champ42272

I searched past threads and did not find any regarding this subject.

I'm turning 59 1/2 next month and want to rollover my FedEx 401k to my traditional IRA at another financial institution.

Any ideas or suggestions would be appreciated.

Champ42272

"Much better than a J-3 Cub!"

champ42272

P.S. MY NEGOTIATING COMMITTEE SPEAKS FOR ME.

Champ42272

RedeyeAV8r

This is a Smart thing to do as you will immediately have more options.
You can roll your 401K into any Investment House IRA,
USAA, Fidelity, Etc, but I'd just call Vanguard.
The easiest way is to roll it into a New Vanguard Brokerage IRA. You can do it over the Phone and they will send you a couple Docs to sign.
You will then have the option to invest any or all of your funds into virtually any Mutual Fund or buy any Stock, Bond, ETF etc.

Just remember the old saying.
(Q) How do you make a Pilot a Millionaire?

(A) Give him a Billion

Raptor

My thoughts:
1) make sure it is a trustee to trustee rollover. (By this I mean you don't get sent the money personally and then have 60 days to roll it over.) If you do trustee to trustee (i.e. Vanguard to Vanguard, Vanguard to Fidelity, etc) you won't have any withholding. If you take the money personally and roll it over within 60 days, they are required to withhold both for state and federal.
2) Assuming you don't currently have any money in traditional IRAs: If you have ANY after tax money in the 401(k), specify to Vanguard you want every single penny of after tax money rolled over into one IRA account and all the pre tax money rolled over into a separate IRA account. (New IRS rules as of September 2014 permit this.). You may owe some taxes on your after tax money growth while in the 401(k), but you won't owe any taxes on the principal. Then, convert your new after tax money IRA immediately to a ROTH IRA account. This will be tax free conversion to a ROTH since it was after tax money. This "back door" conversion can be done regardless of your income. Contributions to a ROTH IRA are disallowed if your income is too great, but conversions aren't subject to this restriction! If you have traditional IRAs, then you'll have to decide on what is best for your situation as the tax situation is more complicated.
3) know why you want to rollover your 401(k) to an IRA. If, for example, you are solely invested in the Vanguard index fund and you were planning to roll over to a Vanguard or Fidelity index fund, that wouldn't be a smart move. You have a much lower expense ratio while invested in many of the Vanguard 401(k) funds (because the class of funds we are in are lower expense ratios based on the group pool of money we have invested) and expenses would be higher when the class of fund is different when you hold that money outside the group pool in an individual IRA. But, if you want to rollover your money because you will have access to brokerage accounts, or other funds that aren't offered in the limited range of funds available in our Vanguard 401(k)s, that would be a good reason.
4) rules were reinterpreted by the courts in 2014 that now limit you to ONE rollover per year now. So, make your rollover wisely: after tax, all, partial, etc. You can always revisit next year and rollover more.

Raptor

Are you retiring or simply turning 59 1/2?

I wasn't aware you could rollover your 401(k) solely based on age? I thought you had to retire?

Flyinhigh

You have to retire to withdraw funds from the PMPP (B Fund). Check the chart on page R-70 of the Pilot Benefit Book for the rules on the PRSP. Lots of good information found in the Pilot Benefit Book.

RedeyeAV8r

Raptor

All good points I didn't mention. Vanguard will walk you through all this when you call them and explain what you want to do and why it is very easy if you choose a Vanguard to Vanguard Rollover.

Happy Times

champ42272

I am turning 59 1/2, not retiring.

I am rolling over the 401k to get it out of Vanguard and into my retirement portfolio at another investment institution.

I confirmed with Vanguard that the B Fund is not eligible for rollover until you actually retire.

Simply stated, the investment options at Vanguard are not sufficient, and rolling over this account into my traditional IRA affords me the options of many other investment vehicles, and complements the rest of our retirement portfolio. There is no after tax money in my FedEx 401K.

Note to all: Vanguard only requires a telephone call to move the assets, they suggest a conference call with the gaining institution, so all the transfer details are accomplished with one call. It's a fiduciary to fiduciary transfer so no withholding.

Thanks for all the inputs

Champ42272

RedeyeAV8r

Champ

The reason I went with a Personal IRA with Fidelity is that every year
I roll over my Vanguard 401K deposits into my Personal Rollover IRA.
having it Vanguard to Vanguard makes it real simple.

Baja

For the record, you can create a Brokerage account at Vanguard. It is no different than having such an account at Scottrade or and other brokerage house. It sits at Vanguard but you're not limited to only putting Vanguard funds in it. I moved all my holdings out of the company plan last year and put them into different Vanguard accounts. Lots more flexibility and all the advantages of having a stand alone brokerage account other places.