temporary leave from work to roll over 401k?

[racemize]

After reading Eric's story of quitting Microsoft to get access to his 401k, I thought I might ask: Has anyone pulled off a temporary leave of work in order to roll their 401k into an IRA?  I'm sure I could talk my boss into it, if it weren't too involved. 

 

 

[ERICOPOLY]

After I left they started offering a self-directed 401k, although I'm not sure if they allow options trades.

 

However I did benefit from the Roth conversion.

[Packer16]

Does anyone else have a self-directed 401-k?  If so, which firms support this option?  TIA

 

Packer

[racemize]

our options are very limited--right now, we just have Davis, Tilson, Wintergreen, and Contrafund as value options, and then some index funds/retirement funds.

[decipher]

Does anyone else have a self-directed 401-k?  If so, which firms support this option?  TIA

 

Packer

 

We have this option through fidelity.

[watsa_is_a_randian_hero]

Over the last 11 years I've worked at 3 firms.  Once 401k balances got sizeable enough to where the differences in expected performance between me and the fund managers of funds offered outweighed the admin fees involved in taking a loan, I would take a 401k loan, deposit it into my after-tax trading account, and use that to get access.

 

A lot of firms cap loans at 50k though (might be legal restriction?), so if you have a large balance then 50k could be peanuts. 

[matjone]

"However I did benefit from the Roth conversion."  - I have followed your story since joining this board - this has got to be one of the all time greatest understatements

 

I have Wells Fargo and have tried to get them to go self-administered, but they would not allow it.  I have always thought that 401(k) plans were a little bit of a scam by the banks and fund companies.  They force you into choosing between handing your money over to them and letting them skim their half percent, or paying 1/4 of it to the taxman for the right to invest it yourself.  Then you sit there and watch berkshire stock selling under book, while you put money into some index fund or hand it to an average manager who probably will be lucky to beat the market by a point.

 

Anyway, sorry for the rant.  Did you ask your accountant about it?  I would be interested in hearing if this works out for you.

[Guest longinvestor]

"However I did benefit from the Roth conversion."  - I have followed your story since joining this board - this has got to be one of the all time greatest understatements

 

........ I have always thought that 401(k) plans were a little bit of a scam by the banks and fund companies.  They force you into choosing between handing your money over to them and letting them skim their half percent, or paying 1/4 of it to the taxman for the right to invest it yourself.  Then you sit there and watch berkshire stock selling under book, while you put money into some index fund or hand it to an average manager who probably will be lucky to beat the market by a point.

a little bit of a scam by the banks and fund companies.  In my view, this is a huge understatement of our generation. Folks will simply watch their 401K balances stagnate while being basically handcuffed for 20-30 years. As you note, what "could have been" your balance if you bought one stock, BRK, at times like this? 

I am a living example of this. Single best thing I did was to roll over four of our 401K's over the past 7 years (two of them pre-2007 ;D)

Sad thing is that I have tried to talk my circle of friends and family into doing the same, not even talking about them quitting their jobs, just roll the $amn old 401K's over, but no, cannot get them to.  The fund industry has everyone drinking the koolaid about asset class balancing, $ cost averaging, target year retirement and $hit like that. I think I know how this is going to end for them, more certainly where I will end up with value investing.

 

Anyone else have this issue convincing others?

 

[beerbaron]

Anyone else have this issue convincing others?

 

You'll die trying to convince people over their money issues. Stop now before you go out of breath.

 

BeerBaron

[benchmark]

After I left they started offering a self-directed 401k, although I'm not sure if they allow options trades.

 

However I did benefit from the Roth conversion.

 

I thought that there is (was?) a limit on income w.r.t Roth conversion -- i.e., you can't convert if your incoming is over certain limit,  you have to roll over to a traditional IRA.

[matjone]

" not even talking about them quitting their jobs, just roll the $amn old 401K's over"

 

longinvestor, I was under the impression that you had to get permission from the plan administrator to do a rollover if you were still employed and contributing.  Am I incorrect?

[matjone]

Never mind I missed the word "old".

[Guest longinvestor]

Anyone else have this issue convincing others?

 

You'll die trying to convince people over their money issues. Stop now before you go out of breath.

 

BeerBaron

 

Surely feels like that. What would help them see is the extra digit to the right side of my IRA balance after working the same number of years. Not there yet... I did convince a 80-year old self-made real estate millionaire to buy a good bit of BRK in his IRA. He had this advisor who had loaded it up with mutual funds with mediocre returns before fees.

Trying to get some of my middle agers to do the same. Hope they make time their friend.   

[ERICOPOLY]

After I left they started offering a self-directed 401k, although I'm not sure if they allow options trades.

 

However I did benefit from the Roth conversion.

 

I thought that there is (was?) a limit on income w.r.t Roth conversion -- i.e., you can't convert if your incoming is over certain limit,  you have to roll over to a traditional IRA.

 

There was no income limit on Roth IRA conversions for 2010, 2011, and 2012.  Not sure about the future.

 

I converted 1/2 of mine in 2008 -- a big mistake not converting the whole thing that year.  Then I converted the second 1/2 of it in early 2009 but had to abort later in the year and push the conversion out to 2010.  Then I had the taxable amount from the 2010 conversion split into 2011 and 2012 tax years.  They don't let you split them out to future years anymore (at least not on 2012 conversions).

 

The ORH buyout by Fairfax stuffed up my plans of not taking any gains in 2009 -- that was why I wound up blowing through the income limits.  Otherwise it was the perfect plan.

 

[oddballstocks]

" not even talking about them quitting their jobs, just roll the $amn old 401K's over"

 

longinvestor, I was under the impression that you had to get permission from the plan administrator to do a rollover if you were still employed and contributing.  Am I incorrect?

 

Some rare companies allow this, and I mean rare.  If you're 59 1/2 you can do an in-service rollover as well.

 

Some plans allow the self directed option as well, we have inquired about this and our provider stated assets need to be in the hundreds of millions to gain this option.

 

I agree with everything said, I wish I could direct my own investments in the 401k, but I can't so I put money in some index funds.

 

Let me play devils advocate here though, most employees should not have any access to individual stocks, lest they blow their retirement money on Facebook or Zynga, or whatever else is popular.  Individuals are terrible investors and I recognize that the 401k is limiting for people who are better investors they truly are the best for the masses.

 

If you want you can always start a side business open a solo-401k and stuff $45k a year into it and invest it as you like.  You can also do a backdoor roth where you can stuff something like $40k legally into a roth IRA a year as well and invest it as you like.  So yes there are options.