Anonymous wrote:

Anonymous wrote:The fee of your 401k may go up if you leave it at an old employer. Move it away from the employer since he will be done with them.
There is zero reason for an advisor unless they help you save on taxes. You didn't mention it.
The problem is not even where the money is, but it's highly taxable.
Advisor is not allowed to invest your money the way you could invest it for you. They don't know your personal situation like you do. The advisor investing it for you, teaches you nothing.

OP here. Our advisor is also our CPA so he is very familiar with our situation. The question would be what the cost would be to keep it in the employer fund vs. the annual cost of ~$15,000 to pay the advisor. We are already spending more than that with him with our other investments. I think the .05% is a pretty good rate already considering he is managing just under $4M for us right now, but that will go up to ~$7M if we move the funds. Maybe I should ask for a reduction in the rate?

Yes, you should negotiate a rate reduction. With $7M+ with them, you should be paying less than 0.05%.

Anonymous wrote:You may not be able to. Check for tax consequences. I was not able to move mine without tax consequences until I retired. I’m not a financial person so I can’t explain why and I don’t recall what I was told.

That being said, we make a much tougher percent on our money with our money manager. And they provide a lot of advice about the market and retirement spending, required distribution and investing. We aren’t there yet - both still working and not 70. But we know what to expect.

So I guess for me, I really like having an advisor which didn’t come through my employer managed money.

One other thing. With $3m your fees may go up. But if your returns are better and the services you get are better it may be worth it.

You can always move a 401K to an IRA without tax consequences when you leave a job (and retirement is just that). You just must make sure it's a direct transfer to the IRA (and not to you yourself)


It almost always makes sense to NOT leave it at the former employer. Even if you transfer it to Vanguard/TRowePrice/some low fee company, you will have many more choices for investments.

Anonymous wrote:I’ll be in similar situation but I don’t have CFP. Some things to think about:

An AUM of .5% is on the low end. For you, that means each year your CFP gets $15K. There are other ways they may make money off your accounts. You should also look at the GE fee of each fund they put you in. With typical low fee funds, this might be .03. Funds with fees that are .4 or higher aren’t ideal.

Your DH should contact his HR and find out if he can keep his 401k with his employer and exactly what his fees would be. For me, my fees would be around $700/year for 1M. Thats nothing IMO.

You should also check his 401k to see what funds he is currently in and if they are low fee.

With that much in 401k, you will be “tax bombed”. You will need to read up on conversions.

There is a ton of information to be learned at this point of life. Bogleheads is a great resource.

Rolling over a 401k to an IRA does cause a tax bomb. I just did this this past year.

If you are in MD, don't roll it over to an IRA. In MD 401ks withdrawals are only partially taxed. I did not know this until after I rolledover my 401k. My FA did not tell me this.

https://services.marylandcomptroller.gov/taxes/en/maryland-pension-exclusion?id=kb_article_view&sysparm_article=KB0010012

Anonymous wrote:I’ll be in similar situation but I don’t have CFP. Some things to think about:

An AUM of .5% is on the low end. For you, that means each year your CFP gets $15K. There are other ways they may make money off your accounts. You should also look at the GE fee of each fund they put you in. With typical low fee funds, this might be .03. Funds with fees that are .4 or higher aren’t ideal.

Your DH should contact his HR and find out if he can keep his 401k with his employer and exactly what his fees would be. For me, my fees would be around $700/year for 1M. Thats nothing IMO.

You should also check his 401k to see what funds he is currently in and if they are low fee.

With that much in 401k, you will be “tax bombed”. You will need to read up on conversions.

There is a ton of information to be learned at this point of life. Bogleheads is a great resource.

This is very informative, thanks.

I did look up the GE (didn't even know what that was before now), and it ranged from .03 to .38 with most being around .1. This is for my portfolio being managed by my CFP of which there are many different funds (38 to be exact). I wasn't able to check the 401K (site is under maintenance now) but I suspect those funds are higher in expenses because they are mainly mutual funds and the choices of investment options are very limited.

You mentioned other ways for CFP to make money off my accounts. Do you have examples of this? I am sorry if this sounds dumb, but I thought the only source of income he has from management was the percentage of the funds being managed. One thing I do notice they do is buy and sell a lot of funds during the quarter in what he calls "loss harvesting." I just trust what he is doing, but should I ask more questions? Is he making money on those trades?

Anonymous wrote:The fee of your 401k may go up if you leave it at an old employer. Move it away from the employer since he will be done with them.
There is zero reason for an advisor unless they help you save on taxes. You didn't mention it.
The problem is not even where the money is, but it's highly taxable.
Advisor is not allowed to invest your money the way you could invest it for you. They don't know your personal situation like you do. The advisor investing it for you, teaches you nothing.

OP here. Our advisor is also our CPA so he is very familiar with our situation. The question would be what the cost would be to keep it in the employer fund vs. the annual cost of ~$15,000 to pay the advisor. We are already spending more than that with him with our other investments. I think the .05% is a pretty good rate already considering he is managing just under $4M for us right now, but that will go up to ~$7M if we move the funds. Maybe I should ask for a reduction in the rate?

I’ll be in similar situation but I don’t have CFP. Some things to think about:

An AUM of .5% is on the low end. For you, that means each year your CFP gets $15K. There are other ways they may make money off your accounts. You should also look at the GE fee of each fund they put you in. With typical low fee funds, this might be .03. Funds with fees that are .4 or higher aren’t ideal.

Your DH should contact his HR and find out if he can keep his 401k with his employer and exactly what his fees would be. For me, my fees would be around $700/year for 1M. Thats nothing IMO.

You should also check his 401k to see what funds he is currently in and if they are low fee.

With that much in 401k, you will be “tax bombed”. You will need to read up on conversions.

There is a ton of information to be learned at this point of life. Bogleheads is a great resource.

How has that money been invested so far? Check the terms, if the fees remain low it might be better to keep it there. 401ks have protection from lawsuits, for example, which IRAs often don’t.

PP - I mean you may not be able to move it until he retires. I was assuming you were thinking of moving it now.

You may not be able to. Check for tax consequences. I was not able to move mine without tax consequences until I retired. I’m not a financial person so I can’t explain why and I don’t recall what I was told.

That being said, we make a much tougher percent on our money with our money manager. And they provide a lot of advice about the market and retirement spending, required distribution and investing. We aren’t there yet - both still working and not 70. But we know what to expect.

So I guess for me, I really like having an advisor which didn’t come through my employer managed money.

One other thing. With $3m your fees may go up. But if your returns are better and the services you get are better it may be worth it.

The fee of your 401k may go up if you leave it at an old employer. Move it away from the employer since he will be done with them.
There is zero reason for an advisor unless they help you save on taxes. You didn't mention it.
The problem is not even where the money is, but it's highly taxable.
Advisor is not allowed to invest your money the way you could invest it for you. They don't know your personal situation like you do. The advisor investing it for you, teaches you nothing.

Anonymous wrote:Do you mean 0.5%?

Oops. yes.

Anonymous wrote:Do you mean 0.5%?

This seems more like it, 0.05% AUM fee seems really low. Unless the advisor is just going to keep it in a target date fund which you could do yourself.

Do you mean 0.5%?

DH has about $3M in his 401K and is retiring soon. We have other investments managed by an advisor to whom we are paying .05% of assets under management, including my own IRA. Should we move the $3M out of the employer managed account into a new IRA managed by the advisor, i.e., would it be worth the .05% in expense to manage it? Or just leave it there? We are not familiar enough with the market to manage it ourselves.