Episode 61: What Should I Do With My 401(k) When I Retire?
Segment 1:
HELLO Lower Alabama! Hello Gulf Coast! Welcome in. Welcome to Coasting in Retirement! That’s. Right. Thanks for joining us today, we’ve got a brand-new show full of great info coming your way! Josh Null here, I’m joined by co-host and show sponsor Jay Stubbs with Providence Partners. Jay, how you doing buddy?
Listeners: Jay and I are here to discuss financial topics relevant to those of you in or near retirement, living your best life along our part of the gulf coast. Here’s what we’ve got in store for you today: First segment – deep dive on our topic of the day. 2nd segment - at about 30 minutes past the hour - “News Headlines of the Week”. Then at roughly 50 minutes past the hour, stick around for our 3rd segment, we call it” Josh’s Crystal Ball and Big Mouth”. So buckle up, we’ve got a lot to get to!
Quick background on me for those new to the show. Again, my name is Josh Null, I am a fee-based financial advisor, I hold my FINRA Series 65 securities license, and I am the owner of Gulf Coast Financial Advisors, that’s a 100% locally owned, 100% independent investment management and financial planning firm with offices in Fairhope, Orange Beach, and Mobile! You can find more information on me and the team at Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com, or feel free to give us a call at 251-327-2124. If you missed that contact info, get a pen and pad ready because we will repeat our contact info several times throughout the show!
So Jay, I want to jump right into our topic of the day. One of the most common questions we get from clients is what should they do with their 401k, specifically the question “what should I do with my 401k when I retire?”. And it’s a very important question because more often than not the 401k account or accounts are probably the largest retirement asset a client has. So what I want to do today is answer the question of what to do with your 401k when you retire, and probably just as important, what NOT to do.
Let’s start with one of the most common decisions that many retires make with their 401k – facilitating a rollover into an IRA, or Individual Retirement Account. I think it’s important to note here, that just as with any 401k account from a former place of employment, more often than not you don’t have to roll those funds out of that 401k. I think it’s a common misconception that something has to be done, and while we are going to discuss the reasoning for doing a 401k rollover into an IRA, we’re also going to discuss reasons why you should leave your funds in your 401k. As with everything in our line of work, it all depends on your individual situation. But first, let’s discuss the factors to consider when exploring a 401k rollover into an IRA:
1. Costs – while most 401k plan fees have come down over the years, there are still outdated plans out there that have non-competitive fees, I’ve seen 2 to 2.5% on a 401k plan, which kind of defeats the purpose of what is supposed to be a low-cost vehicle to accumulate assets efficiently for retirement. Typically, larger 401k plans usually equate to lower fees, but even if you are retiring from a large organization, you need to calculate the all-in cost of your 401k vs the all-in cost of an IRA. If you’re planning on doing a self-directed IRA, then your costs should be lower. If you’re working with a fee-for-service advisor like GCFA, not only do you want to know the advisor fee, but you want to know what services are being offered for that fee. In 2025 and beyond, an advisor should be offering more than just investment mgt for their fee. And for those of you working with a commissioned based broker or insurance agent, you need to know what all the fees are – even if it technically isn’t “costing you anything because the company pays me directly”.
2. Control – Generally speaking, with an IRA, it’s a lot easier to do transactions such as trades, transfers, distributions and conversions. As we discussed on our last episode, make sure you’re working with a well-known custodian that has a platform with easy-to-use technology.
3. Investment Options – generally speaking, the investment options for a typical 401k will be limited, by their nature they’re designed to be one-size-fits-all plans. While a limited but easier to understand menu of investment choices can sometimes help avoid accidentally picking an inappropriate fund, an IRA will typically have much more robust and flexible investment options.
4. Consolidation and organization – especially those of you with multiple 401k plans at previous employers, keeping track of everything can be a pain. And it’s difficult for even seasoned professional to manage asset allocation across a bunch of 401k accounts at different companies, so doing DIY asset allocation and risk profiling can be an issue.
5. Ease of use – generally speaking, with an IRA you have better user experience, and there are no record keepers, HR professional or TPAs to run paperwork thru, making accessibility much easier.
6. Coordination across all plans, especially those of you looking to couple your investments with a comprehensive financial plan.
There are a couple of reasons why you DON’T want to do a 401k rollover into an IRA:
1. If you’re retiring before age 59 ½ but are 55 years old (or turning 55 that year). If you retire from the company that holds the 401k, you can access your funds wit out the 10% early withdrawal penalty. Note that you can’t touch your 401k’s from previous employers before 59 ½ without penalty, it has to be the company you currently work for. But depending on the rules in your current 401k, you can sometimes roll over previous 401k balances into your current 401k
2. If you are in the middle of a conversion, know that the IRS has what’s called an aggregation rule – they look at your total IRA assets to determine how much of the conversion is taxable, so when conducting a roth conversion you will want to avoid pre-tax IRA assets as much as possible, including balances in your Simple IRA and SEPs. Funds in 401k are not included in the aggregation calculation.
Listeners, if you’re unsure about what to do with your 401k, we encourage you to reach out to us. You can call us at 251-327-2124, or find us on our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. We have several meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, or a 30-minute zoom, or a 1 hour in-person meeting at any of our 3 office locations. You can find GCFA offices in downtown Fairhope, or Orange Beach just down the road from the Wharf, or in Mobile off Dauphin St and I-65. Reach out to us - we would love to meet you!
Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance, investments and money. Every week we scour the internet for financial articles that have important information for those of you in or near retirement. Join us after the break to hear Jay and I discuss this week’s relevant headlines in our “News Headlines of the Week” segment. Stay tuned!
Segment 2 - News of the Week:
“Welcome back to Coasting in Retirement, your host Josh Null here! As we discussed before the break, every week we scour the internet for financial articles that pertain to those of you in or near retirement. Our job is to help you all understand how these headlines impact you, especially when it comes to your money! Note – if you want to read our referenced articles yourself, we also include the links in our show transcript, which you can find on our website gulfcoastfa.com under the podcast tab. Alright Jay, without further adieu, let’s get at with the Headlines of the Week:
1. Alright Jay, let’s kick it off with a recent article from Fidelity. It’s titled “4 pitfalls to avoid when rolling over a 401(k) into an IRA”. The article lists the 4 basic choices that retires face with their 401k:
a. Keep the money in your former employer's plan if the plan permits.
b. Roll over the money into an individual retirement account (IRA).
c. Roll into a new employer's plan if it accepts transfers.
d. Cash out.
Then discusses the most common mistakes that investors make when facilitating a rollover, including not rolling into the correct type of IRA, getting a withdrawal check made out directly to you, having a rollover stall, and something rarely discussed but vitally important, not re-investing your rollover IRA funds. Let’s discuss:
https://www.fidelity.com/learning-center/personal-finance/401k-rollover-mistakes
2. Next up, a site we are referencing more and more on this show, InvestmentNews. I found this article from the NAIRA SmartBrief that you forwarded to me, so thank you for that. The article is titled “Financial advisor navigating explosion of actively-managed ETF’s” and while at first blush this may not seemed connected to our main topic today of 401k rollovers, I think it’s a great example of the stark difference between investment choices inside a 401k and those found in an IRA. Little context here: ETF’s, or exchanged traded funds, were originally designed to be a low-cost, relatively simple index investing option compared to higher cost, actively managed mutual funds. But as this article details, ETF’s have significant momentum in the fund investing space. What’s your thoughts on this evolution and how it impacts an investor’s decision to do a 401k rollover into an IRA?
https://www.investmentnews.com/etfs/financial-advisors-navigating-explosion-of-actively-managed-etfs/261374
3. For our third article Jay, I thought I would highlight a particular irritation I have with most 401k record keepers: their insistence on mailing an old school paper check when conducting a 401k rollover. This article from Yahoo Finance details the worst possible outcome with this process. It’s titled “NYC man lost $114,000 – his entire 401(k) – after his physical check from Paychex was stolen and cashed’. This article details some of the legal maneuvers this guy has done to get his money back, and some tips for avoiding this type of situation, but first let’s discuss what is often a giant, outdated pain in the ass process – getting funds out of a 401k for a rollover. Most people that have never done a rollover are shocked when they learn their only option is a paper check, and even worse, some record keepers refuse to offer priority mailing with a tracking number. I’ve got a few stories for you, and how we handled them, but first, what’s been your experience?
https://finance.yahoo.com/news/nyc-man-lost-114-000-114400596.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEDdKWIqHyk2I_GzWoZHqlMmEHB1uqa3gpCbWgKEUYuB48xRswRfr0CQ8LAM-Ff537CHb0bFykUG4u9C0SCGctE7nh1HDO0o4aK1jsAsBnz3eMUOisO1iUHZ65w0zS9uIsGE8F1NJJYfyUz2kQjXXyVfPRUVLt62KWNzwnXll4CB
4. Last article Jay, and I wanted to use it to address a question that may be on some listener’s minds. Historically, financial advisors manage IRA’s and individual accounts in an investment management arrangement, or what’s sometimes called wealth management, and while there are advisors assigned to 401k plans, that role is typically different than an advisor that directly manages your investment accounts. But what if an investor wants to keep their funds in their 401k but still hire a financial advisor?. SmartAsset has a recent article titled “Do I Need a Financial Advisor for My 401(k)?” that tackles this issue. I’ll give you my point of view then ask for yours. First, there are ways for a financial advisor to be more active in your 401k plan, you can incorporate a system such as Pontera or simply choose a self-directed brokerage option on your 401k menu, if available. I often advise people that are NOT in the retirement red zone to keep plowing money into their 401k and do a rollover when it’s closer to retirement, but I can still work with clients like this with a financial planning fee arrangement. What’s your thoughts?
https://smartasset.com/retirement/do-i-need-a-financial-advisor-for-my-401k
Listeners, I hope you learned something from our discussion around these recent financial headlines, all of this matters to your money! Speaking of money, if you would like to start the conversation with us about your investments and retirement planning, I encourage you to pick up the phone and give us a call at 251-327-2124, or visit our website gulfcoastfa.com and click on the blue button in the upper right hand corner to set an introductory phone conversation, or a zoom, or, better yet, an in-person consultation at any of our 3 offices in downtown Fairhope, Orange Beach or Mobile.
Alright folks, coming up next: Josh’s Crystal Ball and Big Mouth. What have been some of my predictions? Have I been right? Was I ever wrong? How wrong? What do I think is going to affect investors in the near future, or maybe the distant future? We talk about all of these things and poke a little fun at my big mouth. Stay tuned!
Segment 3 – Josh’s Crystal Ball and Big Mouth:
Welcome back! Your host Josh Null here, alongside guest co-host Jay Stubbs of Providence Partners. So, I am opinionated, I have strong opinions at times, I would say a radio show host that isn’t probably wouldn’t be very interesting to listen to. And I am paid in my profession to offer professional guidance and opinions to my clients, otherwise what use am I? Just replace me with AI. I like making predictions, and while I usually proved right, there are times I swing and I miss. Want to hear me eat a little crow? Then let’s get at with Josh’s Crystal Ball and Big Mouth.
So earlier this year, when the S&P 500 index was hovering around 5500, some of the Aptus Capital Advisors and I made a prediction about where the S&P 500 index would land at the end of 2025. I said 6200, John Luke Tyner said 6500 and JD Gardner predicted 6800. As of this recording, the S&P 500 is over 6300, but we still have over 5 months to go and a lot can happen. While you’re welcome to throw your prediction into the hat Jay, what I would rather have you briefly explain how the S&P 500 and other well known indexes function with insurance products that are indexed, such as FIA’s and IUL’s, then give your prediction if these products will end the year with higher sales than last year, and why.
Listeners, I hoped you enjoyed a little behind the scenes commentary on how Jay and I form our opinions, and that as fathers and husbands, we are human, and we do pay attention to broad world events. We invite you, one last time, if you would like to start the conversation about your own retirement plans and dreams, then give us a call at 251-327-2124, or visit our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. We have several meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, a 30 minute zoom, or a 1 hour in-person meeting at any of our 3 office locations – downtown Fairhope, Orange Beach of Canal Rd, or Mobile near the intersection of Dauphin St and I-65. Reach out to us - we would love to meet you!
Folks, that is it for this week! I want to give a huge thank you to my guest co-host Jay Stubbs, thank you to our show sponsor, Jay’s business Providence Partners, thank you to our two radio stations, FM Talk 106.5 out of Mobile and WHEP 92.5 FM in Foley, many thanks to the provider of our show music, local band Sloth Racer, huge thank to the show producer, my son Payton Null, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well! Until we talk again, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!
GCFA Disclosure:
Gulf Coast Financial Advisors, LLC ("GCFA”) is a registered investment adviser offering advisory services in the State of Alabama and in such other jurisdictions where it is registered, filed the required notices, or is otherwise excluded or exempted from such registration and/or notice filing requirements. Registration does not indicate or imply that GCFA has attained a particular level of skill or ability, nor does it constitute an endorsement of the firm by the Securities and Exchange Commission (SEC) or any state securities regulator.
The Coasting in Retirement radio program serves mainly to disseminate general information including those pertaining to GCFA’s advisory services, together with access to additional investment-related information, publications, materials and links. The publication of this radio show should not be construed by any client and/or prospective client as GCFA’s solicitation to effect, or attempt to effect transactions in securities, nor should it be interpreted as GCFA providing personalized investment advice, or any type of professional advice, for compensation, wherever this program is broadcast. Any subsequent, direct communication by GCFA with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.
Certain information, news stories, headlines, data, charts, graphs, figures or statistics presented on this radio program may have been obtained from third-party sources that are believed to be generally reliable but which GCFA may not have independently verified. GCFA does not and cannot guarantee the timeliness, accuracy, or reliability of any such third-party information and undertakes no obligation to update or correct any information that may become obsolete, unreliable, or inaccurate. The radio program also contains the opinions, views, and perspectives expressed by Josh Null and any other GCFA representatives which are solely their own, and do not necessarily reflect the opinions, views, or perspectives of GCFA as a firm. Such personal views and opinions should not be construed as endorsements or professional advice from GCFA. GCFA makes no representation or warranty regarding the accuracy, completeness, or reliability of any information on this radio program, and disclaims any liability for any direct or indirect loss or damage incurred from using or relying on such information.
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