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Hi,
I am retiring next week and hope you can help with apparently a stupid
question. Is it true that I cannot roll over my 401K and Lump Sum
Pension into a bank's IRA C-D's? The money is not needed at this time
because I want to try to use only my acquired company stock dividends.
The banks investments companies want the funds rolled over into a
variable annuity, or, since I refused (I already have a couple), Money
Market funds--maybe CD's if I insist, but neither the bank's. I guess
they must be mutual funds (?), I can't deal with the bank? Only with
the banks' investment companies? Thanks so much for any information.
H B wrote:
> The banks investments companies want the funds rolled over into a
> variable annuity
This is enough reason for me to not move the money to them.
If I understand your situation, you want a Rollover IRA for both the
401(k) as well as the Pension.
Any broker would be happy to take this money (via direct transfer, make
sure the check is not payable to you) and you can then invest it
appropriately.
These accounts (both 401(k) and the portable/lump sum pension) are both
tax deferred, there is no benefit to paying for an annuity to hold money
already tax deferred.
JOE
H B wrote on [Wed, 27 Jun 2007 04:05:50 -0500]:
> Hi,
>
> I am retiring next week and hope you can help with apparently a stupid
> question. Is it true that I cannot roll over my 401K and Lump Sum
> Pension into a bank's IRA C-D's? The money is not needed at this time
> because I want to try to use only my acquired company stock dividends.
Not, it's not true. You can indeed roll over your 401(k) into CDs
However, that may not be the wisest decision, as CDs are barely going to
keep ahead of inflation, if at all.
But that's a whole nother issue.
> The banks investments companies want the funds rolled over into a
> variable annuity, or, since I refused (I already have a couple), Money
> Market funds--maybe CD's if I insist, but neither the bank's. I guess
> they must be mutual funds (?), I can't deal with the bank? Only with
> the banks' investment companies? Thanks so much for any information.
You don't want a variable annuity. I'd find another bank, or insist on
rolling it into CDs.
You probably should checkout bankrate.com to find the best rates for CDs
of you are set on that course of action.
Run away from your bank as fast as you can.
Its robbery.
Justin wrote:
> Not, it's not true. You can indeed roll over your 401(k) into CDs
> However, that may not be the wisest decision, as CDs are barely going to
> keep ahead of inflation, if at all.
could pick a very short-term Gov Bond Fund which typically adjusts as short-term
(1-2yr) interest rates change and it's at least 3.5 to 4.5 % per year which when
compounded is not too shabby
> You don't want a variable annuity. I'd find another bank, or insist on
> rolling it into CDs.
wouldn't this also be pretty much the same as putting it into money market account?
the MM account may have very similar interest rate, of course if the CD is multi-year
(ie 5 yr) then the CD trumps the MM rates
Thanks so much for the responses.
Actually it is 4 different banks and as many as 3 different branches of
2 of them. There has to be reasons why they won't do what I want. They
won't explain. Can you?
d...@w...net wrote on [Wed, 27 Jun 2007 10:13:11 -0500]:
> Thanks so much for the responses.
>
> Actually it is 4 different banks and as many as 3 different branches of
> 2 of them. There has to be reasons why they won't do what I want. They
> won't explain. Can you?
Sure, they want to make sales commissions from you.
On Jun 27, 10:13 am, d...@w...net wrote:
> Thanks so much for the responses.
>
> Actually it is 4 different banks and as many as 3 different branches of
> 2 of them. There has to be reasons why they won't do what I want. They
> won't explain. Can you?
In a single word: commissions. The bank, and probably the salesman,
makes more money selling variable annuities than they do by selling
CDs.
Let me suggest that you call Fidelity 1-800-FIDELITY, and ask them
about rolling a 401(k) into CDs or something similar and see what they
suggest.
Can you say why you want CDs and not, say, a mutual fund portfolio? A
CD portfolio probably will not keep up with inflation over the long
term, especially when you consider the taxes you will pay when you
take distributions. Frequently, is is possible to put together a
portfolio containing stock mutual funds, bond mutual funds, and money
market funds, or ETFs (electronically traded funds, I think) that will
do a good job of preserving your capital and give you an opportunity
for some growth. By trading off the proportions between the fund
categories, you can make the portfolio match your risk tolerance, and
you might be surprised that sometimes you can increase your return and
lower your risk by including stocks. Fidelity's web site has a risk
profile survey that can help you match your risk tolerance with
proportions. Or they could mail you a risk profile booklet if you ask
for it when you call. Fidelity also has a retirement income planner,
which might be useful to you. I presume that Vanguard also has these
available.
Dave
<d...@w...net> wrote in message
news:9908-46827B14-9@storefull-3271.bay.webtv.net...
> Actually it is 4 different banks and as many as 3 different branches of
> 2 of them. There has to be reasons why they won't do what I want. They
> won't explain. Can you?
I think they are not seeing that your CDs will be in an IRA. Will they let
you open an IRA? Can you have any type of investment in their IRA? No, you
don't want to take your 401k or pension and put them directly into CDs, else
you would be paying income tax on the entire thing this year. You want to
open an IRA and then choose your investment. But, as someone else asked, why
CDs?
Elizabeth Richardson
Justin <n...@i...com> writes:
> H B wrote on [Wed, 27 Jun 2007 04:05:50 -0500]:
> >
> > I am retiring next week and hope you can help with apparently a stupid
> > question. Is it true that I cannot roll over my 401K and Lump Sum
> > Pension into a bank's IRA C-D's? The money is not needed at this time
> > because I want to try to use only my acquired company stock dividends.
>
> Not, it's not true. You can indeed roll over your 401(k) into CDs
Indeed, you can roll over that 401k into an brokerage IRA
account or mutual fund IRA account you like. It doesn't have
to be a bank at all, and may very well be better off far
away from a bank.
> However, that may not be the wisest decision, as CDs are barely going to
> keep ahead of inflation, if at all.
> But that's a whole nother issue.
He may well want some cash and or short-med term bonds to
offset the volatility of what sounds like a portfolio which
also has substantial equity exposure. To the OP - if that
"acquired company stock" is a big chunk of your assets you
may want to talk to an honest advisor about how to manage
that very concntrated exposure. Folks on this newsgroup
will be happy to provide ideas if you fill us in a bit more
on details, but sometimes dealing with acquired company stock
can be a little tricky - taxes, etc, and the cost of
consulting with a pro may save you a lot in the long run.
> > The banks investments companies want the funds rolled over into a
> > variable annuity, or, since I refused (I already have a couple), Money
> > Market funds--maybe CD's if I insist, but neither the bank's. I guess
>
> You don't want a variable annuity. I'd find another bank, or insist on
> rolling it into CDs.
I think I'd probably find another bank altogether. First they
mislead him about what he can do with the money, then they
try to sell him what are very likely (okay, there's a tiny
chance - teeny tiny - not) entirely inapporpriate and
expensive VAs.
If they made a real case for VAs other than "that's all we
have for you" I'd be curious to see how they try to justify
them for this guy.
> You probably should checkout bankrate.com to find the best rates for CDs
> of you are set on that course of action.
I'd probably lean towards a decent brokerage IRA account -
any of which will give him access to CDs (very likely
quite competitive ones) as well as a universe of other
options - including MMFs, short/med-term bonds, etc,
as well as other asset classes he may need to build
his target allocation.
Very seriously, though - if that employer stock is more
than a few percent of your net worth, some serious
thought about diversification is in order.
--
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No HTML in E-Mail! -- http://www.expita.com/nomime.html
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