QDRO rollover to other retirement 58YO

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Topic Author
Free2bme
Posts: 3
Joined: Wed Mar 13, 2019 3:41 pm

QDRO rollover to other retirement 58YO

Post by Free2bme » Wed Mar 13, 2019 4:01 pm

Looking for all advice regarding QDRO rollover.

Emergency Funds: I do have this. About a year.
Debt: 75,000
Tax Filing Status: Single
Tax Rate: 12% State: 3.07%
State of Residence: PA
Age: 58
*Desired Asset allocation: Unsure what I want, but currently it is 84% stock, 16%bonds
Desired International allocation: Unsure I want/should have that.
Investment & retirement account $ = 750,000
Fund names: Investment: Apple (40G), Costco (1G), Disney(11G), Facebook(<1G), Corning(18G), Tesla(4G), cash (7G)
Retirement: Individual IRA (TDAmeritrade) – Positions: Invesco Comstock Fund Class A (ACSTX), The Growth Fund of America Class A Shares (AGTHX), American Funds Investment Co of America A (AIVSX), The Income Fund of America Class A Shares (AMECX),, American Funds Capital World Growth & Income Fund Class A Shares (CWGIX), Fidelity Select Natural Gas Portfolio (FSNGX). (all have value around $10,000 except AGTHX – $22,000)

Retirement : * QDRO: (approx. 600G) (No additional funds are being contributed to this) This is the fund I need to either transfer to another Fidelity Retirement fund (IRA?) or liquidate and reinvest elsewhere in a retirement fund within 2 months:
Asset allocation: 83.48% stock,
16.52% bonds
“All in one Life Cycle Funds” - Blended Fund Investments – target risk – moderate (just under ½ the value in the account)
“Expanded Choice – Mutual Funds” – Large Blend Vanguard Dividend Growth Fund Investor Shares, (little more than half the value of the account)

Available funds: $50,000 (cash) (personal account)
Note: I will receive a pension of approx. $850/mo at 62, $1000 at 65
SS will be $964 at age 62 or $1440 at 67

Question 1: My immediate concern is the retirement money currently in a QDRO at Fidelity which must be moved. I am not strongly confident about finances and investing but I am willing to make it happen with some encouragement and advice. My choices, as I understand them, are 1 -opening another retirement account with Fidelity and rollover same funds there, or 2 -finding another investment ‘house’ and opening a retirement account, transferring the liquidated funds, and then reinvesting. The first question is where should I put this? (I have a TDAmeritrade IRA account currently that I could add to, but I am not fixed on staying with them, if another option is more desirable.)

Question 2: How do I choose my asset allocation and then which funds? Can you recommend the best allocation and/or funds for me based on my age, circumstances, and assets, etc?

Thank you for any and all your help!

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David Jay
Posts: 7163
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: QDRO rollover to other retirement 58YO

Post by David Jay » Thu Mar 14, 2019 2:33 pm

Welcome to the forum!

A few thoughts on your situation:

1. Every major brokerage will be familiar with a Qualified Domestic Relations Order (QDRO). You can talk to Fidelity or TDA or another low-cost brokerage. At BH we typically recommend Fidelity, Vanguard or Schwab because each has a full line of low cost index funds - you can build a good 3 fund (or similar) portfolio at any of those 3 brokerages.

2. Talk to the brokerage who will be receiving the money. They have the financial incentive to make certain that the transfer goes smoothly.

3. Don’t be in a big hurry to select investment options. Inside an IRA you can change investment options at any time with no tax consequences. So just move the money into a Money Market Account (the settlement account is fine) to meet the time window for the QDRO. Then set about to educate yourself (here at BH the Wiki is a good place to start: https://www.bogleheads.org/wiki/Getting_started ) as you begin this phase of your life.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
Free2bme
Posts: 3
Joined: Wed Mar 13, 2019 3:41 pm

Re: QDRO rollover to other retirement 58YO

Post by Free2bme » Sun Mar 24, 2019 7:22 pm

Thanks for your reply. I am already feeling less stressed about this.
I am inclined to open an account at Vanguard, so I will contact them soon to set up the account. I will also begin to do some more research on the investments. I am sure I will be back to seek further thoughts!
Thanks again.

Katietsu
Posts: 2421
Joined: Sun Sep 22, 2013 1:48 am

Re: QDRO rollover to other retirement 58YO

Post by Katietsu » Sun Mar 24, 2019 7:41 pm

Since you are leaning towards Vanguard, consider signing up for their PAS service. If you feel comfortable taking over after a year of using the advisory service, you can just drop the service and keep the investments. If you are happy with Vanguard, you could later roll your IRA over to Vanguard as well.

Alan S.
Posts: 8661
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: QDRO rollover to other retirement 58YO

Post by Alan S. » Mon Mar 25, 2019 11:26 am

Free2bme wrote:
Wed Mar 13, 2019 4:01 pm
Looking for all advice regarding QDRO rollover.

Emergency Funds: I do have this. About a year.
Debt: 75,000
Tax Filing Status: Single
Tax Rate: 12% State: 3.07%
State of Residence: PA
Age: 58
*Desired Asset allocation: Unsure what I want, but currently it is 84% stock, 16%bonds
Desired International allocation: Unsure I want/should have that.
Investment & retirement account $ = 750,000
Fund names: Investment: Apple (40G), Costco (1G), Disney(11G), Facebook(<1G), Corning(18G), Tesla(4G), cash (7G)
Retirement: Individual IRA (TDAmeritrade) – Positions: Invesco Comstock Fund Class A (ACSTX), The Growth Fund of America Class A Shares (AGTHX), American Funds Investment Co of America A (AIVSX), The Income Fund of America Class A Shares (AMECX),, American Funds Capital World Growth & Income Fund Class A Shares (CWGIX), Fidelity Select Natural Gas Portfolio (FSNGX). (all have value around $10,000 except AGTHX – $22,000)

Retirement : * QDRO: (approx. 600G) (No additional funds are being contributed to this) This is the fund I need to either transfer to another Fidelity Retirement fund (IRA?) or liquidate and reinvest elsewhere in a retirement fund within 2 months:

Do not request a distribution paid to you. That would trigger mandatory 20% withholding, and force you to come up with that money from other sources to complete the rollover. You would do a direct rollover through the IRA custodian you choose.

What kind of account is this, a 401k? Did the plan administrator tell you it had to be distributed now, and why?
What is the age of the plan participant (RMD related), and are they still working there?

Note that distributions you take directly from the plan under a QDRO are penalty free. If you roll it all to a TIRA, and then take distributions from the TIRA, you will be subject to the 10% penalty until age 59.5. One option to address this is determine how much you will need prior to 59.5, and at the time of the direct rollover to an IRA, have that amount you will need distributed to you from the plan penalty free (but subject to 20% withholding). Once the QDRO funds are in the IRA, they are not considered to be under a QDRO any longer. The IRA account will be just like an IRA you owned all along.

Finally, find out whether there is any Roth account included in the employer plan, or any after tax contributions. If so, those funds should be rolled to a Roth IRA. A rollover from a 401k is a one time event, usually with multiple tax related options, so you need to know the composition of the account at the time of a rollover irrespective of the investments it holds.


Asset allocation: 83.48% stock,
16.52% bonds
“All in one Life Cycle Funds” - Blended Fund Investments – target risk – moderate (just under ½ the value in the account)
“Expanded Choice – Mutual Funds” – Large Blend Vanguard Dividend Growth Fund Investor Shares, (little more than half the value of the account)

Available funds: $50,000 (cash) (personal account)
Note: I will receive a pension of approx. $850/mo at 62, $1000 at 65
SS will be $964 at age 62 or $1440 at 67

Question 1: My immediate concern is the retirement money currently in a QDRO at Fidelity which must be moved. I am not strongly confident about finances and investing but I am willing to make it happen with some encouragement and advice. My choices, as I understand them, are 1 -opening another retirement account with Fidelity and rollover same funds there, or 2 -finding another investment ‘house’ and opening a retirement account, transferring the liquidated funds, and then reinvesting. The first question is where should I put this? (I have a TDAmeritrade IRA account currently that I could add to, but I am not fixed on staying with them, if another option is more desirable.)

Question 2: How do I choose my asset allocation and then which funds? Can you recommend the best allocation and/or funds for me based on my age, circumstances, and assets, etc?

This is important, but comes after the rollover transaction itself, which should be your first priority until the rollover is completed, pending your response to why you must distribute this plan within 2 months. The custodian you choose for an IRA should be provided with a statement showing the holdings currently in the plan. Some may be proprietary to the plan and will have to be sold in the plan before a rollover is done.

Thank you for any and all your help!

Topic Author
Free2bme
Posts: 3
Joined: Wed Mar 13, 2019 3:41 pm

Re: QDRO rollover to other retirement 58YO

Post by Free2bme » Mon Mar 25, 2019 2:28 pm

Thank you for your reply.
The QDRO is an account set up due to divorce and it is divided from a 401K that is not with my employment - it is my ex's employment and he no longer works there/contributes to it. Because it is a 401K and not under my employment, I must move it to a personal IRA account and they gave me until June to do this. If I do not do this, they will send me the check with tax implications, which I will not let happen. If I stay with Fidelity, it can be transferred as is (investments). If I move it to Vanguard (or somewhere else) it will be liquidated and transferred as cash to an eligible IRA account without tax implications.
I hope this answers your question.
Clearly, my first step will be to open the account and get that started. I'm not sure I will ask for a personal advisor, but I will give it some thought. Opinions about this are welcome.
Thank you!

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