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Written by DrShelby
Posted December 19, 2007 at 10:50 am

Have questions about your retirement investments? Poor investment decisions could mean the difference in a happy and plentiful lifestyle and one where financial security is jeopardized, so get your answers from the experts.

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9 Responses to this post

Augusto Garcia on December 28th, 2007 11:35 am

I have 401 k with a previous employer, an IRA in a bank, a 401 k at work a total of of about 55,000 dollars. Also I have 70,000 in short term CDs plus a money market savings of 16,000. I am 67 and expect to work for another year. My wife and I get a total ss pension of $1700 per month. My goal is to make this money last a lifetime. What do you think should I do?
DrShelby on December 28th, 2007 1:01 pm

I suggest you get a financial check up from a financial advisor. Here’s why: your 401(k) at an ex-employer is probably not a good idea — move it to your current 401(k) if possible or combine with bank IRA or put in separate account. Also, since you plan to retire in one year, make sure your 401(k) are not loaded with investments that can go down in value. Your $70K in short-term CDs is boosting your taxable income every year — when do you plan to use this money? Your SS is a bit light…so I assume you started early and that may not have been a good move. See my “Guide to Social Security” — its a real eye opener. Can’t give you an specific advise without knowing a lot more — but can point you toward a financial advisor in your area if interested. Thanks for using my blog and make it a great day.
john on May 6th, 2008 4:53 pm

how do you feel about self-directed IRAs?
DrShelby on May 7th, 2008 1:45 pm

I’m a great believer in self-directed IRA — assuming you have some expertise or are willing to do some research. Ironically, I’m currently in the process studying the ERISA provisions about “in-service, non-hardship distribution election” and here is what I am finding:
1. By a simple amendment to an employer-sponsored retirement plan a participant can get some or all of their money out of a 401(k), 403B, 457, TSP, etc. without triggering a taxable event and can still participate in the plan.
2. The IRS allows anyone 59-1/2 to take their money and the employer’s money from a plan while continuing to work and participate in the plan; however, the employer may prevent such unless the plan has been amended to allow “in-service, non-hardship distibutions”.
3. The IRS will also allows an employee to take the employer’s profit sharing and matching contributions, any rollover from another plan moved to the current plan and earnings in the plan at any age if the plan has the “in-service, non-hardship distribution election” amendment.

What this allows is for someone in the red zone before retirement (ages 55 to 65) to get some or all of their money out of the way of a market meltdown by rolling into a self-directed IRA (or Roth IRA if they qualify) and also to position the money to convert to a Roth IRA in 2010 (if they do not qualify now because of the $100,000 annual earning limitation) or pay tax before the tax rates increase.

If your employer does not have an “in-service, non-hardship distribution election” amendment — start lobbying them now. You’ll get pushback from the broker who manages your money because as assets leave the plan they’ll lose commissions. By the way, as assets leave and the plan becomes smaller, the administration fees also drop.
sni on July 12th, 2008 8:34 am

I am receiving a service connected disability of 117.00 per month. I am planning on retiring in a year and i would like to know If i will continue to receive this amount.
Dr. Shelby on July 14th, 2008 9:02 am

Sorry but I cannot answer your question without knowing a lot more about the nature of disability and its fate once your retire.
Conner Collins on October 10th, 2008 11:46 am

I am considering moving to Mexico full time and am wondering what kind of experience people have had with the peso as a currency. In recent times have we seen much fluctuation?

Thanks
Conner Collins
Lesa on October 24th, 2008 12:11 pm

In your article “Tapping into 401K”, you state a company can amend their withdrawal policy. Was this just referencing their company match contributions (which my company already does) or transfering your entire 401K? I would like to have the option to self direct and ergency is paramount since congress is looking to takeover 401K. Lord help us all if this is implemented.
DrShelby on October 24th, 2008 2:03 pm

There are three types of money that can be in a 401(k) and each are treated differently:

1. Roll-in money that came from another plan: can be transferred or withdrawn without restrictions at the option of the plan participant (employee).

2. Employer matching and profit-sharing contributions: ERISA says it can be withdrawn or transferred at any age BUT employers may stipulate an age – and most employers stipulate age 59½ or older to prevent younger employees from withdrawing money.

3. Employee voluntary contributions: ERISA says these cannot be withdrawn prior to age 59½ BUT they permit employers to stipulate an older age – and many stipulate older ages or normal retirement age.

If you have a triggering event – death, disability, plan termination, retirement, leaving the employer and financial hardship (if the employer has a hardship provision in the the Plan, and it is their option) – money can be withdrawn or transferred.

Please read the full report on http://www.theretirementpros.com