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Author: zeemo1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Self Directed 401Fool4 Date: 2/6/1998 1:36 PM
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Can one develop a self directed 401 with the foolish 4?
If so How?
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1663 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/6/1998 6:15 PM
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Greetings, Zeemol, and welcome.

<<Can one develop a self directed 401 with the foolish 4? If so How?>>

One can, but only if the 401k plan document allows an investment option that permits trading of individual securities. Very few plans do. Instead, most participants may only choose from a variety of mutual fund-type investments. You need to check with your employer to see what investment options you have within your plan.

Regards….Pixy



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Author: zeemo1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1671 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/7/1998 7:32 AM
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I neglected to mention important info.

What I meant to ask is can one have a fool 4 in a self directed roll over(from an employer 401 to a self directed 401) upon separation from employment.

It is my understanding that the IRS allows equal and substantial withdrawals from a 401 (72T) if one is de-jobbed at 55+ with out the 10% penalty. I would need to withdraw $ monthly to live on as well as have the $ appreciate.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1675 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/7/1998 10:33 AM
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Zeemol,

<<I neglected to mention important info.

What I meant to ask is can one have a fool 4 in a self directed roll over(from an employer 401 to a self directed 401) upon separation from employment.

It is my understanding that the IRS allows equal and substantial withdrawals from a 401 (72T) if one is de-jobbed at 55+ with out the 10% penalty. I would need to withdraw $ monthly to live on as well as have the $ appreciate.>>

Well, that is a tad different. The money will no longer be in the 401k plan. Instead, it will be in an IRA. And, yes, you can do that. Just arrange to have the money transferred to a self-directed IRA at a broker of your choice. Your broker and plan custodian can guide you through the process so there aren't any tax hassles. Once the funds are in the IRA, you can trade at will, to include using any of the Dow strategies.

Using the proceeds for Section 72t withdrawals throws another wrinkle into the problem. You can do that with the 401k or the IRA. But if you are 55 or older, you can take annual withdrawals from the 401k (but NOT the IRA) without penalty anyway. Stay with the 401k, though, and you are stuck with the investment options within the plan. The flip side is to go with the IRA. Do that, and you're forced to the 72t rules.

If you go to the IRA, you'll have to take care that the annual 72t withdrawals coincide with your trading anniversary dates. Otherwise, the Dow strategies won't work as planned. That's because they are heavily dependent on the holding period. Additionally, you should be aware that under 72t rules there are three ways to compute the required withdrawal. Once selected, you're stuck with that method. You also must use it for at least five years, or until age 60 in your case. You'll need professional advice to run the numbers to see if using 72t will give you the income you need. It may not, in which case you may want to bite the bullet and pay the penalty until you reach 59 ½.

One other out: Take enough from the 401k now to cover annual expenses through 59 ½ and roll the rest to the IRA. Pay ordinary income taxes on the money you kept. Leave the IRA alone until you get to 59 ½, and then you can take money from it in any amount without penalty.

In your case, you may want to pay a fee-only CFP a couple-three hundred to run a few scenarios for you.

Regards……Pixy


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Author: mec Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1676 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/7/1998 10:52 AM
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< Just arrange to have the money transferred to a self-directed IRA at a broker of your choice. Your broker and plan custodian can guide you through the process so there aren't any tax hassles. Once the funds are in the IRA, you can trade at will, to include using any of the Dow strategies.>


Pixy,

Once you have established the self-directed IRA, is there any way to sever the broker / client relationship (i.e. online trading)? I am in a similar situation, but have grown irritated in dealing with my broker.

mec

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1677 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/7/1998 12:01 PM
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Mec,

<<Once you have established the self-directed IRA, is there any way to sever the broker / client relationship (i.e. online trading)? I am in a similar situation, but have grown irritated in dealing with my broker.>>

Sure. Just select another broker and arrange to transfer the account to that one. It's exactly the same procedure you used to establish the original account.

Regards.....Pixy

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Author: rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1684 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/8/1998 2:18 PM
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<<Once you have established the self-directed IRA, is there any way to sever the broker / client
relationship (i.e. online trading)? I am in a similar situation, but have grown irritated in dealing with
my broker.>>

No problem. Just find a new broker, and tell him that you want to open an account with them, and transfer your old account assets into it. All the on-line brokers alreasy have a form for doing this. Note that the old broker might charge you $25 or so for closing out the IRA account.
Regards,
Ray

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Author: JeanDavid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1842 of 75340
Subject: Re: Self Directed 401Fool4 Date: 2/18/1998 11:22 AM
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<Can one develop a self directed 401 with the foolish 4? If so How? >

It is certainly possible, in principle. Get enough of your fellow employees together and get them to ask the management of your company to allow a self-directed option to the 401K plan. If there are enough of you, management can arrange it.

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