ESOP payout rollover help

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triggertreat
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Joined: Sun Jun 18, 2017 1:36 pm

ESOP payout rollover help

Postby triggertreat » Sun Jun 18, 2017 2:08 pm

Was looking for info and found this site.Thanks for the opportunity to join and ask questions.I have just enough investment knowledge to be dangerous.

A little background.I am 62 and plan on retiring in about 4 years.Only debt I have is a very small mortgage.The ESOP I work for was sold .The group I work for was repurchased by the original owner and my 401k will remain with the new/old group.The ESOP payout will be in 3 steps with the first being in the neighborhood of 75k and expected total around 120k. I have a good emergency fund and a managed simple IRA held at EJ that has averaged 10% for the last 9 years.I have used the hands off approach and feel this is best for me and my level of investment knowledge.

Questions
1) In regards to the ESOP pay out.With 4 years to go would I be better off with a managed account at maybe Vanguard or Fidelity and at what allocation
2) My 401k has been almost flat on return for the last 9 years except for the company match.Would I be better taking it out and converting it into a Roth?


I welcome any and all imput.

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David Jay
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Location: Michigan

Re: ESOP payout rollover help

Postby David Jay » Sun Jun 18, 2017 2:44 pm

Welcome to BH!

1. If you feel you need a "managed" account, I would strongly recommend low cost advisory service. There are several, but Vanguard's PAS (Portfolio Advisory Service) cost 0.3% per year, a full percentage point less than an EJ account before we even talk about indivIdual fund expense ratios. The difference of 1% per year doesn't sound like much but it will cost you 1/3 of your portfolio over the next 30 years.

2. If your 401K allows an "in service distribution" (you can find this in the summary plan description or SPD) then it sounds like you should be out of the 401K if your results over the last 9 years are flat. You would do a rollover to an IRA which you can manage yourself or go with a low cost advisor.

I would recommend a search for "EJ" or "Edward Jones" in the search box in the upper right corner of the page (field says "Google") to see what others with EJ accounts are deciding.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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David Jay
Posts: 3397
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: ESOP payout rollover help

Postby David Jay » Sun Jun 18, 2017 2:46 pm

On the ESOP distribution, be careful that you do a direct rollover of the ESOP proceeds into an IRA account to avoid triggering a taxable event.

(I also work for an ESOP company)
Last edited by David Jay on Mon Jun 19, 2017 10:11 am, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

triggertreat
Posts: 4
Joined: Sun Jun 18, 2017 1:36 pm

Re: ESOP payout rollover help

Postby triggertreat » Mon Jun 19, 2017 3:26 am

Thank you David.The sale of the ESOP came sooner than expected so I was doing a little research and posts about EJ led me here .To be fair EJ has done well by me in my opinion for the options I chose.I was just looking for another alternative for this distribution and to not to cause a taxable event.. The fact that I only have a few working years left also plays a part. Not all of the sale/repurchase/reorganization details have been released such as retirement ect but I will check on the in service distribution angle of the 401K to see if I can get my money free of the 401K. Thanks again.

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David Jay
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Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: ESOP payout rollover help

Postby David Jay » Mon Jun 19, 2017 9:59 am

triggertreat wrote:Thank you David.The sale of the ESOP came sooner than expected so I was doing a little research and posts about EJ led me here .To be fair EJ has done well by me in my opinion for the options I chose.I was just looking for another alternative for this distribution and to not to cause a taxable event.. The fact that I only have a few working years left also plays a part. Not all of the sale/repurchase/reorganization details have been released such as retirement ect but I will check on the in service distribution angle of the 401K to see if I can get my money free of the 401K. Thanks again.

Again, your HR department can give you (actually, is required by law to provide to you) the SPD (summary plan description) for your 401K. Look under "withdrawals" to see if an "in service distribution" is available. My company provides unlimited in service distributions after the age of 59.5 (but none prior to 59.5). Of course you can roll-over your 401K after you leave service, but the question is whether you are allowed to do it while still working there.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

inbox788
Posts: 3739
Joined: Thu Mar 15, 2012 5:24 pm

Re: ESOP payout rollover help

Postby inbox788 » Mon Jun 19, 2017 8:12 pm

triggertreat wrote:I have a good emergency fund and a managed simple IRA held at EJ that has averaged 10% for the last 9 years.

Is that starting before or after Oct. 2008?

https://dqydj.com/sp-500-return-calculator/

Do you know what it was invested in? I'd also be weary of EJ as others have warned.

What was your 401k invested in?

triggertreat
Posts: 4
Joined: Sun Jun 18, 2017 1:36 pm

Re: ESOP payout rollover help

Postby triggertreat » Thu Jun 22, 2017 7:21 pm

inbox788 wrote:
triggertreat wrote:I have a good emergency fund and a managed simple IRA held at EJ that has averaged 10% for the last 9 years.

Is that starting before or after Oct. 2008?

https://dqydj.com/sp-500-return-calculator/

Do you know what it was invested in? I'd also be weary of EJ as others have warned.

What was your 401k invested in?


The 401k is with Great West if that tells you anything :happy . With the EJ account Jan. 2009 so my first statement about 9 years should have been 8+.What I put in and what it is worth now equals that gain .While I am not saying EJ is without issues in this one case it has served me well. My ESOP payout will be going else where.

inbox788
Posts: 3739
Joined: Thu Mar 15, 2012 5:24 pm

Re: ESOP payout rollover help

Postby inbox788 » Thu Jun 22, 2017 8:17 pm

triggertreat wrote:
inbox788 wrote:
triggertreat wrote:I have a good emergency fund and a managed simple IRA held at EJ that has averaged 10% for the last 9 years.

Is that starting before or after Oct. 2008?

https://dqydj.com/sp-500-return-calculator/

Do you know what it was invested in? I'd also be weary of EJ as others have warned.

What was your 401k invested in?


The 401k is with Great West if that tells you anything :happy . With the EJ account Jan. 2009 so my first statement about 9 years should have been 8+.What I put in and what it is worth now equals that gain .While I am not saying EJ is without issues in this one case it has served me well. My ESOP payout will be going else where.

Using the calculator linked above starting Jan 2009, it reports the SP annualized return to be 13% and 15.3% with dividends reinvested. Total return of 227.4%, so a simple average return would be about 25%. Too many investors are content with making money and don't care that the fees can be as much as a quarter to third of all the profits.

triggertreat
Posts: 4
Joined: Sun Jun 18, 2017 1:36 pm

Re: ESOP payout rollover help

Postby triggertreat » Fri Jun 23, 2017 3:41 am

inbox788 wrote:
triggertreat wrote:
inbox788 wrote:
triggertreat wrote:I have a good emergency fund and a managed simple IRA held at EJ that has averaged 10% for the last 9 years.

Is that starting before or after Oct. 2008?

https://dqydj.com/sp-500-return-calculator/

Do you know what it was invested in? I'd also be weary of EJ as others have warned.

What was your 401k invested in?


The 401k is with Great West if that tells you anything :happy . With the EJ account Jan. 2009 so my first statement about 9 years should have been 8+.What I put in and what it is worth now equals that gain .While I am not saying EJ is without issues in this one case it has served me well. My ESOP payout will be going else where.

Using the calculator linked above starting Jan 2009, it reports the SP annualized return to be 13% and 15.3% with dividends reinvested. Total return of 227.4%, so a simple average return would be about 25%. Too many investors are content with making money and don't care that the fees can be as much as a quarter to third of all the profits.


Point taken .


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