Portnoff Financial LLC
Founder & CEO
With over 14 years of experience, Jeremy Portnoff is committed to offering comprehensive financial planning and investment management services to individuals and families across nationwide. In founding Portnoff Financial LLC, an Independent Fee-for-Service Registered Investment Advisor, Jeremy has championed what it means to be an individual advisor without a large firm: maximizing the firm's resources without losing the personalized and flexible benefits of working with an individual advisor.
Jeremy specializes in retirement plan distribution rules to help clients minimize taxation of retirement savings and pass them on to future generations in tact. Investment management is also something that Jeremy has much knowledge of and experience in. He approaches this area by utilizing various institutional portfolio strategies to customize an investment program for each individual based upon their unique needs and financial situation. The strategies he employs are based upon an understanding of how demographic trends, predictable consumer spending habits, and technological innovation drive the economy and financial markets.
Jeremy has been quoted in several print and online publications including: The Wall Street Journal, Investor's Business Daily, Business Week Online, The Star-Ledger, Financial Planning Magazine, InvestmentNews, National Underwriter Life & Health, Bankrate.com, Boomer Market Advisor, AdvisorMax.com, and Morningstar.com.
CSUF, BA Business Administration (Finance)
Institute of Business & Finance, MS Financial Services
Assets Under Management:
That doesn't sound right at all unless it is not a 401k plan, but is some other type of retirement plan such as a type of pension plan. Another possibility is that if the funds were all employer contributions and are not vested, then you basically forfeit the funds. If it is a plain ol' regular 401k to which you made contributions and are thus vested in those contributions, upon termination of employment you should be able to access those funds, change investments, rollover to an IRA, etc. The only other reason I can think of is if there is some kind of litigation going on related to the plan which has cause plan assets to be frozen.
You should call them and ask why you are not able to access the funds and get a copy of the plan document which spells out the rules of the plan so you can confirm what you are being told. If there is no reason why to prevent you from requesting your funds, you might have to go to the Department of Labor, but that is a last step.
Look for S&P 500 "PR" which refers to "Price Return" as opposed to "TR" which is "Total Return" which would include dividends.
NO! You cannot roll it over to another 401k! This would cause immediate taxation of the entire account all in 1 year and you would lose tax deferral on the funds. Chances are a 401k plan would not let you do this even if you tried. Usually the question is "can I rollover this IRA I inherited into my IRA?" The answer to that is also NO! Non-spouse beneficiaries cannot transfer an inherited retirement account to their own IRA. Doing so would cause the whole account to be taxable all in 1 year, loss of the tax deferral and have an excess IRA contribution subject to a 6% penalty per year until the funds are removed.
The only option to retain the tax deferral and not pay income tax for the whole account all in one year is to do a trustee-to-trustee transfer to a properly titled inherited IRA and then take distributions over a period of time not to exceed your life expectancy.
Generally speaking, a 401k is an employer-based retirement plan (can also be used for self-employed persons) which employees can defer some of their income. An IRA is an “Individual” retirement account that anyone can have that is not related to their employment.
Both 401ks and IRA have “Roth” options. In a traditional 401k or IRA contributions typically go in pre-tax, earnings are tax-deferred while in the account, and all distributions are taxable when distributed. For Roth accounts, the contributions go in after-tax, grow tax-free, and the distributions are tax-free as long as you are over age 59 ½ and have had the account more than 5 years.
The only exception to this is when non-Roth after-tax contributions are made to IRAs, but this is beyond the scope of your question.
Anyone can defer income into a 401k or Roth 401k, however, the ability to contribute to a Roth IRA is limited when your (modified) Adjusted Gross Income reaches $184,000 and is eliminated when it reaches $194,000 (for a joint filer). Anyone can convert to an IRA regardless of income. At $48K of income you are well within the limits unless you have a high income earning spouse.
The decision to save pre-tax versus after-tax is largely a function of whether you think your tax bracket will be higher or lower than they are now when you take distributions. If you think your taxes will be lower then it makes sense to get the tax break now and pay less tax later via pre-tax 401k contributions. If however you think your tax rate will be higher (because of income sources and/or tax increases in general) then it makes sense to pay tax now to get tax-free distributions later via Roth IRA. One need not do one or the other, rather tax planning in this sense can involve “tax diversification” whereby you make contributions to both types of plans (if allowable) to have flexibility in your tax footprint in the future.
Another consideration is whether your employer has matching contributions in the 401k in which case you would want to contribute at least the amount to maximize the matching contribution.
As far as ideal contribution to a retirement plan in general is a function of what your goal is. Working with a qualified financial advisor can help you articulate what your retirement goals are and come up with a plan to get you there which would include advice on how much you should be contributing to different types of retirement and investment accounts.
There are too many factors to make that determination. For example, his 401k should be split using a QDRO (Qualified Domestic Relations Order) which is more than just the divorce decree. You would present that QDRO to the plan administrator for his plan, but the plan may or may not allow you to break off your portion to a separate account. You'd have to get a copy of the plan document and figure this out because if the plan does not allow this then you might have to wait until he is 59 1/2 or leaves the company (or any other triggering event under the plan that would allow such a distribution).
Supposing you can split off you portion and rollover to an IRA. If you are under 59 1/2, then you're going to pay the early distribution penalty unless you meet one of the penalty exceptions in addition to the taxes owed on the distribution. So even if you can, if it is a small debt, it might not be worth the tax to get to it.