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Help with finance....

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Old 01-24-2007, 03:49 PM   #1
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Help with finance....

Ok, my dad just retired and he has to decide what to do with his 401k. He said that he would like to leave it where it is at and just let it collect interest but I dont think that either his workplace or the group that his 401k is through will let him do that. So we are going to talk to his bank next week about his options.

Well I was wondering what are his options and what kind of questions should we prepare to ask the bank, other than "Ok, what are his options?" I would like to have some kind of information so that he dont get taken for a ride...

Any help will be much appreciated, thanks...
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Old 01-24-2007, 03:54 PM   #2
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Re: Help with finance....

it can be rolled over into a like account with no tax liability. Whatever he does he shouldn't take the payout. Taxes on that bad boy will kill it. Wait until it is needed in cash to cash it.
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Old 01-24-2007, 04:03 PM   #3
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Re: Help with finance....

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it can be rolled over into a like account with no tax liability. Whatever he does he shouldn't take the payout. Taxes on that bad boy will kill it. Wait until it is needed in cash to cash it.
Will he be able to roll it over through the bank or with the current 401k group? Like will the group have programs in place for such an event? Also, he is 61 now, how bad will it be hit when takes it out after his is 62? Is he always going to be looking at a bad tax hit on it?
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Old 01-24-2007, 04:04 PM   #4
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Re: Help with finance....

Contact Liberty Mutual. I've been funding my own retirement for 5 years now and they offer alot of options including annuity funds, which I reccomend for tax purposes, and the fact that you can actually control where your money gets invested (sort of).

They offer a very comprehensive breakdown of all of the options and make them easy to understand.
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Old 01-24-2007, 04:08 PM   #5
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Re: Help with finance....

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Originally Posted by canthetuna View Post
Contact Liberty Mutual. I've been funding my own retirement for 5 years now and they offer alot of options including annuity funds, which I reccomend for tax purposes, and the fact that you can actually control where your money gets invested (sort of).

They offer a very comprehensive breakdown of all of the options and make them easy to understand.
My dad is getting his pension from a former employer where he worked for 26years, and he will be getting a pension from his current employer where he worked for 16 years. And then he will be getting social security next year. So I really dont think that he needs the money right away, and I am not sure what he wants to do with it. But I do know that whatever he does with it he will want it to be extreamly low risk, that is just how he rolls...
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Old 01-24-2007, 04:09 PM   #6
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Re: Help with finance....

Typically you can park your money with the current 401k provider, you just can't contribute to it any more. If they won't let him do that then he should talk to a financial adviser about rolling over his funds to a less risky investments. BTW, he has to start withdrawing from his 401K by age 70 1/2. In any case, if he is of retirement age he shouldn't under any circumstance take risks with his money.

p.s. I have heard MassMutual is great at this sort of thing.
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Old 01-24-2007, 04:22 PM   #7
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Re: Help with finance....

He should contact someone from Fidelity Investments or licensed financial planner. There are TONS of options and only a professional in that line can direct him to the right ones.
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Old 01-24-2007, 04:50 PM   #8
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Re: Help with finance....

it can be rolled over as has been mentioned. does he have a roth ira set up? if not, that may be something to look into...
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Old 01-24-2007, 04:52 PM   #9
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Re: Help with finance....

He can leave it parked as others have said but he will have no control over the fund or fund families. He needs to talk to several different financial reps. before making his decision. If he has a person that just wants to push annuities he needs to move on because they can have some heavy fees and cost that he may not need to pay plus they pay good comisions (thats what they make for selling them). This is money he needs for retiremnet so a mistake now could cost him thousands of dollars in the future. I took a class which was taught by financial reps from Mass. Mutual and was very impressed with them and he may want to give them a call. His insurance agent to see if they have a financial rep. as he should already have a working relationship with them.
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Old 01-24-2007, 05:51 PM   #10
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Re: Help with finance....

His options are:

1) Let it sit right where it is until he's ready to use it. Pro: he doesn't have to worry about it now, and he can always move it whenever he's ready. Con: He can't change the investments within the 401K.

2) Roll it over into an IRA. This is the best option in my opinion. He can roll it over into the IRA and continue to let it just sit there if he wishes. Or he can make changes to the investments held within the IRA. Or he can even begin withdrawing funds to use (he needs to be at least 59 and a half years old to avoid costly penalties).

When talking to the bank, keep this in mind:

They're going to give him lots of great options, but all of those options will be with THAT bank. Just about all the options the bank presents will also be available through Fidelity, Vanguard, Liberty Mutual, and all kinds of other financial companies. My advice: talk to the bank and find out the options. But ultimately, roll the funds into an IRA with Fidelity or Vanguard. Their funds have the lowest expense ratios in the entire business.

I personally don't like investing in annuities, they do guarantee an income stream, but fees can be costly. And I like to manage my own investments. But if you're willing to pay the fees, an annuity and it's steady income stream can give peace of mind. To each his own. (if your Dad isn't ready to start using the cash yet, then DEFINITELY don't get an annuity until he's ready to start using the money).
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Old 01-24-2007, 06:08 PM   #11
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Re: Help with finance....

Quote:
Originally Posted by Schneed10 View Post
His options are:

1) Let it sit right where it is until he's ready to use it. Pro: he doesn't have to worry about it now, and he can always move it whenever he's ready. Con: He can't change the investments within the 401K.

2) Roll it over into an IRA. This is the best option in my opinion. He can roll it over into the IRA and continue to let it just sit there if he wishes. Or he can make changes to the investments held within the IRA. Or he can even begin withdrawing funds to use (he needs to be at least 59 and a half years old to avoid costly penalties).

When talking to the bank, keep this in mind:

They're going to give him lots of great options, but all of those options will be with THAT bank. Just about all the options the bank presents will also be available through Fidelity, Vanguard, Liberty Mutual, and all kinds of other financial companies. My advice: talk to the bank and find out the options. But ultimately, roll the funds into an IRA with Fidelity or Vanguard. Their funds have the lowest expense ratios in the entire business.

I personally don't like investing in annuities, they do guarantee an income stream, but fees can be costly. And I like to manage my own investments. But if you're willing to pay the fees, an annuity and it's steady income stream can give peace of mind. To each his own. (if your Dad isn't ready to start using the cash yet, then DEFINITELY don't get an annuity until he's ready to start using the money).
I agree with most of what you said but I think banks now have financial reps. who are sreies 6 & 63 lic.which can sell these fund families. I also see we agree on the annuities.
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Old 01-24-2007, 10:19 PM   #12
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Re: Help with finance....

Quote:
Originally Posted by Schneed10 View Post
His options are:

1) Let it sit right where it is until he's ready to use it. Pro: he doesn't have to worry about it now, and he can always move it whenever he's ready. Con: He can't change the investments within the 401K.

2) Roll it over into an IRA. This is the best option in my opinion. He can roll it over into the IRA and continue to let it just sit there if he wishes. Or he can make changes to the investments held within the IRA. Or he can even begin withdrawing funds to use (he needs to be at least 59 and a half years old to avoid costly penalties).

When talking to the bank, keep this in mind:

They're going to give him lots of great options, but all of those options will be with THAT bank. Just about all the options the bank presents will also be available through Fidelity, Vanguard, Liberty Mutual, and all kinds of other financial companies. My advice: talk to the bank and find out the options. But ultimately, roll the funds into an IRA with Fidelity or Vanguard. Their funds have the lowest expense ratios in the entire business.

I personally don't like investing in annuities, they do guarantee an income stream, but fees can be costly. And I like to manage my own investments. But if you're willing to pay the fees, an annuity and it's steady income stream can give peace of mind. To each his own. (if your Dad isn't ready to start using the cash yet, then DEFINITELY don't get an annuity until he's ready to start using the money).
Sounds like very good info, my dad has banked at this bank for the past 42 years. And he is very old school in his ways, so being that he would be stuck at that bank to him would be better than going to fidelity or somewhere else. I am trying very hard to break him of that train of thought, but he is very, very stubborn.

When I say that my dad is old school, I mean he will not up grade his checking account to a free intrest checking account. Because they offer only 0.5%, but I tried to tell him that it will not cost you anything and the ammount that you have in there you will be getting free money from it. But no he just wont do it...
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Old 01-24-2007, 10:36 PM   #13
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Re: Help with finance....

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Originally Posted by firstdown View Post
I agree with most of what you said but I think banks now have financial reps. who are sreies 6 & 63 lic.which can sell these fund families. I also see we agree on the annuities.
A lot of the times, this is true, except the reps charge a brokerage fee. If you buy straight from Vanguard or Fidelity, you skip that fee completely.
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Old 01-24-2007, 10:43 PM   #14
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Re: Help with finance....

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Originally Posted by Redskins8588 View Post
Sounds like very good info, my dad has banked at this bank for the past 42 years. And he is very old school in his ways, so being that he would be stuck at that bank to him would be better than going to fidelity or somewhere else. I am trying very hard to break him of that train of thought, but he is very, very stubborn.

When I say that my dad is old school, I mean he will not up grade his checking account to a free intrest checking account. Because they offer only 0.5%, but I tried to tell him that it will not cost you anything and the ammount that you have in there you will be getting free money from it. But no he just wont do it...
Funny, my dad's like that too. Since that's the case, he might be subject to some higher fees at the bank, but he'll really appreciate the customer service and he'll feel more comfortable.

When it comes to money and retirement, you're not just looking to secure the future of your money, but you're also looking to secure a little peace of mind. Nobody wants to have to worry about their cash. So if your dad trusts this bank enough to stay there for 42 years, he'll probably gain that peace of mind by dealing with them. The higher fees are probably worth it in his case.

If you know you're going to be dealing with this bank, just do your best not to let them hem you into one product or another. Get them to tell you about all the options. Ask if they can provide an IRA for him to roll his money into; and get them to explain it. Ask about annuities and get them to explain them thoroughly. Make sure you ask about the tax advantages of each investment vehicle.

A lot of the time, a bank will have a certain product (perhaps an annuity) that they make a lot of money off of, and they'll try to push it on you. Don't automatically dismiss it if they're pushing it; but get them to explain it fully, and get them to explain other options. Don't be afraid to ask tons of questions, there are no stupid questions. The stupidest thing you could do is make one of these decisions without knowing and feeling comfortable with what you're getting into.

Good luck.
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Old 01-26-2007, 12:28 PM   #15
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Re: Help with finance....

Quote:
Originally Posted by Schneed10 View Post
Funny, my dad's like that too. Since that's the case, he might be subject to some higher fees at the bank, but he'll really appreciate the customer service and he'll feel more comfortable.

When it comes to money and retirement, you're not just looking to secure the future of your money, but you're also looking to secure a little peace of mind. Nobody wants to have to worry about their cash. So if your dad trusts this bank enough to stay there for 42 years, he'll probably gain that peace of mind by dealing with them. The higher fees are probably worth it in his case.

If you know you're going to be dealing with this bank, just do your best not to let them hem you into one product or another. Get them to tell you about all the options. Ask if they can provide an IRA for him to roll his money into; and get them to explain it. Ask about annuities and get them to explain them thoroughly. Make sure you ask about the tax advantages of each investment vehicle.

A lot of the time, a bank will have a certain product (perhaps an annuity) that they make a lot of money off of, and they'll try to push it on you. Don't automatically dismiss it if they're pushing it; but get them to explain it fully, and get them to explain other options. Don't be afraid to ask tons of questions, there are no stupid questions. The stupidest thing you could do is make one of these decisions without knowing and feeling comfortable with what you're getting into.

Good luck.



On the subj. of annuities, I've earned a substantially larger amount of money than expected through them over the last several years and now you have alot more control over your money than ever.

The fees suck, but they always will, but it isn't the wost Idea for some of you younger guys who are just starting to save for retirement.

When I started you had 3 options you could invest in and now they're are a couple of hundred. You can choose a general catagory (low risk low yeild, to high risk high yeild) or go into detail and choose to have certain stocks/bonds omitted alltogether or always included in transactions if you feel comfortable having that kind of control.
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