Lost job, 401k

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Lost job, 401k

Quynh-Chi Nguyen
Web Producer · Hamden, CT · Member since 2015 · 51 posts · 6 votes
I lost my job this past Tue. Any advices on what to do with my 401k? Thanks - Chi
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Mark Nolan
Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
10y

@Quynh-Chi Nguyen

You can transfer it to a self-directed IRA and invest in physical real estate.

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  • Rick Wang
    Investor · New York, NY · Member since 2016 · 91 posts · 46 votes
    10y

    nothing you can do until you roll it over somewhere else. If you need the money withdrawals are extremely stiff penalties. Is this your first 401? I've got like 3 floating around from past jobs

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  • Jeff Bridges
    Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
    10y
    Leave it in place. Roll it over to new employer when you are next employed. Continue saving for retirement. Your not in a position to be investing in real estate without good savings and a stable job. Focus on finding a new job. Good luck
    0Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Quynh-Chi Nguyen

    You can transfer it to a self-directed IRA and invest in physical real estate.

    7Reply
  • Alan Grobmeier
    Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
    10y
    Roll to a self directed Ira or a Roth ira
    0Reply
  • Dan Rudolph
    Investor · Corvallis, OR · Member since 2015 · 92 posts · 57 votes
    10y

    Wow. Very surprised at the first advice that you got. The least you should do is a rollover to a traditional IRA so that you have more "retail" investment options (i.e. Stocks and Bonds) than your 401k can offer you. This would also allow you to hire a Investment Advisor to manage it for you if you don't have the expertise or inclination.

    If it is a sizeable amount, you should consider a rollover to a self-directed IRA. The following is a sampling of "non-retail" investments open to non-accredited investors.

    Investment Type Sub-Type
    Holdfolio RE Equity Fund of 10 SFR's
    Prosper / Lending Club Debt Unsecured Consumer Loans
    McKenzie (MRC Fund) RE Equity Private REIT Fund
    Corp Notes Debt Structured Notes

    Feel free to contact me if you want more details on any of this.

    1Reply
  • Matt Hixon
    Phoenix, AZ · Member since 2016 · 11 posts · 4 votes
    10y
    Be careful with some of the terms people use like traditional, Roth, and roll over. No one knows your particular situation and there are different types of 401(k)s, IRAs, and different types of rollovers all with their own rules and consequences. Find a custodian you like (i.e. Schwab, Fidelity, Vanguard, etc.) and ask them for help in getting it moved. They'll explain all your options and help you with the move for free. If they charge you to move it, pick another firm.
    0Reply
  • Derrick Wilson
    Investor · Bronx, NY · Member since 2014 · 66 posts · 25 votes
    10y
    Originally posted by @Mark Nolan:

    @Quynh-Chi Nguyen

    You can transfer it to a self-directed IRA and invest in physical real estate.

     First of all I'm sorry you lost your job, I don't really know what you mean by what to do with the 401k if you was not a Biggerpocket member but since you are a Biggerpocket member I would suggest what Mark said is the best option.That's what I would do.

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  • Karen O.
    NYC, NY · Member since 2016 · 617 posts · 456 votes
    10y

    Sorry for your loss if you are.  

    There are quite a few factors that make it difficult to guide you.  your age. your goals. your w-2 job plans. 

    It might make sense to discuss with a professional or two. If you have enough in the acct, leaving it for now might be best. A rollover to a new employer's plan, a traditional IRA, or conversion to traditional roth IRA might make sense. Rollover to an SDIRA if substantial and not needed could do the trick too.

    In short, there are several viable options for your circumstances. Best to speak to a pro who could help you choose what's best.  

    0Reply
  • Jason Gray
    Note Buyer · Fresno, CA · Member since 2014 · 34 posts · 11 votes
    10y

    I'd start by asking yourself this:

    1. What is my current 401k doing TODAY. Whats it invested in? Is it in stocks/bonds or is it sitting there rotting away earning nothing...

    2. What do you want it to do now? Its not like you lost your 401k when your job went away...it just sits there doing what its been doing.

    3. If its doing nothing, don't rush out and move it around from one IRA custodian to another.

    4. If you don't have the experience or conficence in investing your money personally, don't rush out to drop it in a Self Directed IRA without knowing WHY you might want to do that. Every SDIRA, SD401k, ROTH IRA etc has a WHY. 

    Find out why you'd want to do ______ and find some people who are already there and doing it.

    Use OPM "Other Peoples Mistakes" and learn from them first, then act and steer your funds to investments you'd like to do. 

    Best of luck.



    4Reply
  • Account Closed
    Lender · Hot Springs Village, AR · Member since 2014 · 274 posts · 92 votes
    10y

    Since you are on Bigger Pockets I assume you are interested in real estate. Suggest the following:

    1. Look for a job. Any job. If it is too low paying look for a better job while working.

    2. Learn all you can on Bigger Pockets.

    3. Join an investor meetup or REIA or both. Try to find an individual that can look at your specific situation and give advice.

    4 If you cannot find the advice you need go to a personal advisor and be prepared to pay a fair price for his/her time. Do not use a free personal advisor. They make their money on commissions so you can imagine the advice you will get.

    Best of luck. I have been there too. Had to work for minimum wage for a few months before I landed a job in my profession.

    2Reply
  • Account Closed
    Investor · Frederick, MD · Member since 2015 · 43 posts · 21 votes
    10y

    Do nothing. It's still vested and grows on it's own. Just a slower pace. Won't be anymore contributions from yourself or employer.

    Plenty of jobs that have 401k with 6% match. Get another one and with higher salary. Get your salary to market level for your experience. Roll over the 401k to the new job and max it out.

    1Reply
  • Kevin Moen
    Rental Property Investor · Seattle, WA · Member since 2014 · 215 posts · 77 votes
    10y

    Most of this advice is crap, I assume you are on bigger pockets to learn how to grow wealth for yourself, yes? If so, why would you allow someone else to make decisions about your financial future? Self direct your account, a loss of job is a perfect time to take advantage of your ability to do so. You just need to find a custodian who you will work well with, and you can make investments in real estate, notes, precious metal, etc. Just follow the rules and I would recommend rolling over to Roth while your income is low, and to protect your gains. 

    I invest in notes with mine and can make double digit returns with far more safety than the stock market offers. 

    Kevin

    2Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    10y
    Kevin Moen , what do you mean by protecting your gains with roth? Roth has nothing to do with protecting your gains; it has to do with taxation. If anything, if you're talking about CONVERTING pre-tax funds into Roth (ultimately tax-free) funds, doing this with significant gains is the WORST time to do it (although if job loss = lower income, this COULD potentially offset some of the impact.
    0Reply
  • Kevin Moen
    Rental Property Investor · Seattle, WA · Member since 2014 · 215 posts · 77 votes
    10y

    @Mark S.  Protecting your gains from taxation. What I mean is when I make 100% returns in my roth by investing in notes, I am protecting all of that capital gain from taxation. I would much rather pay ordinary income on my money, put it in a roth, then enjoy all of my capital gains tax free. Especially when making 30%, 50%, 100% cash on cash annualized returns, which is what we get with our note strategy most of the time. Make sense? 

    I also wasn't implying asset protection, however its a lot harder to sue someones SD IRA than it is their LLC or savings account. So it protects your gains from taxation, and in many cases litigation.

    0Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    10y

    @Kevin Moen, now that you've elaborated, yes, I see what you're saying.  Those are some pretty sweet returns.  Why would anyone invest in anything else if they can make 100% cash-on-cash returns?What am I missing here?

    0Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Quynh-Chi Nguyen Check with your tax adviser but if you are out of a job for a while it might be a great time to move some of your money from regular IRA to a Roth IRA. I converted part of mine while off work last year and was still able to avoid owing any taxes. Now that money is in an account where I will be able to make tax free withdraws.

    Also - if you want to use your IRA / Roth IRA for investing in RE you will want to look at moving some of your money to a Self Directed IRA. You can buy RE, do hard money loans, or buy notes in a self directed IRA.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Kevin Moen  one of these days the folks buying into reporforming notes thinking they are great investments will wake up  LOL... your getting out at the right time right before they default again.

    To the OP  there are about 5 or 6 BP members who are experts at solo 401k's and the like you should be talking with them.. the rest of us know enough to be dangerous.

    Brian Eastman is an expert at this you should look him up on BP... Dimitey is another and Mark Nolan responded on the thread.. when you get fired its perfect time to grab those funds and get control of them.

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    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Kevin Moen one can make 100% apr CoC on performing loans as well without all the risk and brain drain of non performing notes.. Not as the rule but it does happen... just like most turn arounds are not that good but it does happen.

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    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    @Jay Hinrichs

    100% CoC? Purchasing notes second hand I take it?

    0Reply
  • Jeff Frizzell
    Real Estate Investor · Westmont, IL · Member since 2016 · 1 post · 0 votes
    10y

    I would talk to someone who can tell you the advantages and disadvantages  ok each investment vehicle, solo 401k, Ira, etc some you can take a portion of the money out as a loan and pay your self interest some you can't. See which quilified plan works best for your situation, but talk to someone that has the experience and knowledge.

    Great success 

    Jeff

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @John Thedford  you know how its done... money went out you got paid off in 30 days.

    for me I have my hybrid program and I hit one last week that spun the calculator at 110% APR.

    but we are not allowed to talk about this on the open threads  so that's all I can say  LOL

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    @Jay Hinrichs

    Gotcha! As always Jay, thanks for the help. I have no intention of keeping up with the Jones---my goal is to keep up with you my friend (I have a LONG way to go).

    0Reply
  • Gary Kane
    Flipper/Rehabber · Jacksonville, FL · Member since 2016 · 47 posts · 8 votes
    10y

    @Quynh-Chi Nguyen First and foremost, try to re-establish employment.

    Second, as the underlying theme from all the replies, just know that you now have options with your "Old" 401K.
    - Leave it.
    - Roll it to a "New" 401K (with your new employer that has a 401K plan).
    - Roll it to a Self-Directed IRA (SDIRA) with a new custodian, which gives you more control (Stock/Bonds or Real Estate Investments). There is usually no charge.

    Note: Vanguard is a great Brokerage firm for rolling into, however they do not provide a Real Estate SDIRA. They would be better for stocks, mutual funds, etc.

    Good Luck in your search, keep your head up!

    0Reply
  • Ann A.
    Marietta, GA · Member since 2013 · 11 posts · 4 votes
    10y

    Sorry to hear about your job. Been there a few times. Here's what I would do. 

    1. Find out if current 401K deducts a fee on a monthly or annual basis, if you are no longer an employee or no longer contributing. 

    2. If the answer is yes, then rollover all funds to Vanguard (or Fidelity). They have the lowest costs funds. 

    3. If the answer is No, stay put. Find another job and then rollover the funds to new Job's 401K....that too only if you want to. if you're happy with old 401K and there's no additional fee, let the money stay there. Its ok. They can't take it away from you if you're fully vested. 

    0Reply
  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    10y

    @Quynh-Chi Nguyen

    Have you made any progress on figuring out what you'd like to do with your 401k?

    0Reply
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