The 401k Rollover Plan
I was talking with a friend recently and she is ready to transition from her current job, where’s she’s worked for over 15 years, into semi-retirement. I had to laugh — she just got a part-time job doing call center work from home. It is perfect for her. She is a talker. She wanted my advice on what she should do with her 401k account now that she’s leaving her job.
It’s a hefty account; she’s been very good about maxing it out and the company had a generous matching plan. I am thankful that I did not have to talk her out of cashing it in. She’s old enough to know better. You can start tapping a retirement account at 59.5 years of age and although a lady never tells her age, I know Susan has just a few years before she hits that milestone. She told me that she’s visited the site to learn more about 401k rollovers, but she really wanted some personalized advice about her money, her retirement nest egg. I told her what I say here on the site — this is a hobby, not a profession! I told her to go talk with the folks at Charles Schwab or Morgan Stanley and that we should keep our conversations on lighter topics. But she insisted…… 
We met for coffee and talked for hours! We talked about what all happens in a 401k rollover account. She had brought a recent 401k statement, so I was able take a look at where she stands right now. I could see that she’s lost money because some of the money is still in some high risk funds. I said, “Sue, you are not getting any younger! When you roll this account over, you need to pick some more conservative funds.”
We talked about the different ways she could go. I’m a fan of doing a 401k rollover to IRA — especially in her case. She’s not moving to another company with benefits; she’s still going to contribute some money to the fund while she’s working. it seems like a great fit. By moving the money to an IRA, she can have a little more control over what funds to choose. A 401k plan rollover will take some time, so I gave her a couple of books to read. She may or may not read them, and I told her that at the time. It’s OK if she doesn’t read them, but it is important for her to be a part of her financial future. That is something Suze Orman talks about and I agree wholeheartedly — you have to take control of your money. No one else cares as much as you do about your money. A fund manager is only going to do some much to optimize your investments. You have to be a willing partner.
“So, here’s what you ask HR for. Tell them you want to do a 401k rollover/IRA and they’ll get you the forms.” Before she could ask, I told her that she didn’t need my help in filling them out. It is a simple form. The hard part is deciding which investment house to use for the IRA. I like Schwab, but that’s just me. Everyone has to do their own thinking about this sort of thing. Schwab might be too conservative for Sue. I told her how to do some comparisons online and with that, we paid up for our coffee and scones and went for a walk in the park.
