If you have a lot of money in 401K's, what should you do with it?

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I have moved it all to government bonds....but carrying cash under the mattress seems a bit extreme. a run on the banks? I seriously wonder about that...there ought to be a list of compliant and "safe" banks...right? but if they are compliant, won't the bad data corrupt the good? Or is there a programmer out there who knows?

-- rick shade (Rickoshade@aol.com), May 08, 1999


Have you considered _quality_ gold mining stocks, of producing, well financed mines, as offered by a couple of the established, conservative mutual funds? Priced right, good potential.

-- A. Hambley (a.hambley@usa.net), May 08, 1999.

Place a portion to cash,small bills ones,fives,tens,and twenties,rolls of quarters,dimes,nickles and pennies.Place a portion to pre 1964 silver coins incase of hyperinflation caused by banks running out of cash from runs on the banks by nervous depositors at the end of this year trying to get late access to their funds. (i.e Banking holiday declared by fed)The next portion should go to getting some small gold coins and diamonds.

During WWII a friend of mine who told me a story of how jews were able to escape the persecution of the nazis. they use the gold as currency to provide safe passage and the diamonds were sewed into there coat to help them to start over were ever they ended up at.

At this point in time it is safe to say we don't know how things will pan out yet. There is an overwellming amount of evidence (our Govt's own reports) that all is not well with the y2k despite the media spin.

We have to treat y2k for what it is a serious societal challenge. Anything less would be lieing to yourself and to the ones you love.

You can take your chances with Insured Govt Bonds or even Tax lien certificates. If y2k only goes middle of the road your investments will be safe there. If y2k is real bad you will just lose that money. Y2k has the real potential to bring down every nation on earth. People are not happy with the way things are being run around the world. Do you really think they will allow the same system that is economiclly enslaving millions to be rebuilt the same way if it breaks,No way.

Prepare for y2k as if it could bring a war and hope and pray that Peace prevails. God bless you y2k aware mike

-- y2k aware mike (y2k aware mike@conservation.com), May 08, 1999.

Ask yourself: do you really think the stock market is going that much higher before the end of 1999?

Ask yourself: do you really think that with all of the anger against our country today that we won't be attacked soon - Y2K being that most opportune moment, with all of the questions about our military readiness abounding and the stunning display of unreadiness currently in Kosovo?

Ask yourself: do you really think we have any patriots in Washington?

The only rational thing, in my mind, is to pull it all out and ready your family for the biggest fall the world has ever seen.

-- Brett (savvydad@aol.com), May 08, 1999.

I predict that before rollover we will have a liquidity crisis that will be staggering, with very sharp rises in both short and long rates. As a result any long term bonds will suffer severe price declines. I'm moving $ into money market funds invested in US Treasuries. Consider the Capital Preservation Fund. I believe that between now and rollover one can make a lot of $ going short selected stocks, e.g. airlines. What is not at all clear is the value of gold and silver. I do agree that some precious metal coins are a good idea, but what % of the portfolio is anybody's guess. What will be true is that barter goods in short supply will certainly work as money. This has always been true throughout human history.

-- Tennessean (holladayl@aol.com), May 08, 1999.


You take it out of the 401(k) and you have taxes and penalties... depending on your tax bracket, you will be giving half your money to the government. I use Charles Schwab to manage my self-directed IRA. Based on my research they are compliant, and I'll keep my paper records from this year to be safe. With 30 years until I plan to retire (and then teach), I think we'll have Y2K sorted out by the time I want to draw down. Short-term US Treasuries are the safest route, if our concerned about preservation... but look to buy back into the market post-correction. The people who could afford to buy stocks in the 30s became very wealthy when the market came back.


-- Mr. Decker (kcdecker@worldnet.att.net), May 08, 1999.

Mr. Decker and I are at opposite ends of the Y2K impact spectrum, however, on this issue I agree with him. It makes no sense to cash in a 401K, or even take a loan against it as a hedge against Y2K, unless you have no other means of financing prudent preparation.

I am not a financial wizard, but I know two things:

1. If you cash in your 401K, you will pay major league taxes and penalties (I believe it's 20% tax off the top, and 10% penalty) if you could even get at it. You either have to quit your job or claim hardship to take money out of your 401K. I don't think any 401K fund manager / committee will consider Y2K as hardship.

2. The IRS, much to many folks disappointment, will still be collecting taxes on 4/15/2000. I don't care if they have to do it with quill pens and parchement; they will still be in operation. In addition to the 30% mentioned above, taking the money from your 401K will most likely boost you into a much higher tax bracket, and your overall tax burden will be much higher.

If you are concerned about market volitility and impact on the value of your 401K, redirect your investments to a fixed income fund (which most 401K's have, I believe).

Again, I'm not a financial wiz by any means. This stuff just seems to be prudent and common sense to me. Talk to an HR person at your company regarding 401K rules if you have any questions. And remember, a 401K is supposed to be a long term investment. Even if you take a bit of a hit due to a depressed market, it will not be nearly as bad as losing much of the value of your account right to the government.

-- Dan Webster (cantsp@am.me), May 08, 1999.

Get a copy of Michael Hyatt's new book THE Y2K SURVIVAL GUIDE and read the big section on "Money" (which consists of a few chapters) then decide. Posts like Deckers are absolutely moronic -- you have to start thinking of how to PROTECT your money, not grow it. To take a 30%-40% hit on your 401k, but use the money to acquire survival goods, cash in small denominations, and silver/gold in small coinage may be the wisest choice that you will ever make as opposed to losing all of it like everyone else will. But, that is for you to decide....

-- King of Spain (madrid@aol.com), May 08, 1999.

Right. Don't listen to an economist. What do they know? Listen to Hyatt instead. Cash out, take the loss, buy a whole lot of stuff you'll never need, sell it at a garage sale next year for ten cents on the dollar, and sleep easy.

Mine stays put.

-- Flint (flintc@mindspring.com), May 08, 1999.

1. Start your own corporation (if you don't have one already)
2. Start a corporate pension plan for yourself with you as the trustee.
3. Roll the 401K money into the corporate pension plan.
4. Now you can get personal control of the money and invest it in whatever you want.

Please note that I am not a lawyer or accountant. See your professional advisor for details and warnings about this plan.

-- Eddie Willers (ed_willers@hotmail.com), May 08, 1999.

The king of spain, as always is correct.

"You take it out of the 401(k) and you have taxes and penalties... depending on your tax bracket, you will be giving half your money to the government."

This statement by double-decker is moronic in the extreme.

You will NOT pay "half" to the IRS (which, by the way is illegal -see Joe Bannister for details).


Better fiat money NOW to do what you like with than a 401k in the markets which ARE going to tank.

You will probably have to take a hit on 20%. That's all. To me this is the price I have to pay. To get an 80% checque you need to leave your job. That's what I did - got a better (much) paying one to boot.

The 10% penalty is not payable until next April. Wanna bet what the situation will be like next April?

Flat tax - IF there is a government. Do not file next year. You may not have to pay the 10% if you are in the 55 or 59.5 age bracket.

You can get out of it on a disability clause. You can ask for an exemption. At any rate you will also have this 10% to short the market as it tanks.

Cash is king now. Take the money and run. Do NOT let the fund managers and the markets CONTROL YOUR WEALTH. Sheer stupidity. You do not have long to protect your savings so get to it! And don't leave it anywhere near Banks on near rollover - if Japan tanks it will happen overnight and you will wake up in the morning with a very big headache.

Good luck!

-- Andy (2000EOD@prodigy.net), May 09, 1999.

And most Y2K survival goods will not end up being sold at a garage sale for pennies on the dollar, assuming that Y2K turns out to be the big nothing that the pollys think. Stored food can be eaten, an electric generator can still be used, etc. (Geez, cash can even be deposited into a bank, though it seems sacreligious, somehow...)

BTW, the complete title of Michael Hyatt's new (published last month) is THE Y2K PERSONAL SURVIVAL GUIDE. There are a couple of similar titled books by other authors.

-- King of Spain (madrid@aol.com), May 09, 1999.

Can an IRA or SEP/IRA be rolled over to a 401(K)? Any research leads greatly appreciated.

Note: I'm considering investigating the plan described above to create a corporation and create a new 401(k) that I can self- administer.

-- Spamless (spam@spam.spam), May 10, 1999.


Too much time in the scrum? Perhaps you should avoid giving advice on the American tax system and stay within your area of expertise... whatever that is.

When you withdraw money from a retirement account, you pay a penalty of 10%. In addition, another 20% is taken out for federal taxes. The withdrawl is classified as income and must be claimed on your federal AND state tax forms. If you are in the upper tax bracket, federal taxes will take an additional 11%. Your friendly state tax collector will also take his share. This can run to 10%. This does not include any fees or charges by the custodian of the account.


-- Mr. Decker (kcdecker@worldnet.att.net), May 11, 1999.

Even the 20% withholding can be prevented. To do this, first roll the 401k distribution directly into a rollover IRA. Then withdraw the money from the rollover IRA, telling the institution holding the IRA not to withhold the 20%. As for Mr. Decker's comments: you'll only have to pay taxes if the IRS and the banking system are still in operation next year. That seems like a pretty low probability at this point.

-- Eddie Willers (ed_willers@hotmail.com), May 12, 1999.

Decker (double),

Read the other posts - you are a patsy - you don't pay the penalty until the next tax year fool. the 20% is also get-roundable with a little ingenuity.

The "rules" were put in place to stop people taking control of their lives. I know that, you know that. The difference is I have a conscience, you, at best, are an economic simpleton (on this thread for sure), at worst a gubbmint shill. I suspect the latter.

I've been in the USA for ten years or so, methinks YOU need to get up to speed on this without giving bogus "advice" to all and sundry.

Your first post for example said you would give up 50%!!!!

What a load of CRAP.

-- Andy (2000EOD@prodigy.net), May 12, 1999.

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