transfer deferred comp plan to Vanguard

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transfer deferred comp plan to Vanguard

Postby keniles » Wed Aug 11, 2010 6:10 am

We are keeping a def comp plan for this stable income but are thinking of transferring it over to our traditional ira with Vanguard and investing it in short and intermediate term bonds along with inflation protected securities.Would this be a prudent thing to do? What do you think? thanks keniles
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Postby Steelersfan » Wed Aug 11, 2010 6:39 pm

Can you tell a little bit more about his "def comp" and what type of plan it is? "Def comp" to me means a deferred compensation plan and I doubt if that can be combined with an IRA.

But I also doubt that's what you mean.
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Defrered Comp

Postby keniles » Thu Aug 12, 2010 7:09 am

Thanks for the response.Yes, Def Comp plan is a 457 plan through my work in the state of Indiana. I am now retired and have that portion of money invested in stable income earning 2.10% interest. I could also invest the money in other options within the plan including Vanguard 500 index, Vanguard Capital Opportunity, Wells Fargo Growth, other small cap , interernational funds, along with Pimco Total Return. I usually keep all this money in fixed income per tax reasons and booglehead guidance. Anyways, I read where these plans can now be transfered from one agency to another, as long as it was an ira. One positive is that it would improve book keeping and be simplier if I moved it to Vanguard-a negative is I would not have the stable income fund to invest in. I also turn 70 and 1/2 next year and will have to begin RMD. If all of it was combined at Vanguard, then it would be distributed only from Vanguard. I hope this helps. Just wondering what would be the best thing to do-not that I would even have to do anything. Thanks again. keniles
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Postby dbr » Thu Aug 12, 2010 10:00 am

Some people sneer at the idea, but I like the concept of having assets at two operationally independent organizations just as a precaution against some organizational or IT snafu at one or the other.

It could be worth the simplification for a spouse or other caretaker to have to only work with one account someday.

Assuming other fund choices and quality of administration are outstanding there may not be a good motive to move.

I think stable value funds are worth preserving access to.

I am not sure for a fact of the ERISA status of 457 plans, but it is possible in some states to lose some liability protection of assets by moving from an employer plan to an IRA.

There is a low volume drumbeat of complaints about Vanguard customer service on this forum. You can disregard or interpret that however you will.
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Postby camper » Thu Aug 12, 2010 10:05 am

My wife worked for the city we live in for a short time. She contributed to deferred comp- a 457 plan. We rolled it over to her roth ira at Vanguard. Since contributions to a 457 plan are pretax, the rollover was a taxable event. We could have left the money in the 457, but we decided to consolidate for simplicity.
"I emphasize three main principles: first, to not be too greedy; second, to diversify as widely as possible; and third, to always be wary of the investment industry." William J. Bernstein
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Postby 555 » Thu Aug 12, 2010 7:10 pm

She could have rolled it into a Trad IRA with no tax (then later transfer some or all to Roth, and pay tax then, as you choose, or withdraw as income).
camper wrote:My wife worked for the city we live in for a short time. She contributed to deferred comp- a 457 plan. We rolled it over to her roth ira at Vanguard. Since contributions to a 457 plan are pretax, the rollover was a taxable event. We could have left the money in the 457, but we decided to consolidate for simplicity.
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Postby camper » Thu Aug 12, 2010 10:26 pm

555 wrote:She could have rolled it into a Trad IRA with no tax (then later transfer some or all to Roth, and pay tax then, as you choose, or withdraw as income).
camper wrote:My wife worked for the city we live in for a short time. She contributed to deferred comp- a 457 plan. We rolled it over to her roth ira at Vanguard. Since contributions to a 457 plan are pretax, the rollover was a taxable event. We could have left the money in the 457, but we decided to consolidate for simplicity.


She only worked for the city for a short time. The value of the deferred comp 457 was less than $3000 (min. deposit to start new fund) and she doesn't have a traditional ira. We try to minimize the number of accounts where possible for simplicity.
The info you give is good for the OP though.
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thanks for responses

Postby keniles » Fri Aug 13, 2010 5:31 am

I updated our stable value fund this am and do like the results of it always going up-even at just over 2%-especially in these uncertain times.
DBR-I like your idea of having things in more than one place-just as you say-so we will just hang on to our account with state of Indiana. keniles
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