when this happens, is it not true that my current Enron 401k
will HAVE to be rolled into something else (either the new parent company's
qualified plan or an IRA)? I don't believe leaving it where it is will be an
option since Enron will no longer exist -- at least not as Enron, anyway.

And so under the circumstances, shouldn't the Enron 401k should be thought
of as a short-term investment rather than the normal long-term retirement
vehicle that it would normally be?

I'd appreciate any input on this.

Ryan