Well, I just started a new job with a much larger Sheriff's Office than the one I was working in before. (From 4 sworn deputies to 175 sworn deputies).

Along with the larger department comes different types of retirement saving that I was not offered before.

At the old job the only retirement plan was a county plan (administered by Standard) that was supposed to imitate the PERS plan (Public Employee Retirement System, Oregon state retirement plan) but was not a part of it.
I was not allowed to contribute to the plan on my own, the county contributed for me in a 100% vested account and over 5 years I accumulated $40,000. (fixed 3% investment return)
I need figure out where to roll that money over to in about two weeks.

The new job offers employer contributions to PERS.
It also gives us several options for a 457 Deferred Comp plan through either Nationwide, MassMutual, or ICMA Vantagepoint.

It seems that from my limited research so far ICMA sounds like it tends to have rather high fees that are hard to decipher.

So, several questions for those better informed than I:

1) Does anyone have experience or recommendations with any of those three companies 457 plans?

2) Does it make more sense to roll the $40,000 account I already have into whichever 457 plan I choose (I assume this would significantly jumpstart that account)

OR

Should I put it in a separate IRA to keep investment options diversified? (I was planning on rolling it into a Vanguard account based on a great thread here with excellent info from Jallen and others), if I find I could invest more once I max the IRA annually, I could put the remainder in one of the 457 plans.


3) Does it make any sort of sense to cash out that old job account with whatever penalties that entails and use it as a down payment to buy a house? (have never owned a house before and it will be two years probably before I am ready to buy without some sort of large down payment like that.
With rent approaching $2000 per month here (aprox 1/3 of my gross monthly salary) putting all that money each month towards owning a home rather than renting seems like a good idea.

The housing marked around here is really up, so it seems unlikely to be a great time to buy, I would be much more tempted if we were in a low home value time but vacancies are super low and the market is doing well in Bend, OR (for owners). However the population around here has been growing rapidly and steadily for a long time and doesn't seem to want to slow down much (even in the recession) because of all the Californians wanting to move here. So obviously no predicting when the housing market might go down, if at all.

The accumulated $40K should be handled as a direct transfer, rollover IRA. You don't want the money to directly go to you...as you'll be taxed heavily. An Investment Advisor can handle that very easily for you.

You don't want to cash out the old job account for a downpayment - Taxes and Penalties will kill it. You'll be penalized at 10% then taxes at your current tax bracket....So it could cost you 35-45% depending.

Just a few quick thoughts

Andrew

 
Open an investment account at one of the biggies, like Fidelity or Vanguard. Set up an IRA, then give the information to HR at your old job (Fidelity/Vanguard will provide you with the address, payee, etc that you give to HR). They will transfer the funds directly to your IRA and you will never have them personally, nor will they be taxed. I did this several times when the company I worked for changed ownership 4 times before I retired. Each change brought a new 401(k), with options to roll into the new 401(k), or any other qualified account (which the IRA is). Get it out of the company's hands and oversight and invest it as you see fit.
 

Put it into a Vanguard account with much lower fees and unlimited investment options.
The fees really add up over time.
Keep in mind that a low down payment home loan will be mostly interest and PMI for many years and unless the housing continues to rise for years, you won't make much headway. You may want to go elsewhere fro another job in a few years and the moving out of a rental is much easier and less costly.

First couple of posts pretty much nail it.
Roll the IRA to a personal account.
Do NOT liquidate it for the down payment. Besides losing a bunch of it to penalties and taxes you are setting back your retirement.

agree with : roll $40k directly into a Vanguard Index fund IRA (Total Stock Market for instance)

as to your new choices with the new employer: i don't know any of those first-hand - but you are correct to research fees - I would generally go with the provider that has the best selection of funds with the lowest charges - as stated - they add up 'unseen' over time

do you get a match? If so contribute at least that amount to max out the match - then decide where to put the extra $$ - I would opt for the Vanguard Index option

if the real estate market is as inflated as you say - now may not be the wisest time to jump in with a major purchase. the same is happening here in South Tampa where I just relocated 2,000 sq ft for $600k and up almost double from a few years ago

Congrats on the new position !

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If you have the option, e.g. any self-employment income at all, a self-directed SEP-IRA gives more investment and contribution options than a regular IRA, or at least it feels that way. Once you open a SEP-IRA, you can rollover other retirement plans into it, and only have one you have to keep an eye on. Also, try to choose a plan provider, where, if you get into a situation where you make an excess contribution, the excess amount gets automatically rolled into an associated Roth IRA. This can also be done when RMD time comes along, i.e. to keep the investments growing rather than taking out cash.

Whatever you do, don't cash out your retirement...the penalties just aren't worth it.

We had a 457 Deferred Comp at work and my advice to all my trainees was to max that out as soon as possible, as it reduced their tax liability. I'm not familiar with any of the ones you have listed, our was through Fidelity. I've never heard of a LEA having matching 401k contributions, but if they did, I'd certainly take as much advantage of it as I could

A house is a much more responsible investment than a boat (lots of cops get boats???)but now might not be the right time. Plus you have to decide if this department will be a long term commitment or another stepping stone.

I stayed with my first department, but it grew while I was there. It went from ~350 when I got hired to almost 1500 when I retired...I think it is down to 1200 now

I dont know anything about your retirement plan at your former employer, but i suggest you fully explore your options before you take any action. Your best option MAY be to leave the money where it is at in order to collect a pension benefit at retirement. You may also want to explore if you can roll your account into the PERS system with credit for your time at you previous employer.

You may also want to speak with a CFP or CPA that is familiar with both systems.

quote:

Originally posted by El Cid 92:
The accumulated $40K should be handled as a direct transfer, rollover IRA. You don't want the money to directly go to you...as you'll be taxed heavily. An Investment Advisor can handle that very easily for you.

Retirement account rollovers to an IRA are easy, especially if going with a mutual fund/ETF company like Vanguard. It would be a huge waste of money to pay an advisor for that. For most people "financial advisors" are a huge waste of money for any purpose, but especially for something so easy to do on your own as a rollover to an IRA.

Also, while a direct transfer is usually desirable, it's not always possible. Years ago I had a 401(k) account with an employer, and when I left I wanted to rollover the funds into an IRA. However, the particular mutual fund company with which the funds were invested would not do a direct transfer, and required that I be sent a check. However, that was no problem, because you have 60 days to reinvest the funds the in an IRA. So I received the 401(k) funds check via FedEx, and immediately sent the check to the mutual fund company with which I was establishing the IRA account. It all was done in less than a week.

quote:

Retirement account rollovers to an IRA are easy, especially if going with a mutual fund/ETF company like Vanguard. It would be a huge waste of money to pay an advisor for that. For most people "financial advisors" are a huge waste of money for any purpose, but especially for something so easy to do on your own as a rollover to an IRA.

While you might save fees, with a do-it-yourself approach, I think you go to far with your statement. Some "financial advisors" are a huge waste of money for any purpose. But not all. Some people need advice and are willing to take it by working closely with their advisor. It's a relationship, and it takes time.

Sounds like our PD’s retirement system. We are through ICMA. State law requires the city to put 7% with a mandatory match by the officer of 7%. You can pick what you want the money to go into from a multitude of choices through ICMA. Since it is gonvernment it isn’t a 401K per se it is a 401A.

The individual officer can put what he/she wants into a 457. Per contract if the officer puts in 2% the city will put in 1%. Our new contract now adds if an officer wants to put in another 2% the city will match 1% to that as well.

As others have said don’t take that money roll it into something.

Good luck on your new department!!!

First of all - roll your existing 403b into an IRA, and either use a self directed model or investment advise based on your retirement goal. You will not get much management with that balance amount, as most firms want $100,000 in investments before certain options become available.

Second, your reference a 457 (deferred comp) however if rent is 33% of your gross, I'm not sure I'd get into deferred comp before you max out your 403b or HSA accounts.

Third, DO NOT CASH OUT THE OLD ACCOUNT. Between fees and taxes, you will loose probably 30%. There are options available ONCE you are ready to buy a house to bypass most of the fees if you are a first time home buyer, but you have to be within a certain window (CPA question).

Email me if you want to be more direct. Email is in the profile.

Rin,

1. You should not be allowed to put your old retirement account in any of the three 457b plans. A 457b is a Deferred Compensation plan and it is different from a 401a, 401k or 403b plan Retirement Plan. From your description, you old plan is most likely a Noncontributory 401a plan. 457b plans cannot accept 401a money. The old plan money should be rolled over to a Brokerage IRA at the Financial Services firm of your choosing. The previously mentioned ones are fine. Focus on choosing mutual funds that have low fees.

2. Nationwide and MassMutual are insurance companies. Depending on the plan, they may have high fees just like the ICMA plan. I would look at all three and determine which one has the lowest fees and the least number of strings attached to the plan. With your relative lack of investment experience, you may want to look at target date funds aimed at the year you plan on retiring.

3. You should not withdrawal retirement funds before age 59.5 or you will be subject to a 10% tax penalty.

I have been working in the industry with all the licenses for about 15 years now. I no longer work directly with clients so I won't try to sell you on my "services" but I am happy to look at your options and help put you on the right track. My email is in my profile if you want help.

quote:

Originally posted by chellim1:

quote:

Retirement account rollovers to an IRA are easy, especially if going with a mutual fund/ETF company like Vanguard. It would be a huge waste of money to pay an advisor for that. For most people "financial advisors" are a huge waste of money for any purpose, but especially for something so easy to do on your own as a rollover to an IRA.

While you might save fees, with a do-it-yourself approach, I think you go to far with your statement. Some "financial advisors" are a huge waste of money for any purpose. But not all. Some people need advice and are willing to take it by working closely with their advisor. It's a relationship, and it takes time.

Considering you make your living as a "lawyer/financial advisor," I'm not at all surprised you would disagree with my statement about your chosen "profession."

I've got to agree with chellim1 as well. A "Good" Financial Advisor is well worth what they are paid in fees. In todays financial market …. there are many choices that can result in decent returns to complete loss of basis. A great advisor will be a good teacher who can help you find what's right for each investor.

Personally, I paid my financial advisor to ensure my recent Roll-over IRA was done correctly. So, I don't have to worry about penalties or taxes. Kind of the same way I pay my CPA to do my taxes; correctly, the first time.

I've taken a ride up and down the markets over the past 28 years of investing. All of them with an advisor. To date - I've averaged almost 13% returns. Yes, that is a very good performance.

Best advice - for anyone. Find an advisor who is a teacher. Then you'll always understand what you are getting your money into.

Andrew