AboutLouis Schwarz, QFP, CFP®, RFC®. ChFEBC Expertise Over 36 years experience - discretionary investment management, advisory service, stocks, bonds, mutual funds, annuities, IRA, Roth, 403(b), 401k, tax planning, tax preparation, retirement planning, tax reduction, life insurances. I hold five professional designations: QFP, CFP, RFC, ChFEBC, and Paladin Registered Advisor with a professional rating of five stars.
Experience First deaf Certified Financial Planner licensee (http://www.cfpboard.org/), General Securities Registered Representative (Series 7)(http://www/finra.org), Registered Financial Consultant (http://www.iarfc.org/), Registered Investment Advisor, Qualified Financial Planner (http://www.iaqfp.org/), Admitted to Paladin Registry of Personal Financial Advisors (http://www.paladinregistry.com/); Chartered Federal Employee Benefits Consultant (http://www.chfebc.com/); Licensed Life, Health, & Disability Agent
Organizations Financial Planning Association, International Association of Registered Financial Consultants, National Association of Deaf, Alexander G. Bell Association of the Deaf, National Deaf Business Institute
Education/Credentials Gallaudet University, College for Financial Planning
Awards and Honors Who's Who in Finance and Industry, Who's Who in the World, NAD Flying Fingers Award, MDAD Distinguished Award, MCAD Business of Year, Montgomery (MD) County Business Award, 2007 Outstanding Business Person of the Year, Gallaudet University Department of Business
I would like to get some advice on rolling my two 401Ks and one non-contributory pension lump sum from previous my employers into one or more IRAs. I am 50 years old, live in New Jersey, currently unemployed, and looking for work. I do not expect to need this money until retirement, which will be 55+.
The 401K from Company A dates back to 1984 and it includes Pre-1987 and Post 1986 after tax contribution. Contributions are from Pre Tax matched and unmatched, a Roll-in from severance package, a Prior ESOP and Restricted After Tax. The 401 K from Company B dates back to 1998 and the contributions comprised of employer contributions and elective deferral (I assume this means pre-tax matched and unmatched). The pension is from company A.
I would like to take the pension lump sum and invest in a qualified plan for security, since the company A has recently merged with a foreign company in a troubled industry. I also would like to roll the 401K from company B into an IRA since the cash investments available is plan are not very secure. The 401K with company A is with a large investment company appears to have secure investment options, so there is no concern to roll to an IRA unless there is a benefit. Thanks for your help.
ANSWER: Hi, Will
Will try to make it simple...
It is easy to rollover all qualified (retirement) plans into one Rollover IRA. However, you have to keep the document showing the portion which is after tax contribution and the custodian for your Rollover IRA account should have the same information.
When starting to receive the distribution, be sure that the tax preparer has that information so your distribution will not be fully taxable each year.
If this is an insufficient answer, let me know what exact information do you need to know.
Thanks,
LJS
---------- FOLLOW-UP ----------
QUESTION: Hi Luis,
A couple of follow ups
So, it is possible to mix before and after tax contributions and still get the tax benefit from the portion of after tax contributions provided their is documentation?
The custodian statement shows the portion of the after tax contributions. However, if there is a discrepancy the custodian of the account has a notified me that they will not verify before and after tax contributions and this must be handled by the account owner and the IRS. Do you think this will be a problem?
Lastly, would there be any negative tax effects to rollover the Company A Pension and Company B 401K into a single IRA if I choose not to rollover the existing Company A 401K at this time.
Answer HI, Will
Sorry for not responding promptly - been out of town till now.
Now to your question 1, it is not proper to say to mix them. It is proper to say that funds can be transfered from one retirement account to another retirement account. It is more important that the new custodian has the record of both before and after tax contributions so it will record into your new account.
To your question 2, if there is a discrepancy, it may be based on what the old custodian gave to the new one. If so, you have to instruct the old one to send the correct information. However, if you have document, it will be still a hassle to resolve it.
To your question 3, there will be no tax effect as long as the new custodian has the correct info from the old one.
