Author Topic: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k  (Read 5313 times)

soccerluvof4

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GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« on: April 16, 2015, 10:01:55 AM »
Hopefully someone can help me understand this in layman's terms. I misunderstood along the way about 401ks , so I think.  I have had my business for about 25 years and have recently decided to retire by liquidating the company vs selling for my own reasons.  Having said that the 401k " administrator" is saying if we keep it with Great West we need to roll this over into an IRA.

My Wife and I along with 6 other employees will still get the safe harbour match for the year.

My questions or mistake was I thought money you put in a 401k stays in that account but feel we are being forced out because of business closing is this correct?

What are our best options? being 50/47 yrs of age we obviously don't want to take out and pay taxes and this accounts for about 1/4 of our wealth as we were late to the party in putting funds into a 401k.


What if one or both of us decided we want to get a job down the line and the new company has a 401k and we want to contribute?

All my taxable investments are in index funds with Vanguard for what that worth for info


Please help!  Though I had this down but now feel a bit of a panic.
Thanks!
« Last Edit: April 16, 2015, 10:03:45 AM by soccerluvof4 »

Cromacster

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #1 on: April 16, 2015, 10:05:03 AM »
roll this over into an IRA.

Just roll it over to an IRA.  No tax issues and you can choose any administrator that you like (vanguard fidelity etc.)

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #2 on: April 16, 2015, 10:08:52 AM »
If i roll it over into say a Vanguard IRA and my wife gets a Job 3 years from now that has a 401k plan does it just start a new?

Will the IRA act like the 401k did in that I can make adjustments to it and at 59 1/2 with the loophole if needed  i can get access to it?

Thanks!

Proud Foot

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #3 on: April 16, 2015, 10:09:56 AM »
Like Cromacster said, just roll it over into an IRA.

It is very common to have to roll your 401k over to an IRA when you are no longer an employee of the company that sponsors the plan. Or in your case, the company ceases to exist. This does not have any effect on your contributions. If you get another job down the line and your employer has a 401k there is no problem contributing to their 401k once you have met their eligibility criteria.

RWD

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #4 on: April 16, 2015, 10:12:25 AM »
If i roll it over into say a Vanguard IRA and my wife gets a Job 3 years from now that has a 401k plan does it just start a new?

Will the IRA act like the 401k did in that I can make adjustments to it and at 59 1/2 with the loophole if needed  i can get access to it?

Thanks!

The next 401k will just start over separate from the original that was rolled over to an IRA. I'm not sure what loophole you're talking about, but traditional IRA funds are available without penalty at age 59.5.

jzb11

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #5 on: April 16, 2015, 10:12:40 AM »
You will roll over your 401K funds into an IRA that you open. You should open an IRA with vanguard and invest there. The process is pretty straight forward. I did the same thing several years ago with my 401k - I rolled it into a new IRA I opened with vanguard.

When you start a new job with a company that has a 401k, that account will be separate from your IRA. When you end up leaving that job, you will, once again roll over that money into your IRA. In the meantime you can contribute to your IRA every year.

Axecleaver

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #6 on: April 16, 2015, 10:16:04 AM »
There are some differences between 401(k) and IRA, most notably contribution limits. If you do still need a 401(k) you can open a solo 401(k) instead of an IRA. But either one of them can accommodate a rollover without penalty, so you should be OK.

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #7 on: April 16, 2015, 10:34:16 AM »
Has anyone ever heard of the 401k Plan (in this case Great West) charging you to roll it over to say a Vanguard or Fidelity IRA? they are making is sound like you have to roll it over into Great Wests IRA to avoid penalty. Is that true?

ShoulderThingThatGoesUp

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #8 on: April 16, 2015, 10:47:55 AM »
I think they can do that, yeah, but how much is it?

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #9 on: April 16, 2015, 10:50:41 AM »
I'm not sure. My wife is actually the one handling that, had i , i would of asked! I will look more into it.

Thanks

Another Reader

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #10 on: April 16, 2015, 11:04:21 AM »
It's common for a plan to charge a closing fee.

However, Great Western is just plain awful when it comes to plan providers, and I would be very happy to pay a reasonable price to get away from them.  They focus on smaller businesses that don't have a lot of choices or lack the time or expertise to find better options.  Look closely at the funds offered in both the 401k and their IRA's.  When I had a workplace 401k through them many years ago, the funds were poor quality with excessive expense ratios.  I'll bet there has not been any improvement.

sisto

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #11 on: April 16, 2015, 11:13:06 AM »
There should not be any fees. Go to Vanguard and open an IRA account there. Then just roll over the old 401K into the Vanguard account. Great West just wants to continue to service your account ie: take you money. Like someone else already said if you or your wife gets a different job later that has a 401K you would just start a new account with that.

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #12 on: April 16, 2015, 11:14:07 AM »
^ Another Reader you are so right. I was upset when my wife signed up with them BUT i myself have to take the blame as i wasn't much smarter at the time. The only funds i ended up putting my money in after couple years back finding MMM was the 2 index funds they offered. Everything the planner had us in was ridicoulous costs.

tyd450

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #13 on: April 16, 2015, 12:48:59 PM »
Vanguard can handle it all on their end.  When I left company A and took a job at company B I could have rolled company A 401k into the new company B 401k but I still chose to just roll it into a new IRA at vanguard and start a new 401k from scratch at company B. 

I called vanguard and gave them all the info-  vendor (fidelity), account number, and amount.  They then called fidelity and conferenced me in on the call and said I am rolling it all over to them.  Didn't take long at all.

rmendpara

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #14 on: April 16, 2015, 02:19:51 PM »
Depending on the size of the assets you have in the plan, even a few hundred dollars won't make or break that decision.

Don't agonize over small one time fees when it means you are moving to a better plan with better investment choices.

But to answer your question, it shouldn't be any different than if you were an employee and quit and got a new job (either right away or after a month... or after a few years). Check into a few IRA providers (Fidelity and Vanguard to start) and ask them whatever questions you have. Some providers even offer to cover transfer fees depending on the size of the plan assets you are rolling over.

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #15 on: April 16, 2015, 02:35:14 PM »
Thanks everyone! I am going to most likely roll over to Vanguard.

Frankies Girl

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #16 on: April 16, 2015, 02:42:43 PM »
There will probably be a small fee assessed for "transfer or closing fees" as companies like that tend to want to hit you on the way out. I had it happen with some rollovers I did a few years back. Wasn't more than $90 if I remember correctly, but still was annoying.


frugalnacho

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #17 on: April 16, 2015, 02:56:36 PM »
My wife rolled over her 401k into an IRA at vanguard.  We got dinged for a $150 fee or something like that.  I can't recall what it was exactly.  We still will come out ahead by being at vanguard though.

soccerluvof4

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Re: GOING OUT OF BUSINESS-WHAT ABOUT MY 401k
« Reply #18 on: April 17, 2015, 11:27:05 AM »
Based on all the answers everyone has been so kind to provide it seems pretty cut and dry what I need to do. Thanks for all your replies.