Sorry to hear that this happened to you. My 401k had great ultra low cost funds and I would have been happy to leave my funds there, but when I retired, I was able to make good use of the Net Unrealized Appreciation strategy with employer stock (for those not familiar with this, you are able to have shares of employer stock distributed to you in a taxable account at cost. To the extent you have tax-paid funds in your 401k, you can remove company stock tax free.) I was with the same company for almost 4 decades and had a lot of very low cost basis shares. I then donated those to a donor advised fund, getting a deduction while still in a very high bracket and never having to pay capital gains. NUA is considered a distribution, which triggers the obligation to fully distribute the 401k within the calendar year. Even though this strategy was very profitable, I was very uneasy while I awaited the paper checks (TIRA & RIRA) from the custodian of my 401k. It only took about a week, and I went straight to our local Schwab branch as soon as they came. I was lucky that the market moved sideways during that period. The financial firms have no incentive to move faster. Many of the checks they are sending are big, and they want to double and triple check everything before they do. And by putting you in the middle of it, they can reduce fraud. I looked at buying options for protection, but deemed it too expensive. In-kind transfers would help in most cases, though in mine the equity funds were proprietary (simple index funds with lower fees than Vanguard's) so you had to cash out for distributions.
I read the originally and was profoundly influenced by it. I am grateful for the clear, logical and dispassionate writing. Now I know what I am giving each of my children for Christmas this year. I tried to teach them the pillars over family dinner, but its time for them to read and learn themselves. (They are all doing well, but haven't had to navigate through crises of the magnitude that I have, and as much wisdom as they now think their father has, hearing it from Bill will be better.)
Comments
Sorry to hear that this happened to you. My 401k had great ultra low cost funds and I would have been happy to leave my funds there, but when I retired, I was able to make good use of the Net Unrealized Appreciation strategy with employer stock (for those not familiar with this, you are able to have shares of employer stock distributed to you in a taxable account at cost. To the extent you have tax-paid funds in your 401k, you can remove company stock tax free.) I was with the same company for almost 4 decades and had a lot of very low cost basis shares. I then donated those to a donor advised fund, getting a deduction while still in a very high bracket and never having to pay capital gains. NUA is considered a distribution, which triggers the obligation to fully distribute the 401k within the calendar year. Even though this strategy was very profitable, I was very uneasy while I awaited the paper checks (TIRA & RIRA) from the custodian of my 401k. It only took about a week, and I went straight to our local Schwab branch as soon as they came. I was lucky that the market moved sideways during that period. The financial firms have no incentive to move faster. Many of the checks they are sending are big, and they want to double and triple check everything before they do. And by putting you in the middle of it, they can reduce fraud. I looked at buying options for protection, but deemed it too expensive. In-kind transfers would help in most cases, though in mine the equity funds were proprietary (simple index funds with lower fees than Vanguard's) so you had to cash out for distributions.
Post: Missing the Action
Link to comment from July 22, 2023
I read the originally and was profoundly influenced by it. I am grateful for the clear, logical and dispassionate writing. Now I know what I am giving each of my children for Christmas this year. I tried to teach them the pillars over family dinner, but its time for them to read and learn themselves. (They are all doing well, but haven't had to navigate through crises of the magnitude that I have, and as much wisdom as they now think their father has, hearing it from Bill will be better.)
Post: Courage Required
Link to comment from July 22, 2023