A new law passed last year, Small Business Jobs Act of 2010, added a provision to allow participants in 401k or 403b plans to move their money from a traditional 401k or 403b account to a Roth 401k or 403b account within the same plan. This is called an “in-plan Roth rollover.” As a practical […]
In-Service Withdrawal: The Law and The Plan Rules
It’s a sad fact many 401k plans are bad: the investment choices are poor; the fees are high. People naturally ask if there’s a way to take the money out of the plan to their own account. We all know when you leave your job, you can. It’s called a 401k rollover. In most cases […]
Money Is Fungible
Money can be moved from one purpose to another. It doesn’t remember where it came from.
Rollover IRA to Solo 401k
In preparation for converting my non-deductible IRA contributions to Roth IRA, I’m rolling over the pre-tax portion of my traditional IRA to my solo 401k. I set up the solo 401k last year primarily for this purpose — to provide a harbor for my pre-tax IRA money so I won’t get taxed proportionally on my […]
Retirement Plans Galore: 401(a), 401(k), 403(b), 457, SEP, SIMPLE
A reader sent me an e-mail some time ago about the interplay between a 401(a) plan and a Roth solo 401(k) plan. You probably heard of 401(k), 403(b), and 457 plans. The names of these plans come from the section numbers in the tax code which specify the rules for these plans. 401(k) plans are […]
Reforming the 401k: Good Ideas and Bad Ideas
When stock market crashed, people’s 401(k) accounts crashed with it. Needless to say people are not happy. They are saying 401k’s don’t work. Wall Street Journal published an article How to Fix 401(k)s by Anne Tergesen. It listed many proposals for changing the 401k’s (and 403(b)s and 457’s). I think some of the proposals are […]
401k Loan Double Taxation Myth
I don’t know who started it. Suze Orman certainly helped spread it. She says that you shouldn’t borrow from your 401k (or 403b) plan because you will be double-taxed. I did a Google search and I found this by Suze Orman: “Also, never ever borrow against your 401k plan because you will pay double taxation […]
Alternatives to a High Cost 401k Or 403b Plan
This is a common problem: you have a 401k or 403b plan at work, but the plan isn’t very good. All the investment options in the plan have high expenses. The plan itself may also have some hidden fees. If the plan has a match, you contribute enough to get the full match. That’s a […]
My 401k Hidden Fees Experiment
Back in March, I wrote Uncover The Hidden Fees In Your 401(k) Plan. Because the hidden fees are so hard to pin down, I gave a method which helps find out if there are hidden fees in the plan and if so how much the hidden fees are. Find in your plan’s menu one fund […]
Uncover The Hidden Fees In Your 401(k) Plan
Marketplace Money, the personal finance program on public radio, had a segment on 401k plan fees a few weeks ago. The host Tess Vigeland interviewed pension consultant Matthew Hutcheson, who said 90% or more of all 401k plans pay 3-3.5% in fees. Here’s a quote from the transcript: Vigeland: How high do some of these […]
Calculator for 401(k), Roth IRA, then Back at 401(k)
[Last updated on July 10, 2008 with 2008 tax year IRA contribution limit.] I searched on the Internet for a calculator that implements the strategy outlined in my previous post 401(k), Roth IRA, then Back at 401(k). But to my surprise I couldn’t find any. There are calculators for 401(k), calculators for Roth IRA, but […]
401(k), Roth IRA, then Back at 401(k)
Money magazine published a list of 25 Rules to Grow Rich By. A few rules are a little silly, for example, Rule #22: Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower. Three months! Gosh, stop buying those crap […]