Since Vanguard S&P 500 index fund VIIIX is the only decent fund at 0.02%. are there any extra fees after you leave Intel? Not talking about expensive target dates at 1%. IRA equivalents cost 0.03% and 0.05%. Experiences? Thoughts? Facts?
11 replies (most recent on top)
Re: Intel plan was worse than other options
That's true UNLESS you move your money over into BrokerageLink where you have access to all mutual funds and ETFs that you would in a personal brokerage account. That might not have been an option for you before you left Intel. Also, it was unknown to a lot of people, even though it was available.
: Once you leave Intel you are NO LONGER considered an employee so no more contributions. Also, IRA law states that contributions can ONLY be taken out from a (and this is important) *earned income. While you may think that 1 year salary is earned income, it's not in the eyes of the IRS. You didn't actually work for it, they gave it to you.
From what I can tell (I was hourly) you ONLY get to contribute to your 401K with vacation pay IF you 'cashed out' your vacation hours in a regular paycheck, That goes for PA (Personal Absence) as well. How do I know this? I was planning on leaving for years. To prep for that (so i didn't get hit hard taxwise should I be offered a package the next year) I started cashing out my PA and vacaton time. I had a LOT of PA time that I cashed out in 2015. It contributed toward my 401K. (I just now double checked that I wasn't mistaken by looking at that contribution period in my account).
Then when I got my final paychecks after accepting a package my cashed out PA & vacation time wasn't in the normal paycheck that I worked for.... it was in one of the other checks I got. (The one where they cashed out my unused sabbatical). It didn't get counted toward my 401K so no contribution. I am SOOOO glad I thought that out and cashed out in 2015 or none of my PA/vacation time (and it was a LOT) would have contributed to my 401K. whew
Some things to consider:
- rollover IRAs are protected from creditors/bankruptcy same as 401k's, at least in OR (no $1M limit). But you should not mingle rollover IRA with other IRAs you may have
-You can convert rollover IRA back to 401k at new employer
-if planning on using a low income year to do traditional to Roth IRA conversion, the rollover IRA amount is apportioned but 401k amounts are not. So you will pay more taxes if you rollover to IRA if you are converting a nondeductible IRA to Roth. So consider waiting to do rollover until year after Roth conversion.
Intel plan was worse than other options when I left, so rollover was a no-brainer. I really wanted to move SERP funds to better investments but could not do that staying with Intel 401k. That may have changed.
do your own research to confirm, don't rely on anonymous internet posters
Good Info in this thread
Once you separate as part of ACT (involuntary) and assuming you still have some space left towards your max 401K contribution amount (i.e. your 2016 401K contribution amounts is not yet at $18,000 and you left your contribution % at 401k.com/Fidelity non-zero before you left, will Intel still route those contribution amounts to Fidelity? Which of the below pay items gets considered.
0) Last pay check and bonus(assuming say you leave on a end of quarter day)
1) Separation pay
2) Vacation payout
3) CORBA amount (i.e. 9K payout)
Item 0) are payments for periods when you are still an intel employee
Remaining items are payouts/severance - you are no longer intel employee
(I guess when they return your SPP amount, that amount is not considered for 401K deductions).
That ~$3.50 HSA fee that will eventually be charged is monthly, not annually. Sorry I wasn't clear on that either.
I have to clarify one point: there IS a fee if you don’t move your stock in UBS to a brokerage account. I believe it’s $75 and is 18 months after you terminate employment.
That's a yearly fee UBS charges, not a 1 time fee. Sorry I wasn't clear on that before.
But there's more to moving your UBS stocks into a brokerage acct... I didn't want to inundate you with too much info at once. The post was long enough as it was. lol
OK, so, if you have stock in your UBS account that hasn't been there for long, and you move them into a brokerage account like Fidelity, Vanguard, or the likes.... Intel/Computershare will contact you annually with a short questionnaire until those are old enough to be long term capital gains. YOU MUST ANSWER THEIR EMAIL. What's going on is if Intel no longer is told by UBS if you're holding your shares, or selling or gifting them, they will assume you've sold and give that info to the IRS which'll screw stuff up for you. Simpy answer their email with what you've done with the share and you're good to go. Its for your benefit so (getting all Nike on you now. lol) just do it.
That email stops once the timing of the shares/grant is where it's long term cap gains because that's taxed at a lower rate than short term cap gains. With that said it's imperative you contact Intel and UBS and make sure they have your personal email address, mailing address, and phone number or you'll miss that email and they'll assume you've sold and tell the IRS as such.
Speaking of which.... anyone in the 10%-15% fed tax bracket is charged ZERO% capital gains on any stock they sell. Yes, you heard me correctly..... ZERO capital gains. My plain has always been to sell the few years after retirement, but only enough to keep me in the 15% bracket. Go a penny higher into the next bracket and you're paying long term capital gains.
A few links about zero long term cap gains taxes:
No capital gains due for some investors - />
Mechanics Of The 0% Long-Term Capital Gains Tax Rate - />
Speaking of fees…. if you have an HSA (Health Savings Account) you will start to be charged a monthly fee if you don’t roll your HSA into some other bank/credit union once you’re no longer on COBRA (something like $3.50 but it could go up or be different depending on who holds your HSA). I think the reasons for these fees after 18 months is you’re sorta considered an employee benefits wise while on COBRA. For those in OR, First Tech doesn’t charge anything and pays 1% interest last I checked. 1% isn’t great but it’s better than other rates out there.
For those that say “Well, I can get more for my HSA at my bank”, yes, that’s true, you can. HOWEVER, you’re invested in the stock market (unlike the 1% interest I just told you about). While being in the stock market CAN get you higher rates…. you can lose principle just like you can with any stock, mutual fund or ETF that you buy. So, sure, you can get more, but your balance can also drop. That’s your gamble to take now that you have the info. :)
Lastly, check if you have a pension if you haven’t already. And do NOT cash it out of you’re not of retirement at (or maybe it’s age 59.5, I don’t recall) or you’ll pay a hefty penalty and taxes. A lot of people are rolling that over into their IRAs and managing that money for themselves. If you have a spouse, and want them to have guaranteed income after you die, than you have annuity options to look into and understand. Same for if you’re single but unless you’re uber conservative in your investing I’d just roll it over and manage it yourself. I think you’ll do better than the annuity option.
I think that’s all I can think of for now. Will post more later if I’ve forgotten something which is highly possible. hahaha Or if anyone has any questions that I can answer. :) I don’t know all answers and will tell you when I don’t. I just studied ‘retirement’ stuff for years so I’d be prepared for the day. :)
Glad you pointed out that over 55 rule in case people don't know. I just learned of that myself several months ago and is a reason I'm keeping my 401k. It's reassuring to have that available, (penalty free), should the need arise.
One thing you haven't taken into account is your age (not mentioned) and if you might ever lose your job before retirement age. You can withdraw from your 401K IF you lose your job/leave AFTER you're reached age 55. There is no penalty to withdraw from your 401K between age 55 and 59.5 (normal penalty free age). You cannot do that with an IRA so if it matters, don't roll it into an IRA.
Also note (since people confuse that rule a lot), that you can't leave employment BEFORE age 55 and wait to be 55. You'll be penalized if you touch the money before age 59.5. You must clear your 55th birthday BEFORE losing employment.
And... With brokeragelink, the 401K has plenty of options isn't quite true. It's actually better! You have EVERY mutual fund and ETF available to you like you would in an IRA. Everything is the same EXCEPT you can't trade individual stocks over there (and do other odd things like options and such. I don't know the full list of what you can't do because it's stuff I wouldn't do anyway because I don't understand it and it's too risky).
Fees are the same over there too. IOW... if it would cost you a fee to buy in an individual brokerage account (which is what it is, only it's linked to you 401K, hence some rules on what you can do over there), then it will cost you the SAME fee there. Don't want to pay a fee to buy? Simply choose "No fee funds". A lot of confusion is around their fees. They are the same as I said, Basically, some funds charge fees, some don't, it doesn't matter if you're buying in your personal brokerage account our your brokerage account linked to your 401K (BrokerageLink).
It's a fact that 401K funds (institutional accounts) have cheaper fees. You could get the same VIIIX fund outside of your 401K but it would have a slightly different ticker but charge a higher fee. So,.. if you really like a fund (like VIIIX) I'd leave your money in your 401K so you can keep that fund. If that's the only one you like then cash out everything else, and move your money into BrokerageLink and buy ANY mutual fund and/or ETFs that you like! Plus, if the ‘over age 55 penalty free rule’ I mention in the first paragraph matters to you, even more reason to keep funds you like in your 401K and move the rest into BrokerageLink.
There is no fees to keep your 401K in Fidelity (other than normal fees you’d pay if it was an IRA (to buy/sell). With that said, there IS a fee if you don’t move your stock in UBS to a brokerage account. I believe it’s $75 and is 18 months after you terminate employment. So….. pick a place to open a brokerage account if you don’t already have one, and move your funds there at some point.
Hopefully this helps. :)
With brokeragelink, the 401K has plenty of options. I imagine you can find an IRA account with a better fee structure though. For now, I decided to keep my money in my 401k for the asset protection advantage noted in the previous reply. You can convert to an IRA at any time, but I do not think you can ever convert back. If your new employer accepts roll-overs into their 401k plan and you like it better than Intel's, you can always roll your Intel 401k over. Again, you probably cannot do this with an IRA.
IRA = better options and less expensive (fees) - easier to draw funds
401k = funds completely protected (eg divorce, bankruptcy) - in ira, only up to 1m is protected
I went with ira