HSC Wealth Advisors
Tami enjoys seeing clients in all stages of life achieve their goals. One of her greatest joys is playing a role in that process by helping individuals save money and make wise financial decisions. Prior to joining the HSC team in 2012, Tami completed her undergraduate degree at Liberty University where she specialized in Accounting and Finance and competed on LU’s Track and Field team.
HSC Wealth Advisors (HSC) is an independent fee-only wealth management firm comprised of a team of EXPERIENCED financial advisors and investment managers. When you are seeking professional, dedicated experts to help you plan a secure retirement strategy, start your financial portfolio as a young investor, or create a comprehensive financial plan, the team members at HSC are some of the best in the industry.
Tami and her husband Caleb live in Lynchburg with their white husky and cat. When she isn’t at the office, Tami enjoys volunteering at church and participating in all things active including waterskiing, volleyball and Frisbee golf.
BS, Accounting, Liberty University
Where to put your in-service withdrawal depends heavily on your current financial situation. There are many considerations.
1. Age: If you are over 55 years old and have limited investment options in your 401k, an in-service withdrawal may be a good option.
2. Custodian: You can roll it into a Traditional IRA at the custodian of your choice. IRAs have access to a much greater variety of funds than most 401(k)s so you could potentially increase the growth in the account.
3. Liability Protection: If your 401(k) is an ERISA plan and you have liability exposure from your employment (doctor, lawyer, etc.), you have greater liability protection keeping the funds in the 401(k) plan.
4. Withdrawals: If you are over 59.5 years of age, you don't have to worry about withdrawal penalties from a Traditional IRA.
To answer your question about maximum 401(k) contributions, if you are over 50 years old you can defer $24,000 in 2017 and that maximum is increased to $24,500 in 2018.
Annuities are appropriate in a very limited number of situations. Most often they are expensive and inflexible investment options. Find a fee-only, independent advisor in your area for some objective advice that can be further customized to your specific situation. You can see there are many factors that should play into the decision to do an in-service distribution.
Most plans allow you to roll the after-tax portion to a Roth IRA and the pre-tax portion to a Traditional IRA. There are several benefits to this strategy. All growth on after-tax money is still tax-deferred when it is in a company retirement plan or Traditional IRA. By rolling the after-tax portion to a Roth IRA, the growth for the life of the plan is tax free. Roth IRAs do not have a Required Minimum Distribution, so you will never be told how much you have to take out. If you don't spend this money during your lifetime, you will pass a Roth IRA to your heirs and they will not be taxed on the withdrawals.
If you roll the after-tax portion to a Traditional IRA together with the pre-tax monies, each time you make a withdrawal from the IRA a percentage of the withdrawal will be taxed and a percentage will be tax-free. It is much harder to keep accurate accounting of the after-tax portion this way, and you can never access the after-tax portion as a whole once it is in a Traditional IRA. This greatly reduces the flexibility of your portfolio.
Some plans allow you to make in-plan Roth conversions of the after-tax portion of your account. This would allow you to take advantage of tax free growth before you retire. In my experience, companies are slow to adapt this but it is worth asking your HR department. Most companies allow after-tax contributions up to the Section 415 limit ($54,000 in 2017); the question is do they allow "after-tax in-plan Roth conversions".