401k plan is being terminated, what are my options

[Anonymous]

My employer sponsored 401k is being terminated by my employer. I am 55 and my kids are almost out college. I had a plan to sock away the max from next year on and now I don’t know what to do. My Dh does have one as well and i was planning to max his too. What are my options? I am behind in savings for retirement due to many years as a 1099 and with small employers who did not match/contribute.

[Anonymous]

Are they replacing it with anything? A Simple IRA?

If not you can put money in an IRA (Roth or backdoor if possible) for yourself and the rest in a brokerage. It won't be as tax advantageous but it's certainly better than not saving. Definitely max out spouse's with catchup.

Consider looking for a new job - if you find one with a 401k and match it can make a big difference in your retirement savings over the next 10 years.

[Anonymous]

Change jobs.

[Anonymous]

I would love to, but I’ve been there for 15 years and technically love this job, though it is becoming unsustainable. I am looking for another job.

[Anonymous]

Roll it directly into one or more IRAs. Otherwise you risk tax penalties.
Is your employer going bust? You might like it there but look for a job with a place stable and organized enough to have a 401k or 503b. You are way behind the curve in retirement savings especially if you did not have a SEP yourself for the 1099 years.

[Anonymous]

OP here, I am way behind and I do acknowledge that. I have been cash flowing about $4000 per month for my kids college education that last few years. I was planning to slap most of that right into the 401k and pay off debt as well. So now, I am just not sure what to do with that money. I do not have a brokerage account. I have another 401k for a PT job I have but I don't make enough to increase my contribution in any meaningful way.

The employer is not shutting down, I don't believe.

So... what I'm thinking is that I will roll my one 401k into the other. They are both with Vanguard so that will be easy and I've been happy with them. Then I open an IRA, my goal was to sock away money pre-tax as I have 1099 work so I'd like to lower my tax burden. I know that I will have a much lower contribution limit to an IRA and I believe that it will likely not be able to be tax exempt, if my google research is correct. Would you all suggest a brokerage account for the rest? Should I do a Roth IRA if I'm not going to get a tax reduction?

confused.

[Anonymous]

Can you roll one 401K into another that is active from 2 different employers?

[Anonymous]

I believe so since the one plan is terminating.

[Anonymous]

There are two benefits from a 401(k): The employer match, and the ability to deduct your own contributions.

If they are shutting down the 401(k), you will lose any match they were providing. But you can still contribute to an IRA, and since you don't have a 401(k) anymore, some of those contributions are tax deductible.

https://www.consumerreports.org/money/retirement-planning/how-to-save-for-retirement-when-you-dont-have-a-401-k-a3701157591/

[Anonymous]

If your spouse makes more than $228,000 you can't contribute to an IRA and get a deduction, even if your employer doesn't offer a 401k.

https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work

I'd do a Roth, and if your income is too high for a Roth, I'd max out your spouses retirement and then do a brokerage account since it offers so much flexibility. (Capital gains taxes are much lower than income taxes, and if you are forced into early retirement you can access the money without penalty. Also, no RMDs.)

[Anonymous]

Anonymous wrote:OP here, I am way behind and I do acknowledge that. I have been cash flowing about $4000 per month for my kids college education that last few years. I was planning to slap most of that right into the 401k and pay off debt as well. So now, I am just not sure what to do with that money. I do not have a brokerage account. I have another 401k for a PT job I have but I don't make enough to increase my contribution in any meaningful way.

The employer is not shutting down, I don't believe.

So... what I'm thinking is that I will roll my one 401k into the other. They are both with Vanguard so that will be easy and I've been happy with them. Then I open an IRA, my goal was to sock away money pre-tax as I have 1099 work so I'd like to lower my tax burden. I know that I will have a much lower contribution limit to an IRA and I believe that it will likely not be able to be tax exempt, if my google research is correct. Would you all suggest a brokerage account for the rest? Should I do a Roth IRA if I'm not going to get a tax reduction?

confused.

So you have the PT job, can you contribute the whole salary of that? Also are you contributing Roth or pretax?

You can contribute $7k to an IRA, not sure what happens to that limit when you turn 50 but I’ve heard of catch up contributions so maybe someone else knows.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, I am way behind and I do acknowledge that. I have been cash flowing about $4000 per month for my kids college education that last few years. I was planning to slap most of that right into the 401k and pay off debt as well. So now, I am just not sure what to do with that money. I do not have a brokerage account. I have another 401k for a PT job I have but I don't make enough to increase my contribution in any meaningful way.

The employer is not shutting down, I don't believe.

So... what I'm thinking is that I will roll my one 401k into the other. They are both with Vanguard so that will be easy and I've been happy with them. Then I open an IRA, my goal was to sock away money pre-tax as I have 1099 work so I'd like to lower my tax burden. I know that I will have a much lower contribution limit to an IRA and I believe that it will likely not be able to be tax exempt, if my google research is correct. Would you all suggest a brokerage account for the rest? Should I do a Roth IRA if I'm not going to get a tax reduction?

confused.

So you have the PT job, can you contribute the whole salary of that? Also are you contributing Roth or pretax?

You can contribute $7k to an IRA, not sure what happens to that limit when you turn 50 but I’ve heard of catch up contributions so maybe someone else knows.

I literally make a tiny amount per year in that job so yes I can defer most of that - and I already do- but it's not going to get me where I need to be in 10-15 years.

[Anonymous]

Anonymous wrote:If your spouse makes more than $228,000 you can't contribute to an IRA and get a deduction, even if your employer doesn't offer a 401k.

https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work

I'd do a Roth, and if your income is too high for a Roth, I'd max out your spouses retirement and then do a brokerage account since it offers so much flexibility. (Capital gains taxes are much lower than income taxes, and if you are forced into early retirement you can access the money without penalty. Also, no RMDs.)

we file jointly and will be over 228K, so I assume no tax advantages. Ugh this sucks.

[Anonymous]

and am I also correct in saying if our AGI is over $228K we can't make Roth IRA contributions at all?

[Anonymous]

Anonymous wrote:OP here, I am way behind and I do acknowledge that. I have been cash flowing about $4000 per month for my kids college education that last few years. I was planning to slap most of that right into the 401k and pay off debt as well. So now, I am just not sure what to do with that money. I do not have a brokerage account. I have another 401k for a PT job I have but I don't make enough to increase my contribution in any meaningful way.

The employer is not shutting down, I don't believe.

So... what I'm thinking is that I will roll my one 401k into the other. They are both with Vanguard so that will be easy and I've been happy with them. Then I open an IRA, my goal was to sock away money pre-tax as I have 1099 work so I'd like to lower my tax burden. I know that I will have a much lower contribution limit to an IRA and I believe that it will likely not be able to be tax exempt, if my google research is correct. Would you all suggest a brokerage account for the rest? Should I do a Roth IRA if I'm not going to get a tax reduction?

confused.

Cutting 401ks is a good sign that they are in financial trouble. The plans benefit the people running the company as much as if not more than workers. It's also just about impossible to recruit anyone with options if you don't have any retirement plan