59 1/2 - 401K, 403b, etc.

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RickBoglehead
Posts: 326
Joined: Wed Feb 14, 2018 9:10 am

59 1/2 - 401K, 403b, etc.

Post by RickBoglehead » Mon Apr 16, 2018 8:50 am

When my wife turned 59 1/2, we rolled over her 403b account (still employed there) to a Rollover IRA, and then moved those assets to Vanguard. Zero cost, took some time, now we have increased flexibility including Admiral funds access.

As I turn 59 1/2, I have Individual 401K assets at Vanguard. No Admiral choices either. I see zero reason to not rollover these accounts once I hit 59 1/2, and then to do so on a regular basis (Vanguard says no problem). I would plan on rolling over the company portion to a Rollover IRA, and the individual portion (which is ROTH) to my ROTH IRA. Vanguard says I can even contribute and then shortly thereafter rollover. One downside is that currently this must be done via US Mail, these forms are not yet available to be Docu-signed.

Then, each year I would evaluate the ability to convert some of the Rollover IRA to ROTH.

Two questions:

1) Is there ANY downside to my plan, NOT INCLUDING the annual conversions mentioned in the last sentence? I don't see any.

2) My wife also has a Rollover IRA, in which we converted SOME of the assets last year to ROTH. With two Rollover IRA (hers and mine), do I have to proportionally convert each to ROTH, or is that just within an individual if you have multiple taxable IRA accounts and want to convert some to ROTH?

Thank you.

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welderwannabe
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Joined: Fri Jun 16, 2017 8:32 am

Re: 59 1/2 - 401K, 403b, etc.

Post by welderwannabe » Mon Apr 16, 2018 8:55 am

Seems like a lot of work to me. Instead of that, consider rolling your i401k to Fidelity. That's what I did when I got tired of Vanguard's silly restrictions on their i401k product.

I still have 30% of my net worth at Vanguard, just not my 401k.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

RickBoglehead
Posts: 326
Joined: Wed Feb 14, 2018 9:10 am

Re: 59 1/2 - 401K, 403b, etc.

Post by RickBoglehead » Mon Apr 16, 2018 9:00 am

Thanks, but when Fidelity NetBenefits screwed up my wife's 403b contributions, and took 5 months to fix them (requiring nearly a day of my time), I removed all but 0.65% of my assets from Fidelity and never plan to go back. I had been there since 1987. With my assigned Vanguard rep, I get great support and he fixes any issues that I have.

In fact, Fidelity is again causing issues with my last transfer, this one from a taxable account. They said I could keep a zero balance, then denied the partial transfer. So I put a small deposit in (Fidelity Credit Card), and they still denied the transfer, now saying the balance had to be at least $150, but the reps that you talk to say that's not correct, but "we'll put a ticket in". I simply raised the balance to $150.01, and will complete the transfer this week. Then, I'll email and get documentation of a minimum balance, if any, that I must keep in the taxable brokerage account to catch future credit card rewards, save that email, and reduce the balance.

I don't care about the work once or twice a year, just want to make sure I'm not missing something.

Sandi_k
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Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: 59 1/2 - 401K, 403b, etc.

Post by Sandi_k » Mon Apr 16, 2018 11:32 pm

403(b)'s and 401(k)'s have better asset protection from creditors than IRAs.

RickBoglehead
Posts: 326
Joined: Wed Feb 14, 2018 9:10 am

Re: 59 1/2 - 401K, 403b, etc.

Post by RickBoglehead » Tue Apr 17, 2018 5:08 am

Thank you for that point. However, the vast majority of my assets are already in taxable and IRAs, so that would not really matter. I also have a $3m liability policy.

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