I've been reading up a bit lately on SD IRA's and solo 401k and would just like some other opinions on what they would do in my situation.
The company I work at just sold and we have to transfer are Putnam company 401k to a vanguard 401k. The new company matches 3% if we put in 5%. I have 20k to work with and I'm just looking for some options or suggestions to get a better return for my retirement account. I have 40k in my savings but I'm going to be using that for a down payment on a rental or 2 in a near future.
Just trying to thing what I could do with the 20k in the 401k.
Would it be better to put it in a IRA, maybe a REIT, or continue to keep it in my 401k. I remember listing to podcast 17, which had some great info on retirement. I'm going to listed to that one again tonight.
Of course I will be researching a ton more before I make my decision, I would just like to hear what others investors would do in this scenario.
Before signing up, find out if you're allowed to move money out after getting started. Also learn about the vesting of your employer matches. The technical phrase for moving money out of the plan before retirement or employment termination is called an "in-service distribution". I can't give you any investment advice but it's certainly a bummer when you want to move money and can't. I'm happy to answer follow-ups. Good luck figuring it out.
If this happens like it has the three times I've been part of an acquisition you will have no choice to take the money out. The existing accounts all get moved over to the new custodian. You only choice would be which of their funds to put your money into.
Jon Holdman, Flying Phoenix LLC
I'm certain you will be offered an option to do the rollover into an IRA or roll the funds into new company plan. I would suggest against the last option because if you do so your investment choices will be limited to what new plan offers.
You will have the ability to set up SD IRA and use for investing in alternative assets. I personally like and invest in trust deeds as I really enjoy the passive investing component of it. There are also other options but you will be somewhat limited because of the smaller balance.
Self-directed Solo 401k might be a better option as it will provide you with other benefits that SD IRA doesn't, but you must have self-employment income or own a business without full time staff in order to set one up.
Regarding the new company retirement plan you should contribute at least to the amount your employer matches, this is free money and it would be foolish not to take advantage of that.
@Dmitriy Fomichenko I was reading the other day that if I am a part-time realtor(which I am) then I could have a solo 401k. I know my limited amount of funds would be a little bit of a problem but I wanna try and see my other options are instead of just doing the same thing everyone else at the company is going to do and just transfer into the new 401k plan. I wanna at least see if it's my best option instead of blindly signing it and letting the company choose my investments. Thanks for your input.
being part time realtor will be sufficient to qualify you for a Solo 401k! You can be employed full time and have a side business, you can even have 401k at your day job and in addition have Solo 401k for your side business.
You are right, moving your old 401k to a new company would not be wise move. Solo 401k on the other hand will give you the most flexibility and allow you to have total control and virtually limitless investment options in your retirement account.
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