401(k) & IRA Planning

Edward Jones Advisory Solutions

tgurley — Mon, 16 Nov 2009 21:41:44 GMT

I have a 401k that I am going to rollover into an Edward Jones acct. The broker is recommending an Advisory Solutions acct. Has anyone had any experience with this concept?? Any experiences would be appreciated. BTW this account would be ~33% of my total retirement portfolio.

Index fund selections

Newbee — Thu, 12 Nov 2009 14:16:00 GMT

I'm trying to rebalance from straight mutual funds to index funds but I'm new at this. Just want to know if I'm on the right track or way off base. I'm 7 years from retirement I'm looking at getting out of DODGX, DOGFX, KSCVX, and putting 50% into SWPPX/BRLIX, 15% into VISGX (already own), 10% into FSIIX, and 25% into VBISX or VFSTX.

College savings: 529 & ESA or just 529??

Nickfund — Sun, 08 Nov 2009 16:05:00 GMT

Since there is no college savings forum I thought I would post this here.

I'm about to open up a college savings plan for my 1 year old. I have $3k to open it and was planning on opening an age based vanguard 529 acct. After doing some reading online that suggest investing in a 529 AND an ESA for K-12 expenses I thought that may be a good idea (since my wife and I are thinking about sending our son to private school).

But now I'm thinking why invest in both when I can just invest all my money in a 529 and if we decide to send him to private school I can make withdrawals of the CONTRIBUTIONS out of the 529, which from what I understand can be withdrawn without any tax or penalty.

So it's either $100 a month to an ESA and 100 to a 529 or 200 to just a 529.

Any advice out there? Thanks.

Nick

Tax Question regarding conversion of IRA to Roth IRA

wahoo829 — Sun, 18 Oct 2009 23:23:45 GMT

I am considering conversion of a portion of my and my wife's IRA's to Roth IRA's in 2010. I have $540,000 in my IRA, my wife has $84,000. I believe I should spread the conversion over several years to keep the applicable marginal tax rate down. I understand that a conversion in 2010 can split the taxes over 2011 and 2012. My question is - can I also pay a portion of the taxes in 2010? In other words I would like to convert a substantial portion of the IRA's in January of 2010 and split the payment of the taxes over 2010, 2011 and 2012. I believe that I will need to spread additional conversions beyond 2012 to minimize taxes. I have to consider that the tax rates are scheduled to increase in 2011 and may go higher. I don't believe that we will need to withdraw any funds from the Roth IRA's and it will be left to our heirs. My wife and I are 61 years old.

Does Edward Jones charge to roll into another company's simple ira?

Nickfund — Sat, 14 Nov 2009 22:41:28 GMT

I want to transfer my wife's simple-IRA from Edward Jones to Vanguard. Edward jones charges too much and its a load fund. Does Edward Jones charge to get out? If so, how much? I cant seem to find it on their site.

Thanks,

Nick

Short Morningstar tutorial on diversification?

levander — Sun, 18 Oct 2009 03:21:17 GMT

I came to Morningstar hoping to find a brief guide on which types of stocks/funds to invest in for retirement based on age, e.g., how much growth vs. how much small cap, etc.. I've got a basic idea, just assumed I'd find something that layed it out on Morningstar since it has always been so synonymous with mutual fund investing to me.

One thing I'm not sure of is how much of each type of asset to buy. Say I put 50% in growth, and I'm doing mutual funds, so how many different growth stock mutual funds should I buy?

Appreciate a link if anyone's got one to a good article, either on Morningstar or other sites.

New federal retirement plan January 1, 2010 called a DB(k)

Fundscan — Tue, 10 Nov 2009 19:31:58 GMT

An article by David Pitt, Associated Press, discussed a new retirement plan for companies with fewer than 500 workers. The new plan is called a DB(k) which companies can start after January 1, 2010. Mr. Pitt said the plan was created in the tax code in 2006.

Mr. Pitt writes that a DB(k) requires companies to establish a pension fund sufficient to pay a worker in retirement up to 20% of that individual's average annual pay received during the last few years of work. Workers become vested after only three years. Alongside of the pension benefit, the participating company takes automatically 4% of a worker's pay and puts it in a 401(k) plan. The company must match 50% of that amount.

Mr Pitt said to find out more, do an internet search for DB(k) plan or eligible combined plans and that the IRS details the plan at http://wwwirs.gov.

I think the new DB(k) plan with it's automatic features will help a lot of workers who don't voluntarily participate in a retirement plan. A pension + a 401(k) in the same DB(k) sounds like a good idea.

Help with retirement investment portofolio

Steven88 — Sun, 25 Oct 2009 00:41:27 GMT

I am 45 years old with $500,000 tax-defered savings in 401k & deferred compensation plans. The portofolio is:Stocks (US/Ex-US): 67%. Bond/short term: 37%. Due to concerns for the deferred compensation plan (a non-qualified plan), I will not contribute to it any more. I will continue to contribute to the maximum to 401k. In addition, I plan to set up a regular investment account, contribute $6000 per month until I retire at age of 60. The goal is to use it as part of the retirement portofolio in addition to the tax-deferred plans. My mortgage is paid off and sufficient fund has been set aside for my 13-year old son's college. Any recommendations to this investment account (type of funds, inflation hedge, tax considerations)? Like to have a moderate balanced allocation. Thank you.

Need advoce

Buck23 — Mon, 09 Nov 2009 00:46:21 GMT

Couple of questions.

1. Retiring from active duty military in December and have accepted new job. I believe my total MAGI income next year will exceed $166K (married filing jointly - but it will be close) If so, it eliminates my ability to make contributions to Roth IRA. But what if at the end of the year we realize we dont exceed the $166K? I could certainly make catch up contributions...and I will max out new company's 401K ($16.5K) - but do I leave $$$ in Roth IRA just in case? If I leave there and can't reduce my MAGI, have I missed out on another oportunity? Dont think I want to convert back to traditional IRA but not sure. Options?

2. Wife not covered by 401k plan - so am I correct that she can still contribute $5K to Traditional IRA and deduct contributions - or is that eliminated since we will exceed the $166K MAGI?

3. Finally, have $$$ is TSP through the military. Thinking about leaving the money there vice rolling over since the fees are low. Correct thought? If I do rollover/transfer, what are the advantages?

Your comments and any other thoughts are appreciated!

Conversion Implementation Strategies?

Dooper — Fri, 06 Nov 2009 04:54:12 GMT

Has anyone seen any good articles/books/newsletters regarding the Roth conversion. With the re-characterization option, it seems like there are a lot of possibilities. So many discussions revolve around whether to do it and the tax liability, but once the decision is made, what are some good ways to implement the conversion. Does Ed Slott provide strategies in his books or newsletters?

Any advice for my 401(k)?

jnojr — Mon, 05 Oct 2009 18:47:16 GMT

My employer uses Principal. The fund choices offered to me are:

Morley Financial Services, Inc
Stable Value Fund

PIMCO
Core Plus Bond I Separate Account

Principal Real Estate Inv
U.S. Property Sep Acct

Vanguard Group
Vanguard Long-Term U.S. Treasury Fund

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime Strategic Income Separate Account

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime 2010 Separate Account

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime 2020 Separate Account

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime 2030 Separate Account

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime 2040 Separate Account

Prin Mgmt Corp/Prin Global Inv
Principal LifeTime 2050 Separate Account

Russell Investment Group
Russell LifePoints® Balanced Strategy Separate Account

Russell Investment Group
Russell LifePoints® Conserv Strategy Separate Account

Russell Investment Group
Russell LifePoints® Eqty Growth Strat Separate Account

Russell Investment Group
Russell LifePoints® Growth Strategy Separate Account

Russell Investment Group
Russell LifePoints® Moderate Strategy Separate Account

Capital Research and Mgmt Co
American Funds Growth Fund of America R4 Fund

Capital Research and Mgmt Co
American Funds Washington Mutual Investors R4 Fund

Fidelity Management & Research
Fidelity Advisor Equity Growth Instl Fund

Lord Abbett & Co, LLC
Lord Abbett Fundamental Equity A Fund

Principal Global Investors
LargeCap S&P 500 Index Separate Account

Vanguard Group
Vanguard Growth & Income Fund

American Century Inv. Mgmt.
American Century Small Cap Value Inv Fund

Goldman Sachs/LA Capital Mgmt
MidCap Value I Separate Account

Neuberger Berman Mgmt. Inc.
Neuberger Berman Genesis Tr Fund

Principal Global Investors
SmallCap Blend Separate Account

Turner/Mellon/Jacobs Levy
MidCap Growth III Separate Account

Vanguard Group
Vanguard Explorer Fund

Principal Global Investors
Diversified International Separate Account

Principal Global Investors/DFA
International SmallCap Separate Account

The Dreyfus Corporation
Dreyfus International Stock Index Fund

Vanguard Group
Vanguard Health Care Fund

The allocation I've chosen is:


Vanguard Group Vanguard Long-Term U.S. Treasury Fund	20.00%	20.00%	20.00%	20.00%
Principal Global Investors LargeCap S&P 500 Index Separate Account	20.00%	20.00%	20.00%	20.00%
Vanguard Group Vanguard Growth & Income Fund	20.00%	20.00%	20.00%	20.00%

Vanguard Group Vanguard Explorer Fund	20.00%	20.00%	20.00%	20.00%

The Dreyfus Corporation Dreyfus International Stock Index Fund	20.00%	20.00%	20.00%	20.00% Mainly, I looked for the lowest expenses. I'm 38 and figure I have probably 30 years to go to retirement.

Choosing a Custodian

JIMP3401K — Thu, 29 Oct 2009 16:37:22 GMT

Hi I just retired and would like to rollover my 401K.I am considering a company name Affinity Wealth Management to handle my funds.They charge a 1% annual fee plus of course trading fees.They said they use noload funds ,C class,.I would like some advice as to what questions I should be asking before I commit $350,000 to them.Any Help would be greatly appreciated

Thank You

Jim P.

401K Rollover after 60 days

Seven7Star — Tue, 27 Oct 2009 19:26:22 GMT

I currently have my 401k with my ex-employer and when I was leaving them they suggested it could stay with them as long as I wanted it. Lately I read an article saying no matter what the 401k should be rolled over within 60 days of moving to a new company. If not done it would be taxed at 20% and penalty of 10%. Also I never had a 401k later with my new company since they did not have that benefit. Appreciate any information on this and advice. Thanks in advance.

Measuring Assets in a Roth for Asset Allocation

Dennis — Tue, 02 Jun 2009 19:18:44 GMT

Has anyone found any articles or discussions of how to measure assets in a Roth account when trying to rebalance investments?

It would seem to me that it may be desirable to give more weight to the investments in Roth accounts because they have already been taxed. I have long thought that if you have the available cash and you have a choice between a Roth account and a regular retirement account, it is as if you have invested in the Roth account not only the amount you invested but also the taxes that you paid (or, perhaps the value of the taxes that you will avoid when you receive your distributions). For example, if you put $10,000 into a Roth 401(k), you also have to pay the taxes on that amount, which could be with state and local taxes, 40% of the amount invested. In that case you have "invested" $14,000 in the account. Similarly, if you have a choice between withdrawing money from a Roth account and a traditional retirement account, you will have to draw much more from the traditional account to have the same amount of cash after paying taxes.

How does that play with asset allocation? If a person has 30% of his retirement assets in a Roth account and invests all that money into one asset class because he wants to have a 30% allocation to that asset class, on an after tax basis, he has more than 30% of his assets in that asset class. If his aggregate tax rate is 40%, then the 30% allocated to that asset class really represents 41.67% of his after tax assets. The investor would seem to be overweighted in the asset class.

To illustrate, consider a portfolio of $100,000, consisting of a Roth account of $30,000 and a traditional account of $70,000. If the investor is in the 40% aggregate tax bracket, that $30,000 is the equivalent of $50,000 in a traditional account ($30,000/ 60%). The equivalent assets total $120,000 and the Roth equivalent assets are $50,000 of that $120,000.

Has anyone written on this? Do you see anything wrong with my analysis? If this is reasonable, do we not need a Morningstar X-Ray tool that takes it into account?

Government TSP

Stef128 — Fri, 30 Oct 2009 05:47:22 GMT

Hello Everyone,

just like everyone I have suffered and now regained almost all of my TSP. I am 43 years old, so I have about 20 more years of investing ahead of me. I have about 20% in the C Fund (Common Stock Index), about 40% in the S Fund (Small Cap) and 40% in the I Fund (international Stock Index). I know I need to make some changes to the allocation to be more protected but want to take advantage of the current rise of the market.

What is your opinion?

Thanks,

Joe

MAGI Cap After 2010

Dooper — Sat, 17 Oct 2009 16:46:32 GMT

I'm confused on the conversion limits. I understand that there is no income limit in 2010 to convert TIRA to a RIRA, but does the $100K MAGI cap go back into effect after 2010?

INCOME INVESTING

el_scube — Sun, 25 Oct 2009 23:53:41 GMT

I found the following passage in an article on Master Limited Partnerships.

Moreover, limited partners might owe taxes on partnership income even if the units are held in a tax-free account, like an IRA.

When would you have to pay taxes prior to withdrawl of the funds in an IRA? Would you have to pay more than regular income tax at withdrawl?

Target Date & Index Funds

FundSeeker — Wed, 21 Oct 2009 18:43:20 GMT

401k discontinuing all actively managed Mutual Fund choices at the end of this year -- leaving only the below to choose from, beginning in Jan 2010.

TARGET DATE FUNDS

Avg. Annual Total Returns:

Investments	1 YR	3 YR	5 YR	10 YR	Life	As of Date

TARGET DATE RET
Inception Date 02/01/2008

5.87

N/A

-1.02

09/30/2009

TARGET DATE 2015
Inception Date 02/01/2008

3.35

N/A

-3.93

09/30/2009

TARGET DATE 2020
Inception Date 02/01/2008

2.33

N/A

-5.39

09/30/2009

TARGET DATE 2025
Inception Date 02/01/2008

1.44

N/A

-6.60

09/30/2009

TARGET DATE 2030
Inception Date 02/01/2008

0.42

N/A

-7.80

09/30/2009

TARGET DATE 2035
Inception Date 02/01/2008

-0.49

N/A

-8.93

09/30/2009

TARGET DATE 2040
Inception Date 02/01/2008

-1.94

N/A

-10.82

09/30/2009

TARGET DATE 2045
Inception Date 02/01/2008

-1.24

N/A

-9.89

09/30/2009

TARGET DATE 2050
Inception Date 02/01/2008

-1.52

N/A

-10.78

09/30/2009

Stock Investments

Large Cap

EQUITY INDEX GROWTH
Inception Date 04/07/2000

-2.32

-2.77

1.75

N/A

-4.05

09/30/2009

EQUITY INDEX VALUE
Inception Date 04/07/2000

-8.75

-6.48

1.35

N/A

0.75

09/30/2009

S&P 500 INDEX
Inception Date 12/02/2008

N/A

19.47

09/30/2009

Small Cap

RUSSELL 2000 INDEX
Inception Date 12/02/2008

N/A

22.09

09/30/2009

International

INTL EQUITY INDEX
Inception Date 07/06/1998

1.99

-3.39

6.21

2.23

2.91

09/30/2009

EMERGING MRKTS INDX
Inception Date N/A

N/A

9.08

09/30/2009

Bond/Managed Income

Income

INCOME
Inception Date 06/01/1987

1.56

3.74

4.00

4.77

7.07

09/30/2009

US FXINC SHORT DUR
Inception Date 12/02/2008

N/A

1.22

09/30/2009

US FIXED INCOME
Inception Date 12/02/2008

N/A

5.84

09/30/2009

US TIPS BOND INDX
Inception Date N/A

N/A

WORLD GOVT BOND INDX
Inception Date N/A

N/A

2.71

09/30/2009

Short-Term Investments

SHORT TERM INVT FUND
Inception Date 09/30/1991
7 day yield as of
09/30/2009 N/A%

0.97

3.28

3.44

3.20

4.10

09/30/2009

Age 45 yrs. old, was planning on retiring in 20-22 yrs. (not sure now, of course).

Any strategy/opinions on Target Funds appreciated... since there is no way to share what's in these choices - maybe some advice on what to look for in the holdings details -- or what others are doing who are in a similar situation. Considering putting majority of contributions in Emerging Index, small portion in company stock, and the rest in MM or income fund -- for a while anyway.

Thanks in advance...

FundSeeker

IRA: Roth Tax Question

Raymond — Wed, 21 Oct 2009 00:34:35 GMT

I have an IRA I would like to convert to a Roth. I also have a carry forward capital gains loss from 2008. Can the capital gains loss be used to offset the conversion tax burden? I appreciate any help you may provide.

why Mutual funds dont work

CHARLIE JERRIER — Tue, 20 Oct 2009 11:56:15 GMT

I have been investing for close to 20 years. Durring this past crisis I was excited to get in at lower prices. OCT 2007 I was 80% cash. All the way down I continued to increase my risk slowly. 70% cash Jan 2008. 60% cash March 2008. 50% cash Jan 2009. 20% cash March 10th 2009 (which happened to be just about the market bottom).But the Mutual funds I invested in were obvoiusly underweight stocks at these times trying to keep up with the panic selling so they took my hard earned money and gave it to cowards who were cashing out in record numbers. This happened at both Vanguard and Fidelity. It will always happen when you pool money together and panic starts. If I had this money in a seperate account and was investing in the positions these firms invested in(or claimed to be invested in) my returns would be much higher. The problem was they wouldnt take cash out of their coffers to payout reinbursements and stocks were losing value so fast they had to sell everybodys positions. I am no brain child just a simple guy who likes his money.

I have come to the conclusion that mutual funds are a poor investment period. I have called Vanguard and Fidelity....pointed out the facts on my porfolios and got no answer as to why my personal returns do not out pace the market substantially. Cause the answer is.... Mr Jerrier we did not follow your directions and buy low.

Target Retirement Funds

nimo955 — Sun, 18 Oct 2009 02:38:42 GMT

Hi Everyone,

I'm 23 and have just started working, so I'm just beginning to save for retirement. The default 401k for my company is VFIFX. I've also opened up a Roth IRA and maxed out the 5k in VTSMX. In the next tax year, I plan to readjust the balances to include more small cap/ international funds. My question is, should I be micro-managing my 401k in the same way that I am managing my Roth IRA? If so, then should I be replicating my chosen asset allocation for each account, which is kind of the way it is now, or would you think of them as one retirement account, meaning the 401k might be weighted heavily in small cap/international and the Roth moreso in large cap, with the end result amounting to the target allocation. Another way of phrasing it might be, should I make sure that there's no overlap between the two acounts?

Thanks.

Portfolio adjustment and strategy Help

Meshu9 — Thu, 08 Oct 2009 03:14:31 GMT

I am a 33 year old female with 120k in retirement.My husband is 38 years old and he has about 150k in retirement account. We have two kids(5 and 2) and we plan to work till 55. The sad part is that my IRA account which was 48k in 2005 became 40k now(this is with a financial advisor) and my husband's IRA went from 19k to 8k as our investments went belly up.

I want to be more disciplined and want to use dividend paying stocks with an overall return of about 8-10% per year on our IRA and 401k accounts. We have other taxable accounts that are about 30k worth. We invest around 22k between both of us in 401k each year.

Can you please advise me as to what stocks or mutual funds would be a good mix for me? i want to pull out from the financial advisor and start doing it myself. Also, I want to start with a clean slate and be very disciplined.

Please, please help me.Let me know if I need to write more details.

Thanks

Meshu

Making cash work harder

Mcaskill — Thu, 15 Oct 2009 16:12:33 GMT

I have a Tradeking IRA in which I keep about 50K in cash to facilitate $2K monthly withdrawals. The cash currently sits in their MM acct earning very little. What are some better ways to invest the cash, but still have it available for withdrawals?

Solo 401(k) limits

Jane — Mon, 12 Oct 2009 22:32:12 GMT

In researching solo (or individual) 401(k)s, an article stated that one had to work at least 1000 hours/year to be eligible to establish a solo 401(k). That has not been mentioned in any other writing, nor can I find it in any IRS pub (though admittedly the IRS info on the topic is pretty slim.) Does anyone know the regulation, if any, on minimum hours or can you point me to it?

Thanks.

Jane

help with new 401k funds please

doubler565 — Sat, 10 Oct 2009 19:33:44 GMT

Hello, I have a family member (sister) who is very risk adverse. She was wanting to pull out of her companies 401k where they had Vanguard funds. The company changed over to Great West and they have moved her Vanguard funds to comparable funds in this plan. Here is the plans funds.

PIMCO TOTAL RETURN PTRAX

PIMCO REAL RETURN ADM PARRX

MFS VALUE A MEIAX

MAXIM S&P 500 index (no ticker)

Amercian Funds Growth fund of america RGACX

Columbia Small Cap Value CSMIX

Fidelity Advisor Small Cap T FCSTX

Thornburg International Value TGVRX

Lazard Emerging Markets LZOEX

AIM Real Estate IARAX

Russell Allocation funds

Her Vanguard funds were mapped over to these funds

Vanguard index 500 to Maixm index 500 (42.28%)

Vanguard Interm-term Bond to PIMCO Total Return (21.9%)

Vanguard Windsor II to MFS Value A (26.34%)

Vanguard Money Market to Great West Guaranteed (9.29%)

Her asset allocation should be no more than 60-40 or maybe even less for her. I am going to try and have her come up with an asset allocation she can live with but we haven't figured that out yet.

Some of these funds charge really high fees and front end loads. I would not be to happy with these choices but that is what she has. The only funds I like is the Pimco and the Thornburg Intl. I believe the MFS Value has a front load of 5.75% and a operating expense of 1%. Most of the other funds expense ratios are 1.5% with 12b-1 fees. Help to create a portfolio of these funds that would be more conservative so she won't pull money out in the next crash. She could also just go into the 2020 Russell fund but I am not a fan of that. For her putting all of this into Pimco would be something she could probably sleep with but I know it's not the right way to go. We are not talking a huge sum of money and she would be tempted to just put it under her mattress if she didn't have a 401k. <30k

Help please