Author Topic: Requesting a sanity check on my 401k->TIRA rollover  (Read 2380 times)

Bric-a-Brac

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Requesting a sanity check on my 401k->TIRA rollover
« on: July 28, 2015, 09:16:00 AM »
Hi, I just wanted to get a head check on my 401k rollover plans.

I have about $300k in a traditional 401k at Fidelity.  I am retiring on August 24 (yay!), so I want to roll that out of my company's 401k plan.

I'll be retiring with about $650k total and I want to put all but $40k into a simple 3-fund portfolio.  The $40k I'll keep in a rewards checking account that yields 2% so that if there's a market crash I'll have something to live off of while I figure out if I need to change course, without selling at the bottom.

My plan is to immediately roll the 401k into a TIRA at Vanguard.  I live in NC, which has a 5.75% flat tax, but my understanding is that this will incur no state or federal taxes.

I plan to use this allocation (tax-efficiently spread across a Roth, a taxable account, and now the TIRA):

  • 60% VTSAX Vanguard Total Stock Market Index Admiral
  • 20% VTIAX Vanguard Total International Stock Index Fund Admiral
  • 20% VBTLX Vanguard Total Bond Market Index Fund Admiral

Does that all make sense?

Thanks!
« Last Edit: July 28, 2015, 09:22:58 AM by Bric-a-Brac »

forummm

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #1 on: July 28, 2015, 09:22:37 AM »
Congrats on retiring!

That all makes sense to me. You're a little bit low on the bond allocation for someone who is retiring--especially someone who is saying they might re-evaluate things if the market crashes. You need to be very confident with your AA now--before the crash. The market will absolutely crash multiple times during your lifetime. You need to be able to ride it out.

Bric-a-Brac

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #2 on: July 28, 2015, 09:24:09 AM »
Your asset allocation applies across all your accounts, and I believe the general recommendation is to stick your most aggressive stuff in the Roth, though it's not something I've looked into very far.

Thanks!  I changed the OP to indicate I know about allocating things tax-efficiently.

EDIT: I had quoted the wrong thing previously.
« Last Edit: July 28, 2015, 11:14:30 AM by Bric-a-Brac »

dandarc

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #3 on: July 28, 2015, 09:25:29 AM »
Where's the other 350K currently?

Agree, very reasonable allocation, but you do need to be sure that you are comfortable with it.

Bric-a-Brac

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #4 on: July 28, 2015, 10:24:34 AM »
Where's the other 350K currently?

Agree, very reasonable allocation, but you do need to be sure that you are comfortable with it.

Thanks for the feedback.  The other 350k is in cash, a house sale that's about to close, and my existing Roth & taxable accounts.

Because I'm still youngish (41), my retirement strategy is to have a pretty aggressive AA and if the market tanks I'll use my cash reserves to buy time to move to a cheaper country, cut expenses, and at worst, get a job.  I'm an experienced programmer, so hopefully that would be doable.

If I survive the early years of retirement I'll move towards something more conservative.

Bric-a-Brac

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #5 on: July 28, 2015, 10:26:35 AM »
Congrats on retiring!

That all makes sense to me. You're a little bit low on the bond allocation for someone who is retiring--especially someone who is saying they might re-evaluate things if the market crashes. You need to be very confident with your AA now--before the crash. The market will absolutely crash multiple times during your lifetime. You need to be able to ride it out.

Thanks.  I've just made a note to myself to spend more time agonizing over it. :)


dandarc

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #6 on: July 28, 2015, 10:46:16 AM »
Awesome - hope to be joining you in the 'retired programmers' group in 5-10 years - late 30's to early 40's for me as well!

I'm sure you are aware, but it sounds like you've got the parts to never pay taxes again: http://www.gocurrycracker.com/never-pay-taxes-again/

Bric-a-Brac

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Re: Requesting a sanity check on my 401k->TIRA rollover
« Reply #7 on: July 28, 2015, 11:12:56 AM »
Awesome - hope to be joining you in the 'retired programmers' group in 5-10 years - late 30's to early 40's for me as well!

I'm sure you are aware, but it sounds like you've got the parts to never pay taxes again: http://www.gocurrycracker.com/never-pay-taxes-again/

Good for you!   If I had wised up at your age I would be retiring to a yacht + bicycle instead of just bicycle. :D

Yes, thanks for that GCC post.  I've read that one before and I do indeed plan to follow those strategies.

Because I'll have a huge chunk in a TIRA I'll be able to set my income to basically whatever I want to minimize taxes and maximize ACA subsidies.