401k's, IRA & TSP - Advice

[claytonr1]

My wife and I recently had an initial "free" consult with a well-known financial planning firm in northern Virginia and wanted to run by his suggestions for any feedback. We want to start taking monthly withdrawals from our retirement accounts to meet expenses and asked for some independent fiduciary input. Here's our current account breakdown:

Wife age 60 - two old employer 401K's totaling $164K. She also has TSP L2020 = $90K
Me age 57 - TSP L2020 = $455K

1. He suggested she transfer both her 401K's to an IRA to allow for more flexible withdrawal options and allow for more of a diverse investment mix than the company 401K's reflect.
2. To meet our currently income needs, he recommends she first start taking withdrawals from the new IRA.
3. He suggests we keep our TSP accounts. Just move to L2030 "a better stock percentage for our ages".

Do these recommendations make sense? He never mentioned anything about transferring our TSP's to IRA's, which bodes well with me. He's well versed with fed employee issues, so was nice to see he didn't recommend we transfer out of TSP. His bottom line: use the IRA first, then the TSP accounts. Folks on here have some good insight and just wanted your thoughts. P.S. Any suggestions for a high quality IRA? Cheers!

[evilanne]

What did the advisor recommend for the rollover IRA investments for your wife? Will advisor be managing the rollover IRA? What are the fees associated with the rollover IRA? No one can guarantee a rate of return, but will whatever they recommend be less likely or more likely to proved a return better than the L2030 Fund?

I'm not crazy about the L Funds but agree with the advice to select one further out since you still want your accounts to continue to grow even with withdrawals. Your wife may have the option to move one or both 401Ks into TSP. Have you looked at any of the seasonal investing strategies?

[claytonr1]

No recommendations were made for the IRA rollover. We just had a basic discussion. I've not hired the adviser and will research and find the IRA myself - if I go that route. We may transfer her old 401K's into her TSP. I'll review the seasonal strategy. Appreciate your thoughts, Evilanne! Thank you!

[crondanet5]

I like his recommendations. He is talking about moving former employer 401ks to a rollover IRA. That means they no longer belong to the employer: they belong to her. You can continue to invest them to make money while withdrawing cash from them. Remember to add federal and state tax percentages to the amount you wish to withdraw so there are no ugly surprises come April 15. Withdrawals from 401k/IRAs are taxable.

Are your expenses exceeding your income? Will it continue this way? Will you run out of retirement money?

[dougabn]

Did the adviser discuss rolling the old 401k into the TSP? Understand not being able to access the cash quickly but, the low fees and ability to self direct 2 times per month sure has it's advantages (I do not use the L funds). I had a "managed IRA" that was not performing very well and the fees were eating up the meager gains. I rolled it into the TSP and started utilizing my 2 IFTs and it has worked out well. When you withdraw monthly payments based on a self chosen set dollar amount (not an annuity or IRS calculated lifetime expectancy) it is my understanding you can adjust that amount up or down once per year in December based on your needs.

[Chulke]

Might also consider rolling all your wife's retirement accounts into 1 401K for flexibility in investing based on your needs. You can still follow a seasonal strategy with 401K accounts and invest similar to the TSP...read this article:

http://news.morningstar.com/articlenet/ ... ?id=696047

Good luck!