Pebble, I agree with Delia. Firms like Vanguard and T. Rowe Price will be happy to help you make the rollover.
What about rolling 401(k)s from previous employers into those of one's current employer. Any pros or cons you guys can think of there?
It would be good to review the investment options and let that be the guide. Some 401k plans have a good selection of investment choices with low fees.
K - this would depend on the quality of the current employer's plan - and wow, they can vary wildly.
Craig, if you have other investments, I sometimes like to keep those older annuities at great interest rates. You won't find them anymore. Of course, the insurance company hopes you transfer it out...
Craig, then I would keep the money there earning 4% until interest rates come back up to offer you a competitive rate outside of the annuity. Take advantage of that legacy high interest rate.
Hi Zach! You are actually next on deck. Thanks for being patient!
Apologies for the slight technical difficulties. Please bear with us for just another minute!
Joe, your question confuses me a bit. If you haven't hit your maximum this year for the HSA you may still contribute and max that out, while at the same time asking to be reimbursed for the medical expenses.
Joe -- That sounds like a great question for our Kim Lankford who writes a lot about HSAs. We're going to forward that on to her, in case she may also be able to address it in her column.
Joe, there's no time constraints on when you put money in and take it out in your example, so go ahead and contribute while also withdrawing money. But if you don't need the money you request as a reimbursement, why not just leave the money in the account? That's another feature of HSAs I love; if you have enough in the account you can often invest the balance. That's what I do with my own HSA account.
Here's a question coming in from Zach:
Joe, the only limit I can think of is that we can no longer contribute to HSAs once we turn 65.
Zach, often those annuities will allow a 10% annual transfer or withdrawal free of those back-end surrender charges.
Zach, they particularly want to see that she's transferring it to another 403b, and will probably require you to complete their own transfer forms. Do ask them about the process.
Joe, Oh, I see what you're doing. Sure, if you want to max out the deduction without coming up with new money then you'd take the reimbursement and turn around and redeposit it, so to speak, as a remainder contribution for the year. Got it. Yes, you can do that. The HSA doesn't care.
Zach, yes, it's a tedious process, but that's how it works.
If you are considering retiring at 50 you would want to contribute the maximum allowed to your 401k. Also you most likely would need to save additionally. Creating a taxable investment account would allow you to have money to live on until 59 1/2 when withdrawing from the retirement plan is penalty free.
Zach, although at this point you may feel that you want to retire at 50, what does that really mean to you? You will very likely have 25-40 years beyond that point. Do you really intend to completely retreat from any kind of work? I think that you are on the right track, contributing to your 401k, and I agree with Katherine that you should be saving outside of your retirement plan for such an early retirement, but you may also want to continue working in some capacity, partly for income but also to keep yourself engaged in life and in your community.
Mary Lauren: I myself often use Skype with my out of state clients. Also, there are a few Web sites that let you post questions for advisors to answer, such as www.nerdwallet.com. We do like to see you in person, however, since we like that type of connection.
Zach, I hear you. Most of my clients who want to quit before the "traditional" date are indeed stuck in crazy-making jobs. So, best to you, sounds like you have a plan for what to do after you escape!
I haven't heard of options being offered in a 401k plan. Usually they are granted separately to employees. Perhaps you could elaborate.
Pebble, that's exactly what those "target date" funds are for, to help put your plan on automatic. But you still should check them out to determine whether they fit who you are now; sometimes they have a higher allocation to stocks -- and are therefore more volatile -- than some people feel comfortable with.
Pebble, I have to say that target date funds are not always a good option; and many target date funds are not particularly highly rated. Delia is right, you don't really always know what's in these funds and may be taking more risk than you think. And they assume that your risk tolerance goes down as you approach retirement age, and personally I don't think, based on my experience with my clients, that that is necessarily true.
Perhaps Pebble ment to say "fund" Katherine.
Apologies, those two posts got inverted.
No I wouldn't think so. View your pension as an annuity to help cover your living expenses.
Checkman, agree with Katherine although you might consider take a partial lump sum to roll into an IRA to give you some flexibility.
Thanks for clarifying the stock option question. Some folks like target funds because they are on autopilot. though the mix of stocks vs. fixed income as it changes over time may be such that you are not comfortable with. So in that case choosing individual funds may be more appropriate.
And, that's all we have time for today! Thank you to all of our personal finance experts for being with us.
Also, thank you to everyone who asked questions today. See you next month for December's Jump-Start Your Financial Plan With NAPFA chat, Thursday, December 19, from 1-3 pm ET.