Comments on: 401-K Rollovers, How do Millionaire Nurses Do It?

By: Dr.Dean

Dr.Dean — Wed, 21 Apr 2010 10:50:19 +0000

Re financial aid-you do have to report your pre-tax contributions to your 401-K or IRA on FAFSA form B-so it counts as income.

As to the courts and IRA, I am sure that depends on too many circumstances to deal with here. Always worth checking with a tax adviser.
But again, don’t be frozen by fear and do neither…..

Thanks for stopping by.

By: Kirk

Kirk — Wed, 21 Apr 2010 05:17:10 +0000

I’ve read that courts are more likely to view a 401K as off-limits than an IRA in the event that a person is sued. And there are some financial aid forms that count a portion of an IRA as part of one’s assets while not counting a 401K. I believe this is because a 401K is essentially the same as a pension while an IRA is a bit more liquid. Do you have any thoughts on this?

By: Dr.Dean

Dr.Dean — Sun, 21 Mar 2010 22:45:00 +0000

Thanks for reading.

Expenses can be a major cause of under-performance of any investment. The problem for most 401-K plans and employee investors- it is difficult to tease out expenses.
I would say that making sure you maximize your 401-k deposits to take full advantage of your employers match. Then, making a Roth or other IRA investment may make sense if the plan has high expenses. There is a movement to insist that 401-K plans are more forthcoming with expense information for there investors. I certainly support those efforts. More transparency the better, when it comes to expenses.

Great point, and thanks again for stopping by.

By: Evolution Of Wealth

Evolution Of Wealth — Sun, 21 Mar 2010 21:14:19 +0000

I think you missed the biggest downfall to 401k plans, expense. Most people have no clue how much their 401k plan is costing them. Yes, they might have a few mutual fund choices and yes, a couple of them have some decent performance numbers but what they don’t realize is the funds in the plan could be costing a lot more than what you could get in an IRA account. There are a high percentage of 401k plans that have some type of asset based fee assessed on top of the internal expense of the funds that are available. People don’t realize this. Most people don’t know what their 401k is costing them and this goes for the old and new 401k. 401k as are awesome, when they work right.

By: Dr.Dean

Dr.Dean — Thu, 18 Feb 2010 13:45:15 +0000

Thanks L. For the tax question, it is based on your income tax rate. If you check with your tax preparer or the potential Roth source-brokerage or mutual fund company-they can give you a quick guestemate, based on your income.

But keep in mind, once you pay the taxes, you can then remove the money in retirement tax free-that is pretty sweet! You also can rollover a portion of the amount in your 401-k if you can’t afford to pay taxes on all of it.

By: Dr.Dean

Dr.Dean — Thu, 18 Feb 2010 13:41:14 +0000

Thanks for the question, J. Most 401-K plans have very limited investment options-usually choosing among a couple of mutual fund options. Money in IRA’s- both Roth and traditional-can be invested among thousands of choices. Even real estate. Now sometimes all those choices make decision making difficult.

But the bottom line is, with an IRA you have more control-that of course can be good and bad…..But that is what we are here for, is to make you competent to help yourself. If you don’t want to learn investing, we want to help you to decide who the best “expert” will be to assist you!

By: Lisa

Lisa — Thu, 18 Feb 2010 12:52:46 +0000

Now that was informative! I have asked wise heads before if I should do a “rollover” and they just say leave it alone. Dumb question, but what percentage of taxes would I have to pay for a Roth IRA?

By: J

Wed, 17 Feb 2010 22:45:49 +0000

Why do you prefer a Roth IRA vs rolling it into the 401 program of the new employer?

I did a rollover. It was just a matter of paperwork. Unfortunately, because I stayed PRN, they wanted their money back. It took about a year, but they transferred my money back to the original hospitals 401