RMD Withdrawal Plans

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ralph124cf
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RMD Withdrawal Plans

Post by ralph124cf » Fri Jan 11, 2019 12:47 pm

DW and I both start RMDs this year.

IRA withdrawals at both Fidelity and Schwab were fairly easy to set up so that we get monthly checks for one twelfth of the yearly RMD deposited to our bank account monthly, with the actual RMD amount recalculated yearly by the custodian.

I have had no success getting a similar plan in place for my 401(k) that is also at Schwab. Schwab told me that this is not allowed for 401(k) plans. I have no idea if this means any 401(k) plans nationwide, Schwab 401(k) plans, or my individual employer's 401(k). The Schwab people did not seem really familiar with RMD rules.

Can anybody tell me if you have managed to set up monthly withdrawals of 401(k) RMD amounts? I am trying to set this up on autopilot now so that, as we age and become more forgetful, we don't screw up withdrawals and have to pay a penalty.

Thanks,

Ralph

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samsoes
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Re: RMD Withdrawal Plans

Post by samsoes » Fri Jan 11, 2019 1:19 pm

401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

jdb
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Re: RMD Withdrawal Plans

Post by jdb » Fri Jan 11, 2019 1:49 pm

samsoes wrote:
Fri Jan 11, 2019 1:19 pm
401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
I am surprised that so many people do not rollover their 401(k) investments into self directed IRA when they turn 60 years old (actually 59 1/2). First thing I did when turned 59 1/2 was do create and do rollover to Vanguard IRA. So much simpler without the 401(k) administration requirements and of course a far bigger universe of investments available. Good luck.
Last edited by jdb on Fri Jan 11, 2019 1:53 pm, edited 1 time in total.

jebmke
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Re: RMD Withdrawal Plans

Post by jebmke » Fri Jan 11, 2019 1:52 pm

jdb wrote:
Fri Jan 11, 2019 1:49 pm
samsoes wrote:
Fri Jan 11, 2019 1:19 pm
401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
I am surprised that so many people do not transfer their 401(k) investments into self directed IRA when they turn 60 years old (actually 59 1/2). So much simpler without the 401(k) administration requirements and of course a far bigger universe of investments available. Good luck.
I suspect usually it is just inertia. In some cases there are advantages to leaving the funds in the 401(k).

In Maryland, withdrawals from a 401(k) are eligible for a pension exclusion on state income tax. Withdrawals from IRAs do not qualify.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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samsoes
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Re: RMD Withdrawal Plans

Post by samsoes » Sat Jan 12, 2019 7:59 pm

jdb wrote:
Fri Jan 11, 2019 1:49 pm
samsoes wrote:
Fri Jan 11, 2019 1:19 pm
401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
I am surprised that so many people do not rollover their 401(k) investments into self directed IRA when they turn 60 years old (actually 59 1/2). First thing I did when turned 59 1/2 was do create and do rollover to Vanguard IRA. So much simpler without the 401(k) administration requirements and of course a far bigger universe of investments available. Good luck.
You can do a trustee-to-trustee transfer neither triggering tax nor penalty before age 59.5. At various times, I've rolled former employer 401(k)/403(b)/401(a) plans all into one (self-directed) Traditional IRA at a single custodian. It's quite routine, actually. Cumbersome, but routine.

The under age 59.5 tax/penalty trigger only comes into play when you have possession of the 401(k)/IRA funds for more than 60 days. Trustee-to-trustee transfers, when executed properly, ensure you never have legal possession of the funds themselves.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

sport
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Re: RMD Withdrawal Plans

Post by sport » Sat Jan 12, 2019 8:05 pm

jdb wrote:
Fri Jan 11, 2019 1:49 pm
samsoes wrote:
Fri Jan 11, 2019 1:19 pm
401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
I am surprised that so many people do not rollover their 401(k) investments into self directed IRA when they turn 60 years old (actually 59 1/2). First thing I did when turned 59 1/2 was do create and do rollover to Vanguard IRA. So much simpler without the 401(k) administration requirements and of course a far bigger universe of investments available. Good luck.
The 401k plan I was in at 59.5 had a rule that allowed me to transfer my contributions and the growth of those contributions. However, the matching money and its growth was not available for transfer until I left the company. So, I did one transfer at 59.5 and another after I retired at age 62.

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samsoes
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Re: RMD Withdrawal Plans

Post by samsoes » Sat Jan 12, 2019 8:30 pm

sport wrote:
Sat Jan 12, 2019 8:05 pm
jdb wrote:
Fri Jan 11, 2019 1:49 pm
samsoes wrote:
Fri Jan 11, 2019 1:19 pm
401(k) accounts are heavily governed by the plan rules setup between the 401(k) plan's sponsoring employer and its custodian.

Have you considered rolling the Schwab 401(k) into a Schwab IRA where you aren't bound by the employer agreement?
I am surprised that so many people do not rollover their 401(k) investments into self directed IRA when they turn 60 years old (actually 59 1/2). First thing I did when turned 59 1/2 was do create and do rollover to Vanguard IRA. So much simpler without the 401(k) administration requirements and of course a far bigger universe of investments available. Good luck.
The 401k plan I was in at 59.5 had a rule that allowed me to transfer my contributions and the growth of those contributions. However, the matching money and its growth was not available for transfer until I left the company. So, I did one transfer at 59.5 and another after I retired at age 62.
Ah - you're referring to transfers out while still employed (called "in-service" transfers)? That varies by employer agreement. The trustee-to-trustee transfers I referred to above always occurred after I had left the corresponding job, having waited an ample period of time to ensure there weren't any additional employer contributions headed my way, such as true-up matching, etc.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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