401k options

[anxvariety]

I’ve heard mentioned in here that an employee can use 401k contributions for an investment of their choice and even buy buillion. Is this true?

What are my options outside of the list that my employer is providing? They are using DFS which I’m guessing is Dreyfus, what if I don’t want to invest in any of these?

Thanks in advance.

[Anonymous]

One can self-direct IRAs (into stocks, bonds, real estate, and probably gold), and here's an okay book that I read on such: 

http://www.amazon.com/IRA-Wealth-Revolutionary-Strategies-Investment/dp/0757000940/sr=8-4/qid=1165350605/ref=sr_1_4/102-5441985-4964918?ie=UTF8&s=books

But, I've never heard of self-directed 401(k)s, and I've been the 401(k) administrator/trustee for three different plans.  But, I'm willing to learn, if such is true!

[Daniel]

I have never heard of self-directed 401(k)s either.

[mrwrong]

This depends on your employer’s 401(k) plan. Most plans only have limited investment choices. My former employer’s plan allows you to transfer your contribution to a self-directed brokerage account. You can then invest in pretty much anything you like. Check with your employer.

Mr. Wrong

[powayseller]

This is how we did it back in the 1980’s. My husband put the 401(k) money in his company’s fund, the money market option. From there, we did a rollover to our Vanguard account. Easy! I did the rollover every few months.

[Daniel]

Powayseller,

Is it possible to do a rollover out of a 401(k) while still working for that employer and contributing to the 401(k) in question? I didn’t know that. I thought you could only do it after leaving that employer. Thanks for sharing this info. My wife has amassed a pretty substantial amount in her 401(k), and her plan choices are rather poor, so moving that money out to an IRA would be a good option for us. I’ll tell her to make inquiries at work.

[Anonymous]

401-K has ERISA bankruptcy remote protection. I’d keep the money in 401-K instead of rolling over for that reason alone.

[powayseller]

Yeah, you do lose some special privileges when you leave your employer plan, like borrowing against your 401(k). I’m not expert, but we did the rollovers while my husband worked for the company.

What’s the ERISA bankruptcy remote protection? Isn’t your retirement money always safeguarded from bankruptcies?

[Anonymous]

Looks like there is new update on the legal front:
http://www.tiaa-cref.org/support/ira/advanced/bankruptcy_iras.html

I haven’t checked this for a while so my information was stale. It now looks like roll-over got the same protection in 2005.

Good 401ks have institutional shares in mutual funds that offer the lowest management fees. I don’t know if this can be replicated in your personal roll over accounts.

Another consideration is that under the current tax laws it is probably more advantageous to do your fixed-income/money market investing in tax deferred accounts and equity investing in taxable accouts. Under this scenario, investment options in tax deferred account are not all that important.

[Author]

Posts