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FAQ

What does it mean to "rollover" a 401k or IRA?
Typically, when you switch jobs you leave your 401K behind. 401K has limited options, most 401K online platforms have an extremely unfriendly interface (not sure if that is intentional that they don’t want you to login easily) and might or might not have hidden, administrative fee.Unless your employer negotiated very well, the investment options are very limited in a 401K account.So simple rule of thumb is that it is a good idea to rollover your 401K to IRA if you have left the job and there is no economic advantage of keeping your 401K with your previous employer.People do it because it usually means one or more of the following for them:Fewer constraints.More Investment Options.More Control.At qplum, we help with rolling over your 401K to IRA without any hidden fee!And our Flagship portfolio has been fine tuned for retirement accounts.I hope this helps!PS: You can also invest in an IRA and 401(K) simultaneously! Watch this video to learn more.Disclaimer: All investments carry risk. This is not a solicitation to buy/sell securities. This is not an offer of personal financial advice or legal advice. Past performance is not indicative of future performance.
I want to open a SIMPLE IRA or a Solo401k for my small business in Rhode Island, what company provides this?
I actually had the same question and found out about Hedgeable (which offers 7 day a week amazing customer service!) and decided to open a Solo401k with them. HIGHLY recommend.They were incredibly helpful, are always ready to speak with me whenever I have a question, and protect my account from risky market conditions through their downside protection.You can read about their investing platform here. They offer both Solo410k’s and Simple IRA’s so once you decide which, this is definitely the place to go!
Is it okay to have a Roth IRA and no 401k?
Original question: Is it okay to have a Roth IRA and no 401k?Having both is your best long-term strategy, but if you’re not yet able to contribute more than $5500 per year, it doesn’t make much difference for most employees.401k’s are better because:They have higher contribution limits ($18,500 vs $5,500)Some employers match the funds you contribute, which is free money!Both types of accounts come in traditional (tax exempt contributions) and Roth (tax-free earnings) versions.IRAs have a couple of advantages, neither of which is better than free money:The money is completely under your control. You pick the fund manager.You can choose from a lot more types of investments that are offered in even the best 401k plan. Those funds aren’t any better than what’s offered in a good 401k plan (though they can be better than a bad one).By the time you retire you will probably have both. I currently have money in two previous employers‡ 401k plans (in both regular and Roth) and two IRAs: traditional and Roth. I’ve rolled money from several previous employers‡ 401k plans into my IRAs.
What should I do with my old company's 401(k)?
There is no right or wrong answer to that question. Here are the pros and cons of each of the options you stated above:1. Leave it where it is. While this is clearly the simplest option, it is also the least favorable. For one, you cannot make any more contributions to your 401(k) if you leave it where it is. And, more likely than not, you will not be kept up to date with changes in the investment options or performance of the plan, which can hurt you long-term performance. 2. Roll Into new companies 401(k)This is a good option for some people. First, you need to make sure that your new plan allows you to roll your old 401(k) into the new plan. Then, you need to ensure that the investment options you have available in your new 401(k) are at least as good as those in your old plan (if they are not, this may not be the best option)If you are able to, and the investment options are equal or better, there is a clear advantage to do this over leaving it at your old company. You will be able to update and monitor your investment much more easily, and you will have only 1 401(k) instead of 2. However, the downside to a 401(k), as others have mentioned, is that you have limited investment flexibility, 401(k) plans are designed to be simple. They are designed this way to encourage employees to contribute. Part of the way they are kept simple is by limiting investment options, so that you are not picking from 10,000 mutual funds or ETF's, but are picking from 10. The 10 funds provided in your 401(k) are likely diversified, but may be over-priced and/or under-performing relative to funds available outside your 401(k).3. Roll into a Roth IRARolling your old 401(k) has the advantage of increasing your investment flexibility. Within a Roth IRA, you have access to an almost unlimited array of investment options. However, because it is a roth IRA, you will be taxed on the entire 401(k) balance that was rolled over. The advantage, however, is that all withdrawals from your Roth IRA (taken after age 59 1/2) are tax free, unlike a traditional IRA where they are taxed. You are also able to make contributions to your Roth IRA if your modified AGI (adjusted-gross-income, don't ask me what this is unless you want another 10 page post) is within certain limits.4. Roll Into a Traditional IRARolling your old 401(k) into a traditional IRA has similar advantages to rolling it over toa  Roth IRA, with the added benefit that you will not be taxed on any portion of the rollover (assuming that the entire rollover amount is deposited into your new IRA within 60 days of you taking with withdrawal). However, all of your withdrawals from the IRA will be fully taxable when you take them out, and may also incur a 10% penalty if taken out more age 59 1/2. You can make contributions to your IRA up to $5,000 ($6,000 if over age 50), and depending upon your income and whether or not you have a retirement plan at work, may be able to deduct the contributions on your tax return.5 Something elseYou probably shouldn't do something else. The only other big something else I can think of is withdrawing the money altogether. If you di this, you would be taxed no the entire 401(k) balance. and very likely have to pay an additional 10% penalty on the account balance.So which option is best? That depends.If your old employer has better investment options then you new plan, AND you are not comfortable choosing your own investments AND you do not want to hire a professional advisor, it may be best to leave your assets where they are. If you do this, make sure you take the time to keep up to date with what's happening with he plan, it's options and your investments.If your new employer has good investment options and allows you to roll over your old 401(k), AND you like the simplicity of the 401(k) AND want to manage it yourself, understanding the investments may not be the best, roll it over to your new employer 401(k)If you are comfortable choosing your own investments, or want to hire a professional advisor, roll it over into an IRA or Roth IRA (this process is very easy...if you have questions about that I would be happy to answer)I would highly recommend speaking with a CPA or financial advisor when choosing between Roth IRA and traditional IRA. Both have their purpose, but there is not one clear answer as everyone's financial situation is different.Sorry for the extremely long answer, but this is a topic people seem to be very confused about and there is no short--way to answer this question.I hope this helps!
What's the next best investment option for younger college grads who've established some financial stability? (paid off all debts)
Assuming a long time horizon (like retirement, whether “early” or not), I’d definitely suggest the stock market.I started investing actually in my teens but cash out to buy a car in high school. I started investing again right out of college with my first full-time job. Then I kept at it every single year (monthly actually through auto-contributions) and by my early-40s I had a balance of a half million. Read the details of how slow and steady got me to 500k if you are curious.If you don’t know how to invest well on your own, or you just don’t want to mess with the DIY route, consider a robo-advisor. I generally recommend Betterment - for a variety of reasons (read my Betterment review if curious), but there are others such as Wealthfront, Acorns, Motif, etc.Of course DIY investing is fine too. I love working with Fidelity on DIY portfolio management.If you have a 401k, Simple IRA, or similar at work, then they’ll dictate your investment options. So you will need to go through them to determine what specific investments are available and set up the contributions. Work plans are great because you can usually investment more than an IRA allows, and about 80% of companies pra match on contributions (free money!).By the way, check out how much you’ll have to retire on if you max out your 401k plan each year. Most people are seriously surprised.Hope this helps!
Do Employers benefit more if their employees choose 401K/IRAs instead of Roth plans?
Your question is not clear…If what you meant to say was Traditional 401k vs Roth 401k, then no, generally there is no employer benefit to choosing one over the other, or both. The client benefits most from having the choice or both, but it does not happen at a cost to the employer.If you question was whether they benefit from offering a 401k vs a Roth IRA or some other type of IRA, then maybe. Employers do not offer IRAs. They can sponsor a group retirement plan. Some of these offerings can include a SEP IRA or SIMPLE IRA plan.Employees benefit most when they receive a contribution match. Not all plans offer this.Every 401k plan costs the company money to set up and administer. These costs can be paid by the company or passed along to the plan participants. Just because you don’t see the fees, doesn’t mean you are not paying them. If you have questions about your plan fees, you should discuss this with your employer.You should be aware that there are 2 types of 401k plans, bundled and unbundled. Bundled is when all the different parts of the 401k are bundled into one package. Unbundled is when the different components are separated. If you have an unbundled plan, this allows you customize the plan. This also allows you to invest in non-traditional investments. You can read more about it here, Self Directed 401k - How to invest in alternative investments with your 401k.Most 401k plans limit themselves to mutual funds, but your investment options are virtually unlimited. The plan trustee is responsible for providing the plan investment options, so if you want to invest in certain assets, you should talk with your company about expanding your offering.I hope you found this helpful.KirkInnovative Advisory Group - Wealth Management
What does it feel like to pay off your mortgage?
Initially there wasn’t much of a feeling, more like “ok, cool…that’s done”. My wife called the mortgage company to find out what a payoff could be if she came in that day, and wrote the check for around $20,000. When I came home that day she mentioned she paid it off and that was that. There wasn’t really any excitement - at that point…..I will tell you what DID get exciting, but first I want to touch on an important point of paying off your mortgage.From 2021 to 2021 we focused hard on paying off all debts, including the house. Our small business was doing well, but we would just take extra money and pay off the mortgage. We didn’t really increase our lifestyle.The interesting thing about paying off your mortgage is that while you are paying off your mortgage, even if you make a big payment in a single month—let say 2X, 3X, or 5X your regular payment ‡ the next month, that same mortgage payment is still due. In other words, you take all this money that would be fun to spend on something else like a cool car, or cool vacation, and it just goes to the mortgage company and next month the same payment is still due. That isn’t much fun.BUT…what did keep me going was seeing each month how much less we were paying in INTEREST! Seeing the dollars paid in interest vs principal go down and down and down was FUN - and exciting!! Our payment was about $2,200/month (we paid our taxes separately). We went from a 30 year mortgage, refinanced to a 15 year mortgage, and then got aggressive paying it off. We went from $1,500/month in interest, down to $1,000/month in interest (getting under $1,000 was exciting!) down to $100/month in interest, and then of course just paying it off entirely. Seeing the interest go down was AMAZING.I realize on paper, the math for paying off a mortgage doesn’t make sense: our interest rate was 4% on a 15 year fixed rate mortgage back then - so any numbers person would tell me I was insane to pay that off because I could put that money into other investments and do much better, especially when you factor in inflation and the tax deduction. I get all that but I wasn’t interested to stay in debt. Payments totally suck and reduce your confidence to take risks in life.Remember earlier when I said initially when paying off the mortgage I didn’t feel much and it was more of “well, we got that done” - this is true. Let me tell you what happened 6 months and beyond……we became wealthy.I COULD NOT BELIEVE HOW FAST WEALTH PILED UP WITHOUT PAYMENTS!Imagine that…thousands of dollars a month which used to go to a mortgage payment were just pilling up in our savings account. In no time at all we had 6 figures in cash savings. I was maxing all my tax deferred options (Simple IRA, Roth IRA, ect) but beyond that I was seeing all this cash pile up. We remained pretty frugal still (driving Honda Civic and Toyota Camry), in our house was worth around $260,000 or so. But I realized I needed to get up to speed on investing our money outside those tax deferred accounts - which over time I got educated on. After paying off our mortgage in 2021 we stayed in that modest host for another 6 years and in 2021. we moved into our dream house - a beautiful big 5 year old home in a great neighborhood with fantastic public schools. The elementary school is 4 houses from ours. The well regarded high school is a 10 minute walk from our house.We paid CASH for our dream house - but not immediately….We did have the cash to buy our dream house outright, and that was the plan, but our bank took notice of all the money and investments we had saved up and said…’You need to get into a mortgage and invest the money with us!!‡ We can get you a 2.6% interest rate! (and they did!)’So, I tried it out.I HATED HAVING MORTGAGE PAYMENTS AGAIN! HATED IT…HATED IT…HATED IT.After 2 years, even with a 2.6% interest rate, we went in and paid off the mortgage. We also eventually moved our investments from the bank as well. They meant well, and didn’t do anything wrong, but I learned full well how much I hated payments and will never go back.In 2021. we take 3 very nice family vacation each year. I bought my dream car - a 2021 Porsche Panamera GTS that sounds and drives amazing. My wife has a nice 2021 Audi Q7.We have fully funded our kid college funds. That’s done. And putting money into that each month ALSO felt like a payment - so I “paid that off” as soon as I was able to.We continue to save.Having no mortgage and no payments has allowed me some key things:A relaxed peace of mind overall.To take thoughtful calculated risks with my career and investments that if I had had debt, I might have passed on, and lost some opportunities.To take a more relaxed attitude with investments. I don’t feel a need to swing for the fences or “make up ground” for retirement savings. I’m very happy with our position and we could retire now if we wanted (but I LOVE WHAT I DO!).Once you become debt free and pay off your mortgage, your cash will build fast. Invest it and get it compounding! I highly recommend Vanguard’s Target Retirement Funds.Last note‡ after paying off the kids college fund it hit me: my wife and I can REALLY REALLY REALLY do anything we want. What’s next? I don’t know. I’m very content and have no interest to stop working. For us, more than likely, the next chapter will be about giving back in a BIG WAY.
What is a Fidelity self-directed IRA?
The phrase “self-directed IRA” has two distinct meanings; one of which Fidelity would allow under some conditions and the other that they will not under any conditions.The first is simply a normal IRA, wherein you have asked for direct authority over trading decisions. Due to fiduciary liabilities, Fidelity will not permit you to have unrestricted access to all markets or all trading functions of their website, unless you can both demonstrate that you know what you are doing and are willing to sign a document stating that you know what you are doing, wish to act as your own adviser and waive any liability of Fidelity as a typical fiduciary. I have this type of upgrade myself. Don’t pursue this unless you actually do know what you are doing; but if you do it anyway, this will grant you access to the full market as well as some useful order types not typically available inside of a retirement account. For example, I gained access to the “pink sheets” as well as the ability to use tricky orders such as One-triggers-the-other orders.The second kind of “self-directed IRA” refers to a kind of legal work around that I think will eventually get shut down by the IRS. The tax laws that creates these tax advantaged accounts all require that a third party act as a fiduciary and manger while “holding” your account assets on your behalf. In the case of stock investing this is easy to imagine, as your broker holds your stocks in the name of the brokerage, and simply keeps an account of what portions of the brokerage’s total holdings belong to you. But you couldn’t call up your broker and ask for the stock certificates to be transferred into your name, or personal possession, if the stock is held inside of a tax advantaged account. The same would be true if you bought physical gold inside of an IRA, you can do this but you would have to find a company willing to hold it in their vaults on your behalf, because you’re not supposed to be able to take possession of your assets. This kind of “self-directed IRA” is advertised by some companies as an asset manager that will “hold” your assets in “your” safe, or something along those lines. I.E. they are pretending that you can have your cake and eat it too; or in this case, hold your gold inside of a tax-advantaged account but still have it physically in your possession. I recommend that you stay away from these companies, this will not end well.
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