Comments on: 67 Year Old Advised by Accountant to Not Enroll in 401k – Should He Find a New Accountant?

By: Nancy

Nancy — Fri, 24 Jul 2009 03:59:18 +0000

I would get them on a conference call together or meet with both and hash it out.

By: William E. Wheeler, CPA/PFS

William E. Wheeler, CPA/PFS — Tue, 16 Sep 2008 02:14:08 +0000

Being a CPA and a financial planner, I would say the man needs a new accountant. I am a huge fan of the 401(k) and I always recommend it to my clients. Especially if the employer is making a matching contribution, no matter how much. What a great way to save for retirement and save on the current year’s income taxes.

By: Jeremy

Jeremy — Tue, 17 Jun 2008 16:39:46 +0000

Jhonny, you certainly could. After age 59.5, you’re free to take your 401k money or other retirement assets and do with them as you please. But, paying off a mortgage may may or may not be the best use of that money. There are a lot of other things to consider such as the interest rate of the mortgage, how many years you have left on it, what your retirement account balances are, etc.

But to answer your question, there is nothing stopping you from applying those funds to pay off your mortgage.

By: Jhonny

Jhonny — Tue, 17 Jun 2008 16:19:52 +0000

Great comment.I have a question, I’m 67 years old and I planning to retire February 2009, and I have $48K mortgage loan.Can’t I take this money and pay off this morgage?.

Regards

Jhonny Urrego

By: LMJ

LMJ — Sat, 24 May 2008 18:27:22 +0000

Sorry, clarification, I meant 401(k), not IRA. Currently jobless, and apparently nocturnal, I just got up.

By: LMJ

LMJ — Sat, 24 May 2008 18:26:32 +0000

Just one question: How does one earn money in an IRA? Might that be from a series of investments, often in money market funds or stock, things that are currently decreasing in value? I know my personal 401(k) has lost 10% since September. At that age, I wouldn’t even be considering a 401(k), I’d be looking at more stable and secure investments. **MBA-Accounting student**

By: Mrs. Micah

Mrs. Micah — Fri, 23 May 2008 21:22:16 +0000

Well, I would look at the situation and figure out what I wanted. You make a convincing case for the 401(k). I’d probably find a new accountant, simply because he hadn’t explained to me the possibility of deferring the RMD as long as I was employed. Especially if there was an employer match.

By: Jeremy

Jeremy — Fri, 23 May 2008 13:57:21 +0000

In terms of whether or not it is possible, yes, you could find a way to make this work. As long as you haven’t begun taking the RMD from the IRA, and your new employer plan accepts rollovers from an IRA (usually they will only accept from a rollover or conduit IRA, not a contributory IRA), then you could effectively work just enough to qualify for the plan and prolong your RMDs.

But like you said, there are a lot of other considerations that go into a plan like this, and it isn’t all that common, but it can be done.

By: Steve Austin

Steve Austin — Fri, 23 May 2008 07:50:05 +0000

I didn’t know about the exception rule regarding 401(k) plan RMDs while still working. It makes me wonder about a workaround: IFF one is somehow in the position of not wanting to incur RMDs (at age *70.5*, isn’t is, Jeremy?), could one join a company that has a plan that allows rollovers of other 401(k)s into it, couldn’t that person just pull back to part time or less, be effectively retired and over age 70.5, and still not have to make the RMD if s/he did not want to?

An example where this might be useful is a 50 year old who retires with a $500,000 401(k) account balance, who rolls it over to a self-directed brokerage Rollover IRA. 15 years later, the retiree has done exceptionally well with the self-directed investments and has $2.5M in the Rollover IRA (and has been living off of a taxable accounts, Roth IRAs). The individual may start to receive SSA income soon and does not need/want the large RMDs from the Rollover IRA. Is a solution to go back to work full-time just long enough to get enrolled in a 401(k) plan that allows rollover *into* it? Then pull-back to part time or less and only take distributions needed to live, not the full RMDs? I realize there are SSA-related complications to the tax calculus to working and drawing SSA retirement, so my question is purely “is it possible”, not “does it work for all cases”?

By: Chad @ Sentient Money

Chad @ Sentient Money — Thu, 22 May 2008 11:49:51 +0000

As an accountant, any personal accountant should know TAX LAW! If they don’t, what are you paying them for?