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Started By
Message
In My Current Situation, How Should I Consolidate Retirement Accounts?
Posted on 3/12/17 at 7:53 am
Posted on 3/12/17 at 7:53 am
Thread UPDATE on 09/05/2017: See below for current situation. I have changed jobs and have four different accounts: current employer 401k (contributing 10% with 6% company match into Vanguard 2055 Target Date Fund), previous employer 401k at around $19,300, previous employer pension fund ($12,100), and this damn variable annuity at around $12,100 as well.
Trying to figure out what to do with these accounts that makes the most sense. I picture myself maxing out my 401k soon and then want to do something else. Should I use these three accounts to move to an account that I would use for investing after maxing out my 401k?
ORIGINAL POST:
A guy who I had helping me with financial planning convinced me to roll a small 401k account (only about $11k) from a previous employer into a Variable Annuity. I still think there's a more stream-lined approach for this money so I don't have ten accounts to worry about.
I am 31, have a 401k with my current company, and have term life and disability insurance (through the same guy who sold me the Variable Annuity).
I am also contributing to an HSA through work. After I max out tax-deferred contribution accounts, I plan on starting some other investing. I'm just not convinced that this Variable Annuity is something I want to hold onto. Any good reason not to do something different with this account?
Trying to figure out what to do with these accounts that makes the most sense. I picture myself maxing out my 401k soon and then want to do something else. Should I use these three accounts to move to an account that I would use for investing after maxing out my 401k?
ORIGINAL POST:
A guy who I had helping me with financial planning convinced me to roll a small 401k account (only about $11k) from a previous employer into a Variable Annuity. I still think there's a more stream-lined approach for this money so I don't have ten accounts to worry about.
I am 31, have a 401k with my current company, and have term life and disability insurance (through the same guy who sold me the Variable Annuity).
I am also contributing to an HSA through work. After I max out tax-deferred contribution accounts, I plan on starting some other investing. I'm just not convinced that this Variable Annuity is something I want to hold onto. Any good reason not to do something different with this account?
This post was edited on 9/5/17 at 1:32 pm
6
Posted on 3/12/17 at 8:10 am to lnomm34
Why would you put a tax deferred product ( annuity) into a tax deferred account ( Ira rollover) other than to make your " Advisor" fees? You don't get double tax deferral !!!
Posted on 3/12/17 at 8:23 am to 1609tiger
What do you mean? Did I frick up by rolling this to the Annuity and now I'm stuck?
Posted on 3/12/17 at 8:26 am to lnomm34
Why did you agree to it if you didn't have a full understanding?
Posted on 3/12/17 at 8:29 am to castorinho
quote:
Why did you agree to it if you didn't have a full understanding?
Good question!! At the time, I blindly trusted his explanation. But as I grew to know him more, every time we spoke he wanted to sell me more insurance products. It's made me question his motives.
He spoke highly of the product. But everything I've read is the VA is bullshite. So. I'm trying to understand my options now if I should get out of it.
Posted on 3/12/17 at 8:37 am to lnomm34
An annuity is properly used in a financial planning discussion when a client comes and says this is my portfolio and it equals x. I need x amount of money per month to live off of.
From there we can tell if that amount of money the client needs per month is either high or low compared to their portfolio value. If it's high, then they are going to have a high "reliance" to their portfolio, meaning they are going to be emotional to the market swings of it. An annuity can remove a lot of that emotion bc it can provide guaranteed income, however for a price.
That's the only time I like to use them.
From there we can tell if that amount of money the client needs per month is either high or low compared to their portfolio value. If it's high, then they are going to have a high "reliance" to their portfolio, meaning they are going to be emotional to the market swings of it. An annuity can remove a lot of that emotion bc it can provide guaranteed income, however for a price.
That's the only time I like to use them.
Posted on 3/12/17 at 8:41 am to lnomm34
My point is you got bad advice. Annuities are tax deferred accounts. A variable annuity means the investments inside the annuity vary in price i.e. There probably mutual funds. The cost of a typical annuity is 1.5 - 2 percent annually. You're better off taking your rollover account to Fidelity and buying index funds and because it's an Ira you already have tax deferments.
Annuities should only be considered if you are maxing out that 401k ( that's 18000) and your doing a Backdoor IRA Roth ( look that up). Even then understand annuities are an expensive way to save.
Annuities should only be considered if you are maxing out that 401k ( that's 18000) and your doing a Backdoor IRA Roth ( look that up). Even then understand annuities are an expensive way to save.
This post was edited on 3/12/17 at 8:44 am
Posted on 3/12/17 at 8:55 am to 1609tiger
quote:
Annuities should only be considered if you are maxing out that 401k ( that's 18000) and your doing a Backdoor IRA Roth ( look that up). Even then understand annuities are an expensive way to save.
I'm close to maxing out the 401k. Then my plan is to add more to HSA and max that. Then consider the Backdoor Roth.
Should I do something with this Variable Annuity product now? Or should I wait? I need to talk with someone who can give me some good advice. This dude we worked with before has pissed me off.
This post was edited on 3/12/17 at 8:56 am
Posted on 3/12/17 at 8:59 am to lnomm34
As far as getting out, if your advisor is a broker he sold you an annuity which pays him an upfront fee. To do this the annuity has to make sure you stay in it for some number of years, typically 6-7. If you get out you will pay a steep sales charge.
Look it's only 11000. You probably just need to find out how long the penalty period is to get out and ride it out. Just know what the variable investments are inside the annuity. Sometimes you have choices and brokers dont really watch that after they sell you the product.
Look it's only 11000. You probably just need to find out how long the penalty period is to get out and ride it out. Just know what the variable investments are inside the annuity. Sometimes you have choices and brokers dont really watch that after they sell you the product.
This post was edited on 3/12/17 at 9:01 am
Posted on 3/12/17 at 9:04 am to lnomm34
Btw if your 31, maxing out your 401k and HSA plus the backdoor IRA you are doing great.
This post was edited on 3/12/17 at 9:05 am
Posted on 3/12/17 at 10:22 am to lnomm34
quote:
Did I frick up by rolling this to the Annuity
YES!
Posted on 3/12/17 at 11:12 am to lnomm34
Go sue this dude.
Posted on 3/12/17 at 1:13 pm to lnomm34
Yeah I would not have done that. The good news is you only make a mistake with 11K. Wait the surrender period out, and then move it. Might take a few years. Don't put any more money into it, though.
As another poster said, annuities make sense in some situations, this is not one of them.
As another poster said, annuities make sense in some situations, this is not one of them.
Posted on 3/12/17 at 4:48 pm to lnomm34
quote:
I'm close to maxing out the 401k. Then my plan is to add more to HSA and max that. Then consider the Backdoor Roth.
Getting a divorce from the annuity now is likely going to cost you. But anyway, as far as the HSA, why not max it before maxing the 401k? Unless you just mean maxing the 401k up to the employer match, the tax benefits from the HSA should be greater than the benefits of a standard 401k, as long as your withdrawals are qualified.
Posted on 3/12/17 at 4:54 pm to LSUFanHouston
Thanks y'all. So I should eventually be able to move this into another investment without too much issue? I need to look at the fine print. It's been in it about 2 years.
Posted on 3/12/17 at 5:00 pm to Jag_Warrior
quote:
Getting a divorce from the annuity now is likely going to cost you. But anyway, as far as the HSA, why not max it before maxing the 401k? Unless you just mean maxing the 401k up to the employer match, the tax benefits from the HSA should be greater than the benefits of a standard 401k, as long as your withdrawals are qualified.
I always thought that was the logical steps. Right now I'm contributing right at $10k per year (with employer matching around $8,500). So I still have some room to increase my contributions and will continue to do that. I'm just a planner and like to think of things down the road. I'm aggravated at myself for getting talked into this Annuity. I didn't think it was the right thing to do then, and actually told him that. But alas, I'm a pushover and let it happen.
Posted on 3/13/17 at 9:37 am to lnomm34
You are stuck until the annuity comes out of surrender. After that, you can move into mutual funds or ETFs without triggering tax consequences, as long as it stays under an IRA
Posted on 9/5/17 at 12:21 pm to lnomm34
I'm finally ready to do something with this money.
I now am convinced that this guy just wanted his quick $500 to sell me the annuity. It really does irk me. He made 4.5% selling me this shitty product and the expenses are over 1.05% per year.
To make things more timely, I also just changed jobs and have $20,000 in a 401k and another $12,000 in a pension that I need to do something with. This Variable Annuity account is at around $12,000 now, so that puts me with around $44,000 that I need to decide what to do with.
My previous employer 401k is through Charles Schwab and is currently in the following funds:
I have opened a 401k with my current company--contributing 10% with a 6% company match. They work through Fidelity and I've elected to invest in Vanguard's 2055 Target Date Fund (VFFVX).
So my question is: what should I do with the Variable Annuity, old employer 401k, and the pension money?
HELP! Please?
I now am convinced that this guy just wanted his quick $500 to sell me the annuity. It really does irk me. He made 4.5% selling me this shitty product and the expenses are over 1.05% per year.
To make things more timely, I also just changed jobs and have $20,000 in a 401k and another $12,000 in a pension that I need to do something with. This Variable Annuity account is at around $12,000 now, so that puts me with around $44,000 that I need to decide what to do with.
My previous employer 401k is through Charles Schwab and is currently in the following funds:
I have opened a 401k with my current company--contributing 10% with a 6% company match. They work through Fidelity and I've elected to invest in Vanguard's 2055 Target Date Fund (VFFVX).
So my question is: what should I do with the Variable Annuity, old employer 401k, and the pension money?
HELP! Please?
This post was edited on 9/5/17 at 1:28 pm
Posted on 9/5/17 at 2:01 pm to lnomm34
Short, easy answer: roll the old employer 401K into an account with Vanguard (pick 2 or 3 funds, max) and let it ride. Rollover paperwork is easily found on V's website here: LINK
The pension money--does the $12K belong to you, free and clear? Find out. Some plans require a certain term of years' service to fully vest; IOW, if you were below the full vesting period, you may only be entitled to a portion of the funds. Whatever portion is yours to keep, roll it over into the Vanguard account you set up for the 401k.
The annuity: do you dang homework & figure out how long you're stuck in that thing....when you hit the break point, get the $$ out and put into that Vanguard account.
There is no need for active management....this is your long term retirement nest egg. Index funds, bond funds, etc. Set it and forget it.
If you want to play with stocks, do that with spare cash, not the bulk of your retirement savings.
The pension money--does the $12K belong to you, free and clear? Find out. Some plans require a certain term of years' service to fully vest; IOW, if you were below the full vesting period, you may only be entitled to a portion of the funds. Whatever portion is yours to keep, roll it over into the Vanguard account you set up for the 401k.
The annuity: do you dang homework & figure out how long you're stuck in that thing....when you hit the break point, get the $$ out and put into that Vanguard account.
There is no need for active management....this is your long term retirement nest egg. Index funds, bond funds, etc. Set it and forget it.
If you want to play with stocks, do that with spare cash, not the bulk of your retirement savings.
Posted on 9/5/17 at 2:16 pm to hungryone
quote:
The pension money--does the $12K belong to you, free and clear? Find out. Some plans require a certain term of years' service to fully vest; IOW, if you were below the full vesting period, you may only be entitled to a portion of the funds. Whatever portion is yours to keep, roll it over into the Vanguard account you set up for the 401k.
I vested fully (barely) and was sent a letter with options for the pension funds. The lump sum value is a little over $12,000 and they give instructions on roll-over in the packet sent to me.
quote:
Short, easy answer: roll the old employer 401K into an account with Vanguard (pick 2 or 3 funds, max) and let it ride. Rollover paperwork is easily found on V's website here: LINK
That's where I am leaning. Can I add funds to this account at a later date after I finish maxing out my contributions to my 401k? Is that a smart thing to do after I max 401k?
quote:
he annuity: do you dang homework & figure out how long you're stuck in that thing....when you hit the break point, get the $$ out and put into that Vanguard account.
The annuity I have is a 'front load,' which means I paid the initial 4.5% fee to the fricking salesman and there should be no withdrawal fees. The more I think about this annuity the more pissed off I become. I explained to him before I transferred the money that I wasn't fully comfortable and didn't understand the supposed benefits. Now I'm seeing that the annuity has expense ratio of around 1.23%. It looks like the Vanguard 2055 Target Date fund has around 0.16% expense ratio.
I need to call Vanguard. Since I have three different accounts I want to consolidate, I want to be sure they can all go into the same account and I won't incur any unforeseen taxes/fees.
This post was edited on 9/5/17 at 2:56 pm
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