Ask an author: David Loeper here to answer your retirement planning questions!

[David Loeper]

Originally Posted by Brahms

This thread has been very helpful....even though some of this stuff is way over my head. It sounds like the book is pretty accessible based on the feedback here. I'm definitely picking up a copy.

I have a question that might not be covered in the book. David do you discuss hardship withdraws? I remember hearing that you can withdraw from your 401(k) plan if you need repairs for your primary residence. Does it have to be necessary repairs? What if you just wanted to remodel your kitchen?

I'm no tax accountant, but as I understand the IRS's position on hardship withdrawals from a 401k, they need to fall into one of the following four categories:

1) College tuition for yourself or a dependent that is due within 12 months or less(dependent defined under IRS terms)

2) Down payment for a primary residence (this implies a purchase, not an improvement)

3) Medical expenses that are not otherwise reimbursed for you, or your dependents as again defined by the IRS

4) Prevent foreclosure or eviction from your home/residence

Keep in mind even if you qualify, your plan isn't obligated to comply with even IRS approved reasons. If you are under age 55, you will be subject to withholding taxes and a 10 percent penalty.

Sometimes a plan loan may be a better option (if available) unless you are in very dire circumstances where there is a high risk of ending up with the loan being treated with the same taxes and penalties as a hardship withdrawal because of job loss/parting service and not having the resources to pay back the loan.

As for necessary repairs, while some folks in your company may have been able to get away with it, that probably would not meet IRS rules (this could result in back taxes and penalities.) Remodeling your kitchen isn't going to get approved unless your administrator has a desire to move to a low security prison.

[David Loeper]

Originally Posted by DCer

Mr. Loeper do you have any general advice to financial analysts looking to write a new book? As far as I can tell, this is your first book and it is already a pretty big success. How did you get the book deal? What's a good way to approach a publisher in a market that is already saturated with so many self-help finance books? Thank you.

Since this message is not really the topic of the forum, why not contact me privately? You can email me from the "email the author" link on the contact page from the book website at: http://www.401kripoff.com/contact.htm

[Will]

Our friend Kim Palmer from US News and World Report wrote a post about this thread. Welcome US News readers!

Originally Posted by David Loeper

Since this message is not really the topic of the forum, why not contact me privately?

A lot of our readers are aspiring writers (i.e. bloggers who eventually want to get book deals) so I think it is ok to talk about your experiences with the publishing world. No pressure, though.

[David Loeper]

Originally Posted by DCer

Mr. Loeper do you have any general advice to financial analysts looking to write a new book? As far as I can tell, this is your first book and it is already a pretty big success. How did you get the book deal? What's a good way to approach a publisher in a market that is already saturated with so many self-help finance books? Thank you.

Since Will suggested it would be ok to respond...
In general there are a lot more books written than there are readers/buyers of books, so getting a book deal is not easy. Although there are numerous self publishing/hybrid models out there.

To be successful, it has to have a large SPECIFIC market (i.e. 50 million 401k participants in my book's case.)

Also, understand that 80% of all people do not read any books, so what might seem to be a large market, may not be that large at all.

It also helps to have a good marketing and PR plan. Most traditional publishers won't do anything to promote a first time author, so you may want to hire your own press agent.

It also helps if there is already a lot of media coverage on the topic. I was fortunate to have both the Congress and Senate proposing competing bills shortly before the release of the book on the very topic of the book.

Finally, it helps if you have credibility in previous writing. In my case I've had hundreds of thousands of downloads of my industry whitepapers, award winning articles in trade publications and numerous speaking engagements and media coverage.

All that being said, each book is "A Black Swan" which Nassim Taleb would suggest means there is a lot of just plain old luck that goes into the equation.

[ScottPax]

My husband changed jobs last January. The folks where he was previously employed said we could not move his pension for a year. They are now asking what they want us to do with his pension money (he has the impression it's urgent, I can't imagine why, and asked him to go back and ask if there's a reason other than that they want to cross him off their "to do" list).

I know we're moving laterally, not getting out of the market....told him "for now just say DON'T SEND US A CHECK!" ...but I don't want to move it twice or move it and be "stuck" without serious thought (i.e. we could move to his current IRA ..... or, where he is now he has a 403b for their contributions and we FINALLY got the paper work so we could add to that as well....)....

We’re supposed to meet with a financial planner at the end of April (after I get through my sister-in-law’s wedding and we finish our taxes). While we certainly don't want to leave this money with his prior employer long term, is there any reason for us to rush to move it before we make a bigger plan, for the sake of a few months?

[David Loeper]

Originally Posted by ScottPax

My husband changed jobs last January. The folks where he was previously employed said we could not move his pension for a year. They are now asking what they want us to do with his pension money (he has the impression it's urgent, I can't imagine why, and asked him to go back and ask if there's a reason other than that they want to cross him off their "to do" list).

I know we're moving laterally, not getting out of the market....told him "for now just say DON'T SEND US A CHECK!" ...but I don't want to move it twice or move it and be "stuck" without serious thought (i.e. we could move to his current IRA ..... or, where he is now he has a 403b for their contributions and we FINALLY got the paper work so we could add to that as well....)....

We’re supposed to meet with a financial planner at the end of April (after I get through my sister-in-law’s wedding and we finish our taxes). While we certainly don't want to leave this money with his prior employer long term, is there any reason for us to rush to move it before we make a bigger plan, for the sake of a few months?

The reason it took so long for the employer is a bit perplexing, it shouldn't take a year to move the money out.

It could be that now though they are trying to avoid the need to do an audit (mandatory at certain numbers of participants- and quite expensive) or avoid additional adminstration costs of record keeping for all former employees.

Trustees can, depending on the plan document and the asset balance, require distributions be made with a certain time frame. They make a good faith effort to contact the former employees and ask for their election for the disposition of the funds. In the absence of you making an election, having been offered the opportunity and X days (i.e. like 30), they can make the distribution directly to you by issuing a check which complicates matters for you. It is far less complicated if you exercise your right to have them do trustee to trustee transfer into an IRA rollover account.

I wouldn't wait until you meet with the planner. I would open up an IRA discount brokerage account with any of the leading discount brokers (Schwab, Fidelity, E-Trade, Ameritrade, etc.) and just put the money in their money market fund for now, or, if you are concerned about being out of the market for a short period of time, replicate your allocation with index funds or ETFs (depending on account balance.)

From there, as long is your planner isn't conflicted with their own brokerage relationship (a big red flag) your planner can advise you on how to invest that money regardless of the custodian and it will already be in a account, ready to go, when they figure out your investment strategy.

You won't be "stuck" regardless. You can even roll your rollover to a different broker later on if that is needed to work with your planner. But, any truly objective planner should not care who the custodian broker is.

[jusrme]

Each day (including Saturdays, Sundays and holidays) the number of shares in my husband's 401k funds are less than the previous day and the balances are less each day when the market is closed. This is in all his funds including the stable value fund. NAV remains the same as the market NAV. We have never seen this in any other 401k plans. Customer Service was surprised to see this and could not explain what is going on. I also called this to the attention of the employer.
An example would be this:
Mon.: shares - 330.091483
Tue.: shares - 330.090190
Wed.: shares - 330.089594
etc.etc.etc.
This goes on daily even when the market is closed. The loss of shares over time really adds up.
What is happening here?
Thank-you.

[Will]

Hi everyone!

The winner for week 3 (3/3 - 3/9) is Desdemona!

[David Loeper]

Originally Posted by jusrme

Each day (including Saturdays, Sundays and holidays) the number of shares in my husband's 401k funds are less than the previous day and the balances are less each day when the market is closed. This is in all his funds including the stable value fund. NAV remains the same as the market NAV. We have never seen this in any other 401k plans. Customer Service was surprised to see this and could not explain what is going on. I also called this to the attention of the employer.
An example would be this:
Mon.: shares - 330.091483
Tue.: shares - 330.090190
Wed.: shares - 330.089594
etc.etc.etc.
This goes on daily even when the market is closed. The loss of shares over time really adds up.
What is happening here?
Thank-you.

Without the NAV I cannot tell for sure, but it sure looks as though these are additional fees beyond the investment expense coming out of your account.

Some record keepers charge the fees daily (it makes them easier to hide since many people do not pay attention to the fractional shares and regular salary deferrals make up for the fees on each payroll cycle in terms of the overall whole shares.)

Is this plan with Transamerica by any chance? I know they have plans where their contract/mortality expenses are accrued daily.

The other types of fees it could be are wrap fees, advisory fees, even administration costs your employer is passing through.

There is a short article about fees on my book website you might want to review at: http://www.401kripoff.com/fees.htm

[jusrme]

Originally Posted by David Loeper

Without the NAV I cannot tell for sure, but it sure looks as though these are additional fees beyond the investment expense coming out of your account.

Some record keepers charge the fees daily (it makes them easier to hide since many people do not pay attention to the fractional shares and regular salary deferrals make up for the fees on each payroll cycle in terms of the overall whole shares.)

Is this plan with Transamerica by any chance? I know they have plans where their contract/mortality expenses are accrued daily.

The other types of fees it could be are wrap fees, advisory fees, even administration costs your employer is passing through.

There is a short article about fees on my book website you might want to review at: http://www.401kripoff.com/fees.htm

It is a week later now and the fund given as an example is down to 330.084106 shares now. This would be the Growth Fund of America (RAEGX) with NAV of 30.29 as of yesterday's closing. The 401k is through Diversified Investment Advisors.