Taking 457 distributions from winners or loser funds?

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Biggie55
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Joined: Sat Jan 13, 2018 4:15 pm

Taking 457 distributions from winners or loser funds?

Post by Biggie55 »

Hello Boggleheads. :D

I have a rollover 457 with my employer and I just started taking distributions from the account this year.

My US large cap Index Mutual fund has done great over the recent years.

My International Index fund has really been a drag in the last few years.

With my mid cap and small cap doing ok.

If I wanted to withdraw say 10,000$

Should I take distributions equally from all funds to equal the 10,000$

Take the 10,000 from the best performing mutual fund?

Or, Take the distributions from the lowest performing international index fund?

Is there a rule of thumb?

Thanks in advance.
123
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Re: Taking 457 distributions from winners or loser funds?

Post by 123 »

You should take distributions in a manner to achieve your desired asset allocation for the account. If the asset allocation is as desired sell proportionately to maintain it.
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EngCapt1
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Re: Taking 457 distributions from winners or loser funds?

Post by EngCapt1 »

Biggie55 wrote: Wed Oct 30, 2024 9:56 pm I have a rollover 457 with my employer
You should consult the Summary Plan Document (SPD) for your employer plan. It likely tells you how the withdrawal will be funded (I believe pro-rata is most common).

:beer
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Topic Author
Biggie55
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Joined: Sat Jan 13, 2018 4:15 pm

Re: Taking 457 distributions from winners or loser funds?

Post by Biggie55 »

123 wrote: Wed Oct 30, 2024 11:15 pm You should take distributions in a manner to achieve your desired asset allocation for the account. If the asset allocation is as desired sell proportionately to maintain it.
Yeah, that makes sense. At the same time the reinvested dividends in the winners end up being sold to buy more of the underperforming funds. And I get the sell high buy low benefit.

So that keeps my asset allocation proportional.

Thanks for the reply. 😁
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Biggie55
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Re: Taking 457 distributions from winners or loser funds?

Post by Biggie55 »

EngCapt1 wrote: Wed Oct 30, 2024 11:46 pm
Biggie55 wrote: Wed Oct 30, 2024 9:56 pm I have a rollover 457 with my employer
You should consult the Summary Plan Document (SPD) for your employer plan. It likely tells you how the withdrawal will be funded (I believe pro-rata is most common).

:beer
I’m with nationwide and they allow me to choose pro-rata, or to select the specific mutual fund to sell. So far I’ve pulled money pro-rata.

Is there a benefit to drawing only from the best performing mutual fund that year? Instead of pro-rata?

Thanks again!
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retiredjg
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Re: Taking 457 distributions from winners or loser funds?

Post by retiredjg »

What do you mean by "rollover 457"? Sounds like you might have an IRA, not a 457.

If it is an IRA, take from the asset that you have "too much" of in your portfolio. That will nudge your portfolio toward your target AA instead of away from your target AA.

If it is a 457, chances are the plan will distribute some from each fund.
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grabiner
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Re: Taking 457 distributions from winners or loser funds?

Post by grabiner »

EngCapt1 wrote: Wed Oct 30, 2024 11:46 pm
Biggie55 wrote: Wed Oct 30, 2024 9:56 pm I have a rollover 457 with my employer
You should consult the Summary Plan Document (SPD) for your employer plan. It likely tells you how the withdrawal will be funded (I believe pro-rata is most common).

:beer
But even if it works that way, you can reallocate. If you want to take your entire withdrawal from a bond fund, you can take the pro rata withdrawal, and then move enough from a bond fund to a stock fund to restore your stock allocation.
Wiki David Grabiner
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