Advice Request -transfer 401k from a private company

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cashworth
Posts: 114
Joined: Mon Jul 03, 2017 11:18 am

Advice Request -transfer 401k from a private company

Post by cashworth »

I'm sure this has been asked, but I need advice.

My brother just accepted his first fed job with the USAF and has a decent chunk in a 401k from his previous job. What should he do with it?

Can it come into the TSP? Could it go to something like Vanguard without tax implications? Thanks in advance!

I've only ever been a Fed since college, so I've never thought about moving retirement $

strohz
Posts: 10
Joined: Fri Dec 30, 2016 6:08 pm

Re: Advice Request -transfer 401k from a private company

Post by strohz »

As I understand it, he could transfer his 401k into any financial company like Vanguard, or into the TSP if it is in traditional pre-tax and not Roth funds: https://www.tsp.gov/account-basics/move ... al%20money.

If it was me, I'd roll it into a brokerage company which will have far more fund flexibility and less restrictions (like the 2 IFT limit) than the TSP comes with. Note, there is a time limit to do it penalty free so he might want to look into this sooner than later. Here is Vanguard's advice for rolling it over: https://investor.vanguard.com/401k-roll ... -roll-over


hay99
Posts: 2
Joined: Wed Sep 30, 2009 7:43 pm

Re: Advice Request -transfer 401k from a private company

Post by hay99 »

If it was me, I'd roll it into a brokerage company which will have far more fund flexibility and less restrictions (like the 2 IFT limit) than the TSP comes with. Note, there is a time limit to do it penalty free so he might want to look into this sooner than later. Here is Vanguard's advice for rolling it over: https://investor.vanguard.com/401k-roll ... -roll-over[/quote]

I agree with strohz

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Advice Request -transfer 401k from a private company

Post by crondanet5 »

Go with a brokerage company. One ETF to consider is HIPS. 11% annualized dividend.

The important thing is to make the account grow with prudent research and nimble moves. It is not a passbook savings account, it is a brokerage account. Work it.

Scarfinger
Posts: 598
Joined: Mon Jan 30, 2012 12:00 am

Re: Advice Request -transfer 401k from a private company

Post by Scarfinger »

I rolled over 2 previous Pre-Tax 401K plans into the TSP using TSP-60 form. I rolled them over 5 years after I started working for the VA. There was no penalty that I am aware of. I had to have one balance notarized before they would transfer.
You cannot roll over Roth money into the TSP and you must complete your rollover within 60 days from the date you receive your funds.
If I remember correctly, this 60 day time frame relates to the fact that his 401K may send him a check. Once he receives the check he has 60 days to mail it to the TSP.

I am almost positive the 60 days has nothing to do with the actual date/time he left his previous employer. I would call the TSP to clarify.
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IRQVET
Posts: 80
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Re: Advice Request -transfer 401k from a private company

Post by IRQVET »

He can transfer it into the TSP, just call them as its a pretty straight forward process. HOWEVER, when I did this, it prompted two seperate IRS audits that I had to deal with. Here is what happens.

His private IRA cannot simply (wire) transfer into the TSP.
They will cut him a check for the amount in his private IRA.
He has if memory serves me correctly you have 60 or 90 days (I can't remember which one) to forward the check to TSP and have them deposited into the TSP account.

Tell him to keep good records, because I got audited twice because I rolled over two different IRA's into the TSP. And each time it was because the IRA funds were given to me in check form, so the IRS (thought) I ran with the cash, so tried to count it as additional income. I was able to show all the funds went into the TSP during that 60,90 day window so it went away, but anytime IRA funds and cut to you via check, it will trip an IRS audit.

I wish the TSP allowed private IRA companies to wire transfer, but unfortunately they do not. So it will catch the attention of the IRS.
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snaffu
Posts: 372
Joined: Wed Jan 23, 2008 2:09 pm

Re: Advice Request -transfer 401k from a private company

Post by snaffu »

I just did this a few months ago. I transferred my 401K $$ into the TSP. You need to fill out a TSP form 60, and give it to whoever has your current 401K. Then wait.. There is an address for them to send the $$ directly to the TSP. Per the holder of my 401K, it should take about 10 working days for the funds to show up in your TSP. Follow the instructions in the link that Bubba above posted.

Snaffu
Just because I give you advice, It doesn't mean I know more than you, It just means I've done more stupid stuff.

polom319
Posts: 56
Joined: Fri Sep 08, 2017 12:15 pm

Re: Advice Request -transfer 401k from a private company

Post by polom319 »

I agree with many, move your 401K into a brokerage account instead of TSP. Many more options to make the most of your money.

Mrexter
Posts: 15
Joined: Wed May 25, 2016 10:06 am

Re: Advice Request -transfer 401k from a private company

Post by Mrexter »

polom319 wrote:I agree with many, move your 401K into a brokerage account instead of TSP. Many more options to make the most of your money.
Agreed.

Check out ARKK and ARKG. These are ETFs that are actively managed. There are a few other ARK funds if you want to do your research. Yes, the management fees are a little higher (ARKK Expense Ratio 0.75% vs TSP 0.042%), but the returns on these are very good. I only wish I knew about these two years ago.


https://ark-funds.com/

From the ARK website: ARK invests across sectors, geographies, and market caps, seeking to identify companies missed by traditional sector-based strategies.
“Disruptive innovation is often not priced correctly by traditional investment strategies because people may not understand how big the ultimate opportunities are going to be. They aren’t sizing the opportunity and they aren’t analyzing the disruption.”

Good Luck

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Advice Request -transfer 401k from a private company

Post by crondanet5 »

You can also open a rollover brokerage account and trade stocks. As I have said in the past, TSP is a poor limited IFT program whose only incentive is the deferred Agency match pay. My wife has a 401k with Wells Fargo and I can IFT it every day. We also have brokerage IRA/ROTH accounts we buy and sell stocks, oftentimes the same day, perhaps within minutes of placing the orders. It is not day trading if you make a profit and I wait until that money becomes settled cash before making another transaction. Learn to make money with your brokerage accounts while following the Fantasy Leader allocations to make money in TSP. The goal for all of us is to be self made millionaires.

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