401k Question

[7998]

My wife has a sizable 401k through her work. Is there a way to convert it to something safe for a period of time than perhaps convert it back? Are there fees involved in this,etc?
I'd like to pull it now then hold it until say early next year.
It took 20 years to build and I'd hate to lose it or lose 50% of it's value. Especially if things get squirrelly here after the election.

 

[AustinSN]

I don't have a 401k but can't they go all cash on the investments?

I know I can on my roth.

 

[Willie2]

*I'm not a financial professional so don't listen to what I say* Some of my thoughts:

*Taking it out and converting to something else will cost you the 10% early withdrawl penalty unless she is over 65
*Her 401k program should have many investment avenues to choose from within it. choosing a safer choice might help
*I'm willing to bet she, like me, took a big loss when all this started but is now back whole. invest for the long term
*If she is near retirement age her blend of investments should be on the more conservative side anyways

 

[Fat Boss]

To answer your question, Yes. She can move funds WITHIN her 401k to a "stable value" fund. I did that last Aug, shoved it in starting mid-March, then moved it all back to the stable value fund in June. No tax liability if she leaves it in the 401k account.

 

[PowerWheels]

You probably have a stable value option. You could transfer some into that.

My suggestion would always be diversify yourself to your level of risk tolerance. You might think you are being safe being all cash just to find inflation is eating away at that position each year. With governments around the world printing money this is a real possibility.

Also keep in mind even if you are retiring now are you going to use all that money now. Id think not. You probably are wanting it to last decades. That means you need future growth, not exposure to just eroding inflation.

Where I'm going with all this is you need diversification. Going all cash is not what I would do.

Its worth your time to learn more about the options available in that 401k.

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[7998]

*I'm not a financial professional so don't listen to what I say* Some of my thoughts:

*Taking it out and converting to something else will cost you the 10% early withdrawl penalty unless she is over 65
*Her 401k program should have many investment avenues to choose from within it. choosing a safer choice might help
*I'm willing to bet she, like me, took a big loss when all this started but is now back whole. invest for the long term
*If she is near retirement age her blend of investments should be on the more conservative side anyways

Yeah we took a hit but are back close to where we were.

To answer your question, Yes. She can move funds WITHIN her 401k to a "stable value" fund. I did that last Aug, shoved it in starting mid-March, then moved it all back to the stable value fund in June. No tax liability if she leaves it in the 401k account.

You probably have a stable value option. You could transfer some into that.

My suggestion would always be diversify yourself to your level of risk tolerance. You might think you are being safe being all cash just to find inflation is eating away at that position each year. With governments around the world printing money this is a real possibility.

Also keep in mind even if you are retiring now are you going to use all that money now. Id think not. You probably are wanting it to last decades. That means you need future growth, not exposure to just eroding inflation.

Where I'm going with all this is you need diversification. Going all cash is not what I would do.

Its worth your time to learn more about the options available in that 401k.

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Is a stable value option market based? I'm trying to get away from anything in the market. We redid her 401k a few years ago as she was approaching 50. We're within 15-20 years of retirement and with all the unrest going on my gut is telling me to hold. If things go south I'm not confident the market would ever recover.

 

[Fat Boss]

In my case, I have my money in Fidelity's SPAXX (ticker symbol) that has a value of $1. Its high and low for the year is $1. It is fully insulated from market swings. PowerWheels is right that you don't want to keep your money out of the market for years at a time, due to opportunity losses, but in the near term, with a spreading global pandemic, and a real chance of liberals taking over the Federal government- it's a safe bet.

Fidelity Government Money Market Fund

SPAXX - Fidelity ® Government Money Market Fund | Fidelity Investments

 

[PowerWheels]

Stable vale is usually a fix income alternative investment that has an insurance backed rate of return. So far they have been very safe.



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[mysticsvt]

I think things will be better once the election is over to be honest.

 

[MG0h3]

Op you should be able to move the funds into a bond or treasury backed fund.


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[q6543]

.

 

[03cobra#694]

I lost a bunch, but it grew back higher as of yesterday. I just let it ride.

 

[MFE]

I assume the 401(k) is a stock fund? If so, you can re-direct the investments within that fund. I have two 401(k)'s, the biggest one being one from an old employer that I chose not to roll over when I started a new job (and a new 401(k)). Both of them are with large brokerages, e.g. Schwab, American Funds, Merril, Vanguard, etc. I would be shocked if your wife's 401(k) wasn't with a large brokerage/administrator like this that allows you to pick and choose from maybe 10-20 investment options.

I was doing pretty well with my largest 401(k) using a moderately growth-oriented mix of funds, but it lost 27% of its value between February 20 and March 24th. I hung in there and got 2/3 of it back by mid-May, but IMO there is no way in hell this economy is sustainable. Because IMO there's no WAY the stock market is being rational right now. We haven't yet gotten a glimpse of the full economic effect of the pandemic and the lockdowns. It's gonna hurt. The stock market is fat and happy on stimulus money in people's pockets and vacciine talk, but the piper's a'comin, and he's gonna get paid.

So, late May I went full asset-protection conservative with my fund selections. I have missed out on some of the stock market recovery, but I also haven't been slaughtered on the downsides. I'm 53 yo and I don't have decades left to rebuild from being blasted out of the water. OTOH I was counting on doubling my money in about 7-8 years and sitting on a decent retirement, but that can't happen with the returns I'm getting now. That little red triangle in mid-may is where I made the change, and you can see how much less volitile it is, but also a flatter growth curve.

Anyway, log into the account with her and start looking at the different fund types available.

 

[ford fanatic]

You can move it to a fixed income fund. My advice is to ride the roller coaster, you'll regret this move in the future.

Oh, and consult a good financial advisor, not a group of people on a car forum...

 

[Ohio Snake]

I am a investment advisor. Knee jerk reactions are not good, however concerns for loss should always be addressed.

Most 401k’s should offer a stable value fund, but keeping pace with inflation may be hard to do.

Short duration bonds may be favorable in a changing and lowering interest rate environment, but longer duration may be more volatile.

If your plan offers a target date fund, such as conservative (2020, 2025, etc.) consider this as an allocation. Target date funds may be considered a “fund of funds” for allocation. The higher the target date, the higher the risk, in general.

To properly assess a possible change, one needs to look at the funds available to you in the plan, your goal and age for starters.


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[ON D BIT]

I think things will be better once the election is over to be honest.

Im thinking home value at least over valued places like ca drop like a rock if Biden wins.

 

[Adower]

My wife has a sizable 401k through her work. Is there a way to convert it to something safe for a period of time than perhaps convert it back? Are there fees involved in this,etc?
I'd like to pull it now then hold it until say early next year.
It took 20 years to build and I'd hate to lose it or lose 50% of it's value. Especially if things get squirrelly here after the election.

I would go something like 70/30 or 80/20 into bonds and s&p500. Just ensure that you don’t pick something with a high expense ratio.

Watch out for the target date funds. My 401k provider hiked up the costs to manage those funds starting this year.

 

[ur bittn]

I lost a bunch, but it grew back higher as of yesterday. I just let it ride.

+1

 

[Fat Boss]

Im thinking home value at least over valued places like ca drop like a rock if Biden wins.

My house value, on the outskirts of Silicon Valley, has been essentially flat for about 2 years. That's a lot of pent up steam for an increase if you ask me. Silicon Valley is rockin'. TONS of people are working from home, and still cashing their regular checks and getting fat bonuses. CA is really a dichotomy though. There are places like Silicon Valley, and places like the Central Valley. They really couldn't be more different.

One thing that might happen if Joe gets elected is they might repeal the tax law that limited mortgage deductions. That alone will give the high end housing market a kick in the ass.

 

[q6543]

It does seem like maybe you need to rebalance if you are worried about your risk assets.
10 year is at .553% yield... so plenty of people are thinking the same.