Luke DeBoer is the Founder of Thinking Wealth.
Luke earned his Bachelors of Science in Finance at St. Cloud State University and his MBA at The Carlson School of Management at the University of Minnesota with a concentration in Tax, is a CFP®, and is currently in the process of becoming a Certified Benefits Professional.
Check out the Way to Wealth blog on thinkingwealth.com for deeper insights.
BS, Finance, St. Cloud State University
Assets Under Management:
What I'm writing here is not advice and should only be read with the knowledge that it is informational only. If you want my advice as to how anything I write might apply to you personally you should reach out.
Regarding the question of rolling over. It is a very good question that is somewhat loaded if you're asking a finance professional. Keep in mind as you're reading these answers that most "advisors" have a direct incentive to tell you to roll your old 401(k) into an IRA.
With that being said, there really isn't a catch-all correct answer. Some considerations though.
1.) Many 401(k)'s give you access to institutional level funds that are less expensive than the version you may be able to buy through an IRA. However, not all 401(k)'s give you access to these. Generally speaking, the larger the company the lower cost the investment options are.
2.) Consider your investment strategy. If you are self-directed and hands-off then you are likely better off just keeping your assets either in the current 401(k) or your new 401(k), due to creditor protection and the possibility/likelihood of lower cost investment options. However, if you are using an advisor he/she may only manage the accounts that are directly held with him/her. So you may need to roll over into an IRA simply to get professional advice.
3.) Consider long-term tax management. You may want to systematically convert pre-tax assets to Roth (fill up your tax brackets with Roth conversions). This is often times better handled in an IRA due to the ability to reverse the decision.
Hope this helps!
The other advisors here already gave you excellent and correct answers.
With that being said, I'd like to encourage you to consider whether you should actually take out that much in one fell swoop. Time and Roth assets are best friends, so be sure to only distribute from a Roth what you absolutely must/should take out (i.e. distributing from Roth only upon hitting a new tax bracket threshold). Also be cognizant of other possible distribution sources which may be more beneficial to take from first.
Finally, good job in saving that much in a Roth!
Wyatt mentioned a couple of very good resources to start with. Additionally, you may consider www.feeonlynetwork.com.
Best of luck!
There are plenty of good answers already posted on your question but I'll add a few thoughts.
1.) Due to your pension and your upcoming social security income, your marginal bracket will not be going down in the future (outside of complete restructuring of the tax code itself) and in fact may be the lowest it will ever be right now (until you start to take social security). So any conversions you do right now are akin to a Roth contribution of a saver with 100% certainty of equal or higher tax rates in the future. This is a strong signal of the need to consider Roth conversions (though be careful to phase them in).
2.) One would need to know the cost basis of your stock to give a really strong answer to when and how you should distribute these funds. With that being said, distributing from that first, to both supplement income and reset your basis could make a lot of sense.
3.) Finally, likely pair up distributions from your cash holdings early in retirement with any prospective Roth conversions.
Finally a disclaimer. You should, outside of being an expert yourself, definitely consult a tax or financial planner on this if you want the most tax effficient distribution strategy possible.
Thanks for asking!
Interesting and good question.
The answer somewhat depends on whether or not you foresee a pre-retirement use of the funds. So you may not have a short-term need for the funds but may have an intermediate-term need for them. With that being said, if you do want to save these for the truly long-term (i.e. retirement age) then there are some guidelines to follow.
1.) Make sure you are maxing out your HSA if you are eligible. There is not a more tax-efficient vehicle than the HSA.
2.) Either contribute to a Roth IRA (if you qualify) or increase your 401(k) contributions (either via pre-tax and/or Roth), depending on your need and the makeup of your company's 401(k) plan (fees, investment options, etc.).
3.) Finally, if you are going to invest in a taxable account, strongly consider the type of investment within the account. Some guidelines/information: low turnover funds or individual stocks allow you to somewhat control the timing of tax liability, REIT dividends are taxable as ordinary income, corporate bond interest is taxable as ordinary income, etc.
Thanks for asking!