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Author: RJW2000 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: 401K/Income Fund/Asset Allocation Date: 11/10/2000 1:07 AM
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Greetings
I will be retiring in about 4 months at the age of 55. What I've been thinking of doing is leaving my 401K intact, not rolling it into an IRA. This way I can withdraw money from it as needed without paying a 10% penalty. I have checked with the plan administrator and they do allow such withdrawals. If I were to roll it into an IRA I would need to set up SEPP to avoid the 10% penalty in order to withdraw money prior to reaching 59 1/2.

The 401K has a private income fund managed by Fidelity. This fund has an annualized return over the last 5 years of 6.6%. I am planning on keeping 3 to 5 years of living expenses in this fund and making withdrawals every couple of months.

The remainder of the money in the 401K will be put into the American Century Ultra Fund (TWUIX)this is a large company growth fund.

There is also the question of what to do with the company stock that came from a 5% match over the last 31 years. I know what the options are, just not sure which one to use.

I will also be receiving a lump sum distribution that I would like to put in an IRA at Vanguard. I would put 46% into VEXMX, 20% into VIVAX, 21% into VISVX and 13% into VISGX.

I will also be investing some money in individual companys that meet the foolish 8 stock screen.

I would like to hear comments, suggestions, conserns, etc. on what you think of my plan. I have been to a couple of financial planners and they seem to want me to get into funds with front loads and high yearly expenses. I guess this is how they make their money. It makes me very uncomfortable knowing they have such a conflict of interest.
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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26064 of 76384
Subject: Re: 401K/Income Fund/Asset Allocation Date: 11/10/2000 1:32 PM
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Your plan sounds reasonable to me.
You are right to beware of "financial planners" selling load funds. Very few outperform Vanguard index funds and as you increase the time span, ever fewer.
If you convert your 401k to an IRA, you will have more choices of stocks and funds. I assume that the decision to leave your money with the current plan administrator does not preclude you rolling to an IRA later--like when you reach age 59 1/2.
Best wishes, Chris

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Author: RJW2000 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26069 of 76384
Subject: Re: 401K/Income Fund/Asset Allocation Date: 11/10/2000 6:11 PM
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Thanks for your reply Chris. Yes, once I reach 59 1/2 I will roll my 401K into an IRA and take advantage of more choices. By this time my wife will also be retired and we will roll her 401K into an IRA also.
Thanks, RJW2000

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Author: Ringfinger Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26083 of 76384
Subject: Re: 401K/Income Fund/Asset Allocation Date: 11/11/2000 2:44 PM
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Yes, most definitely do roll it when you reach that magic age. The choices are practically limitless. You seem to have a good plan, and will avoid the penalties.

Good Luck!

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