On Mar 14, 9:25*am, BreadWithS...[at]fractious.net wrote:
- quote -

Bread, thanks for the additional insights. Very informative, as
usual.

NUA is definitely something to take into consideration. To be honest,
I forgot about it when throwing my list together. While it's
definitely pertinent info, I'm not sure it classifies as an advantage
or disadvantage of rolling-over (which you may not have meant it to
be). To employ the NUA rules, one must leave the 401k but not enter
and IRA. It's more like a third option, don't you think.

Note to OP: If NUA applies, you can still roll the non-NUA assets to
an IRA (or not).

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kastnna <kastnna[at]auburnalum.org> writes:

[Doing 401k rollover to IRA]
- quote -

Don't underestimate this. The OP indicated that the 401k *plan*
is with a major financial institution. That doesn't make much
difference if the former employer is not - you still have to
track down the employer to do many things. I had a big hassle
tracking down someone able to deal with a 401k from a former
employer which had gone out of business. The 401k provider,
of course, was just fine.

Also, don't forget
8. *clarity* - many 401ks have fees which are not clear or
visible. The funds may be great and have low expenses
at the fund management level, but the plan itself may
still be whacking at you with fees which aren't obvious.

That said, some plans are fabulous. My current one
has is as straightforward and low-cost as could be.

- quote -

If one is on disability or has fully separated from service
to that former employer (which, IIRC, the OP has).

- quote -

However, there are very few for which an equally good
equivalent is not available in an IRA.

also,
3. If you have employer stock in that 401k with a big
gain embedded in it, there may be good reason to
make the company stock a taxable distribution,
since it may be treated differently tax-wise. Talk
to an accountant. Google for "Net Unrealized Appreciation"


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In 2010, it the new president does close this loophole,
you can convert it to a Roth. A Roth doesnt have
mandatory withdrawasl which might increase the
size of your medicare premiums.

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On Mar 11, 3:05*pm, Art Harris <n...[at]hotmail.com> wrote:
- quote -

Antiquated 401k plans that have not been amended can require that,
upon death, all proceeds in your 401k plan be distributed in the year
after your passing. In this instance, the funds can no longer grow tax
deferred. Furthermore, you cannot manipulate the marginal tax ceilings
to minimize your tax burden. The result is almost assuredly a higher
marginal tax.

Even in updated 401k plans, your non-spouse heirs are required to
distribute the funds based on the their life expectancy (this changes
somewhat if you were already in RMD territory). If you have multiple
primary beneficiaries (such as two children), the life expectancy used
to calculate distributions is the one that results in the shortest
distribution period. Again, some of your funds will lose their
precious tax-deferred status earlier than necessary.

Given the later scenario, one alternative would be to establish TWO
stretch IRAs (one for each of your hypothetical children). Upon your
demise, each child would stretch their inherited IRAs over their
unique life expectancies. The end result is that the younger
beneficiary has the option to keep the funds tax-deffered in the
account for a longer time period. In addition, they increase the odds
that they will be able to withdraw only so much as prevents them from
entering the next tax bracket.

Congress seems to be slowly eliminating the above mentioned benefit by
expanding the capabilities of 401k plans. However, as they add these
capabilities they have historically only made them OPTIONS, not
REQUIREMENTS. As a result, many behind-the-times employers still have
outdated restrictions on their plans many years after the law allows
those restrictions be lessened.

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On Mar 11, 1:28*pm, Dave Dodson <dave_and_da...[at]juno.com> wrote:

- quote -

Good point Dave. I overlooked the "few years until retirement part".

Still a good mental note for others it may apply to though.

Thanks again.

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kastnna wrote:

- quote -

It was a good start. The thread from January added:
(Disadvantage)
3. if one has substantial NUA (Net Unrealized Appreciation)
on employer stock in that 401k (which may be better to
transfer to a *taxable* account, depending on circumstances)

(Advantage)
8. IRA allows for easy move to Roth IRA. (This may really be 1a, as you
can roll from 401(k) to Roth, but I'd be concerned if you tried to do it
past 12/15 with a 401(k) admin needing it done by year end.

Joe
(This would be a good question to add to the FAQ, and update if there
are more items to add to the list.)

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kastnna wrote:
- quote -

This is what got me thinking about a rollover. I'm not sure what the
payout period of the 401k would be if I were to die. It might even be
a lump sum payment requiring large tax payments.

I saw Ed Slott on TV talking about stretch IRAs, etc. It was the first
time I'd heard that term, and I guess I need to investigate it
further.

Would the purpose of "multiple IRAs" be to have a different
beneficiary (e.g., children and spouse) for each?

Thanks,
Art

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On Mar 11, 12:59*pm, kastnna <kast...[at]auburnalum.org> wrote:
- quote -

Only for those who separate from service during or after the year in
which they attain age 55. This probably does not apply to the original
poster because he left the company 13 years ago and still has a few
years until he retires.

Dave

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On Mar 9, 8:30*am, Art Harris <n...[at]hotmail.com> wrote:
- quote -

POTENTIAL advantages:
1. Hassle of dealing with former employer and it's administrators.
2. IRS's ability to "freeze" 401k due to company malfeasance.
3. Better ability to personally manage fees and expenses in IRA.
4. Multiple IRAs allow for personally crafted stretch provisions upon
death.
5. IRAs have wider selection of investment choices.
6. Consolidation of statements and paperwork if combining multiple
401k and IRAs.
7. 401k plans often need to be amended (at the employers discretion)
to accomodate new tax laws. IRAs don't.

POTENTIAL disadvantages:
1. 401k may allow distributions at 55 without penalty.
2. Institutional investments that may not be available to IRA
investors.

That's a good start, I think.

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On Mar 9, 9:30*am, Art Harris <n...[at]hotmail.com> wrote:
- quote -

This is a good question, Art, and I'd like to know the answer too
since I still have a 403B plan that I have not rolled over into my IRA
(I retired 2 yrs ago). Let's hope someone answers.
I think you can keep the 401K indefinitely as long as the company
doesn't make you move it.
SandyBeth

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I still have a 401k from a company I left 13 years ago. I like the
funds offered, and have not felt inclined to roll it over into an IRA.
The plan is administered by a major financial institution.

Are there any risks or disadvantages to not rolling it over into an
IRA? I'm still a few years away from retirement.

Thanks,
Art

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