401k-Holding fast but..........

[drssg]

If you are over 72, you must sell to take Required Minimum Distribution.

I'm not an expert, but I thought you just have to move some money out of the pre-tax investment and declare the income.

Is there anything that would prevent you from immediately reinvesting in the same fund, but in a non-ira account?

 

[lennyzx11]

You dirty profiteer!

:laughing:

:thumbsup:

You weren’t buying hand sanitizer in bulk were you?

That’s horrible! (Let me in on it).

 

[dragoneggs]

I finally took a peek at my 401K today. Doesn't factor in todays drop but mine is only down about 9%. I was relieved. Sure glad I have my funds in a 2025 retirement fund vs a more aggressive fund where equities are a much higher percentage vs. bonds and fixed rate investments.

Today I did change my future contributions from the conservative 2025 account to a more aggressive 2050 retirement fund. Hopefully soon when this starts rebounding, I think I might move my existing pot from 2025 to 2050 to ride the rebound in a more aggressive fund. Sound smart?

 

[BankerDude]

I'd stick it out and let the market do what it's going to do. Id you sell now, it's a sure loss. Stick with it and give it a chance to recover. In the mean time, I suggest a financial advisor. It's water over the dam now, but anyone close to retirement should(5 yrs or less) should be converting some investments to more conservative investments. A good advisor would help you prepare and plan. Now is a great time to invest. Think of it as buying when its on sale. It does take some intestinal fortitude to put $ in when the talk is like it is, but good opportunity to buy cheap. Good Luck!

 

[kenmac]

Good thing I'll will be taking SS next mo.. My IRA may go to ZERO !

I hold one energy stock that at one time was at $114.00 per share.
After today, it's $22.56. Gasoline prices at the pump should be in the .90 -$1.00 per gallon range

 

[dragoneggs]

Good thing I'll will be taking SS next mo.. My IRA may go to ZERO !

I got 7 years left to go... have to pay the house off. Maybe less if I stop buying so many tools that I NEED.

 

[npalen]

I'm not an expert, but I thought you just have to move some money out of the pre-tax investment and declare the income.

Is there anything that would prevent you from immediately reinvesting in the same fund, but in a non-ira account?

The problem is having to sell more shares to meet the RMD, which is established on Dec 31 of the previous year, when the market is down. Its simply a case of buy high sell low vs the opposite.

I think that most of the pain in a down market is self inflicted. Thinking like: If I would have just sold everything a month ago when the market was at its peak, I could buy it all back today and look how much I would be ahead.
If I would have just sold......look at the tractor I could have bought but now its gone.
And on and on.

 

[Oaktree]

I think that most of the pain in a down market is self inflicted. Thinking like: If I would have just sold everything a month ago when the market was at its peak, I could buy it all back today and look how much I would be ahead.
If I would have just sold......look at the tractor I could have bought but now its gone.
And on and on.

Yeah, trying to time the market is a fool's game, and one you're almost guaranteed to lose.

Hopefully, anyone at or fast approaching retirement age has a portfolio that's diversified enough so you're not putting all your eggs in one basket (ie-the stock market).
As others have noted, the market always comes back. This market crash was strictly panic selling, the main fundamentals were still strong and once the panic recedes it should recover nicely. This is not to say that the market wasn't in need of a corrrection, but nothing this extreme.

 

[Richard]

I'm not an expert, but I thought you just have to move some money out of the pre-tax investment and declare the income.

Is there anything that would prevent you from immediately reinvesting in the same fund, but in a non-ira account?

If your funds are in a 401K, you will have to do a cash distribution and yes, you can reinvest those (in a non-retirement account) any way you wish.

If instead, your funds are in an IRA and you are looking at taking an RMD (Required Minimum Distribution) then, you can instead take a "Distribution in kind" where instead of selling anything, you can move SHARES of something to a non-IRA type account. If you are subject to any transaction fees (most places are going to zero stock fees if they're not there already) then you save those costs... The day the shares leave the IRA account, becomes the value of your distribution. You can either have the account pay the taxes at which point, you'd have to have some cash in there or, you can not have taxes withheld (this is from an IRA, not a 401K) and you can deal with the taxes later. If you plan for the account to pay the taxes, you simply have to plan ahead so you have sufficient cash in there.

If you take an RMD (or any distribution) from a 401K, they are required to take 20% off the top and send it to the IRS as prepayment towards taxes which you may.....or may not.....owe. The IRA account does not have that same requirement.


If you are in a situation where you won't owe the taxes on your 401K RMD so therefore, won't "owe" any of the 20% required withholding..... you could instead, ROLL that amount over to an IRA somewhere and take the distribution out of the IRA instead of the 401K and NOW, since it's coming out of an IRA, you can choose to have zero taxes withheld. (an option that you simply do not have in a 401K)

 

[Richard]

401K's are a rip off, anywhilst. The only one that consistently makes money is the person managing the 401K. The person putting the money into the 401K is last at the trough ....

Pardon my being blunt here.... but that is simply stupid.

It is totally wrong and completely idiotic.

If you have access to a 401K when you are fresh out of school, and you participate in it appropriately you will usually find that when you retire your home is your most valuable asset.....followed by your 401K.

I've seen many times over the years where the 401K has actually exceeded the value of the home.

401K's are designed where YOU the owner, "manage them" (to use your phrase above) That said, yes, you can hire an outside manager to do that for you if you wish but that's optional for those accounts that have that feature. The funds in the account are managed (if that is what you're trying to say) but in most cases, the 401K account will be a less expensive way to access those funds than buying them normally.

You are a bit correct though in that the person putting the money into the 401K (the owner) is the last at the trough.... meaning, they are going to get whatever the value of the account is whenever they decide to take it out.

Keep in mind that all 401K's also have a fixed account (not something I personally prefer) that might be paying a fixed rate of 3% or something like that.... zero market risk, zero management feeding at the trough...

401K's are arguably the best investment vehicle going..... Those 401K's that offer the Roth option, perhaps all the better.