Episode 79: 401(k) Rollover Sharks
Segment 1:
HELLO Lower Alabama! Hello Gulf Coast! Welcome in. Welcome to Coasting in Retirement! Thanks for joining us today, Josh Null here, alongside co-host Michelle Lee Melton-Null, Michelle how are you doing? We are back in Coastal College’s recording studio, beautiful downtown Fairhope, ready to put together another great show for those of you tuning in!
Listeners: Michelle and I are here today 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: First segment – deep dive on our topic of the day. 2nd segment - at about 30 minutes past the hour - “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 is 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!
Alright, Michelle, let’s get to the show. You know those aerial drone videos they take of beaches, especially the Gulf Coast videos? What do they almost always show, sometimes just a few feet from the people swimming? That’s right. Sharks. Tons of sharks. Most of the swimmers are oblivious. In our industry, there’s a different type of shark, something I call the “401k Rollover Shark”. Most retirement plan savers don’t realize that as they start dipping their toes into the gentle waters of retirement, just a few feet offshore are thousands and thousands of these 401k rollover sharks just cruising back and forth, back and forth, constantly looking for their next meal, looking to take a bite of something, anything, even if it leaves a bloody mess behind. Today listeners we are going to give the shark repellant you need so that the 401k rollover sharks don’t leave your retirement accounts maimed, or worse yet, torn to bits.
We’re discussing rollovers, which typically involves moving a 401k balance to an IRA, so let’s take a minute to describe the primary differences between a 401k, or if you’re in public service, a 403b, and an IRA. 401k’s and 403b’s and their cousin 457’s are offered as group retirement plans at your place of employment, often with some type of company match, often thru well-known companies such as Fidelity, Empower, John Hancock or Principal, just to name a few. IRAs, or Individual Retirement Accounts, are just that – you own the account, and while it may be tied to your employment if you have a SEP IRA or a Simple IRA, you still maintain individual control over the account. There are 4 broad types of IRAs, 2 we just mentioned – SEP IRAs, or Simplified Employee Pension, Simple IRAs, pre-tax Traditional or Rollover IRAs, and after-tax Roth IRAs.
It is very common, and one of the big reasons our practice exists, or any other financial advisor practice to exist, for folks going into retirement to do what’s called a “rollover”, that is, do a tax-free transfer from their soon-to-be former employer’s 401k into their own Rollover IRA. It’s become so common, in fact, that my industry sometimes preys on investors’ assumption that they HAVE to do a rollover, or worse, that they should do an early rollover well before the investor’s retirement date.
Just like real life sharks have different track records for how dangerous they are to people, 401k rollover sharks differ in the danger they present to investors, so we’ll give each type of advisor its own shark avatar that hopefully helps you understand the danger with each type. I’m going to start with the sharks that typically don’t take huge bites out of people up to the big dog on the block, Great Whites, who can maim and kill someone even when just taking what scientists call a “curiosity” bite. Here are our 401k rollover shark avatars:
- Hammerheads
- Blacktips
- Bull sharks
- Great Whites
Let’s start with Hammerheads, which don’t have a record of ever killing anyone but still have done damage to people, much like its hammerhead 401k rollover shark equivalent. This is the 401k rollover shark that convinces someone fortunate enough to retire early to do a premature rollover before they turn 59 ½. This shark either ignores or doesn’t know the “Rule of 55”, that is, if you leave your job at 55 years old or older, but you leave your 401k account in place, you can often access that 401(k) money without paying the 10% penalty for early withdrawals before age 59 1/2. Once you roll your 401k into an IRA, you're locked out until 59½ unless you want to pay a 10% penalty.
Next up is the Blacktip 401k Rollover Shark, which must like the real-world fish, is both very common along the Gulf Coast, and while they don’t typically kill people when the attack, there’s a ton of them around here and they can be aggressive. I’m assigning this shark to the annuity salesguy that tries to convince you to rollover most or all of your 401k into a Fixed Index Annuity. Michelle, this show used to be followed by a Blacktip 401k Rollover Shark, but he bailed on the Mobile market…does that mean we’re the killer whales that moved in? Maybe. Anyway, the Blacktip 401k Rollover Shark is going to try to convince you that his annuity has significant upside potential with no downside risk, that the annuity gives you special tax benefits, that you can access your money anytime, and that the annuity will often outperform the market over time because draw down risk is eliminated. Unfortunately, all of these things are lies or misrepresentations coming by that big smiley shark face.
The truth is your 401(k) or traditional IRA is already tax-deferred. Buying an annuity for "tax deferral" inside a retirement account is like wearing a raincoat inside a submarine. It adds no extra tax benefit. You’re also trading ease of full access to your money for only 10% free access per year, often for 7-to-10-years, or longer. And as we’ve proven on this show in the past, if you look at fixed index annuity performance over a period of years, benchmarked against a real index performance vs a made up nonsense index, it rarely, if ever, keeps up with true equity exposure. Remember listeners, annuities are for capital preservation and income production. If you’ve got a pushy Blacktip 401k Rollover shark trying to get up in your biz, give us a call.
All right, here comes our Bull 401k Rollover Shark. He’s a crafty fellow; he uses one of the most common but "invisible" shark tactics. This tactic involves telling you that they can get you the exact same funds you had in your 401(k), but with "more personal service" in an IRA. The problem with this? Even if you’re actually moving into exactly the same type of fund, which is highly unlikely, you’re typically moving from Institutional Share Classes in the 401k into Retail Share Classes in the IRA. The other problem with the Bull 401k Rollover Shark is that they don’t tell you that the fees in your account will undoubtedly be increasing, sometimes significantly.
Often people roll over from a 401k where they are paying an all-in expense rate of 25-75 basis points to a situation where they are paying 2 to 3 times that (explain what basis points are). And if your advisor is just functioning as a broker or even just an investment manager, you’re often stuck getting the same level of basic service you had with your 401k for 2 – 3 x the expense. You should always know the fees before conducting a rollover, it should be in easy-to-understand black and white print, and in my opinion, in 2026 and beyond these fees should incorporate financial planning services, at the very least. Our fees at GCFA are very easy to understand, and we include a ton of services. If you get hooked up with the wrong Bull 401k Rollover shark, you may be crawling into retirement missing an investment limb.
Note: I include in the Bull 401k Rollover Shark category you annuity shops that move your clients from annuity to annuity by often replacing that last annuity you sold to the client with a “newer and better” annuity, which is often not true, especially you sharks that induce a surrender charge on the previous annuity, because if you’re being honest with yourself, you’re only doing it to generate a fresh commission. Unfortunately for you a killer whale entered you market and is keeping a close eye on your shenanigans.
All right, time to get to the Great White of 401k rollover sharks. These sharks apparently have the most money to spend because I hear and see them often on TV and radio. I even seen their ads on YouTube because apparently YouTube wants to irritate me. An encounter with a Great White 401k rollover shark usually starts with a late-night ad or getting a cold call warning about "the dollar collapsing", or "government seizures," or sometimes even “societal collapse”, whatever the terrible news, they’re all urging you to move your 401(k) into a physical Gold IRA. I have no problem with gold, and I can tell you for a fact that neither does Michelle, but here’s the problem: the math doesn’t work.
These "Gold IRAs" often sell coins at a 50% to 300% premium above the spot price. You start your retirement 30% in the hole on day one. Gold in itself is a fine investment over the long run, it’s usually fairly stable but sometimes the gold market goes nuts like it has recently, but we have decades if not centuries of data to prove that owing pieces of profitable companies always beats holding precious metals over the long run. On top of this you pay high annual fees to store metal you can’t even see or touch. And good luck when you need your money, you’re about to get another arm bitten off with heavy fees and "buy-back" spreads.
Michelle, I have one bonus shark category before we close this segment. I googled “dumbest shark” and learned that there’s a shark called the dumb gulper shark that is often cited as the "dumbest" shark due to its common name and status as a slow-moving, deep-water dogfish. The reason I needed a dumb shark is because I was trying to not disgrace any types of real-life sharks with this next type of 401k rollover shark: the “401k is a scam” dumb gulper shark.
This is a newer breed of shark found on social media and YouTube. They use viral videos to claim that 401(k)s are a "scam" or a "trap" by the government and that you should "be your own bank. They often use fear of taxes or stock market drops to lure you into what’s called "Infinite Banking" or crypto or try to sell a high-cost life insurance policies with a poorly rated insurance company. These dorks are called “fin-fluencers” so I guess there’s the fin part…but telling people to walk away from free money thru employer matches, or to avoid getting tax deductions on their income, or missing out on access to low cost index funds, all these things that most 401k plans provide, is just dumb beyond measure. And a lot these guys are scam artists. So the next time you see a video claiming that 401k plans are a scam, just think, Dumb Gulper Shark.
That was fun, right? Do you think we’ll get a call from the shark group saying that we disparaged these beautiful and majestic creatures of the sea?
Alright listeners, if you want to set up a follow-up conversation with the team at Gulf Coast Financial Advisors, it’s easy. You can catch 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. There are flexible meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, a 30-minute zoom, or my preference, an in-person meeting at any of our 3 office locations: Downtown Fairhope, Orange Beach just down the road from the Wharf, or in Mobile near the intersection of 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 relevant to those of you in or near retirement, then give you our honest opinion about these headlines. So join us after the break to hear Payton and I discuss this week’s relevant headlines in our “Headlines of the Week” segment. Stay tuned!
Segment 2 - News of the Week:
Josh: Welcome back to Coasting in Retirement, your host Josh Null here, alongside co-host Michelle Lee Melton-Null. 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, or at least we tell ourselves it is, 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. Now without further adieu, here’s Michelle with the Headlines of the Week!
1. Michelle: Alright Josh, our first article is from Yahoo Finance, it’s titled “I’m a Financial Advisor: Avoid These 7 Mistakes When Rolling Over Money Between Retirement Accounts”. This article points out common errors such as having the rollover check directly written to you, not separating pre-tax and post-tax accounts, and being unprepared with transfer details. It also cautions investors to make sure any 401k loans are paid off before doing the rollover, and making sure they do something called a trustee to trustee transfer versus an indirect transfer, with all of these mistakes potentially triggering thousands of dollars in taxes and, sometimes, penalties. Do you see these types of mistakes in your practice, and if so, how do you make sure your client’s don’t make them?
Josh: Calling with the client, asking record keeper to mail check directly to custodian, how to title the check, old school paper checks versus electronic transfer, ACAT,
https://finance.yahoo.com/news/m-financial-advisor-avoid-7-120020539.html?guccounter=1
2. Michelle: Next up Josh, we went a little hard at the Gold IRA guys in the first segment, those Great Whites devouring everything in their path, so you asked me to find an article that backed up your statements. I decided to go straight to the source, the Commodities Futures Trading Commission. They have a white paper tilted “Lies Versus Facts: The Truth Behind Gold and Silver IRA Scams”. This white paper details the five most common lies told my Gold IRA marketers, such as “putting all of your money in precious metals is safe and secure”, that the “government can’t seize collectible coins”, and that there are “secret tax loopholes to owning precious metals”. But I feel like the one that will get you most riled up is that Gold IRA marketers often using political or religious affiliations to build trust in their victims, er, customers. That said, Gold IRAs are obviously a thing, otherwise we wouldn’t be talking about them, so care to expound on why you associate these marketers with the most aggressive and deadliest shark, the Great White?
Josh: So I play a lot of pick up bball games. There are certain unwritten rules, such as, no one tries to take a charge, or don’t dive for loose balls near someone’s legs, b/c that how old guys get hurt. One of the main unwritten rules in our business is that if someone is pitching you an investment in church, don’t buy it. There are no secrets to IRA or 401(k) rollovers, just ask your tax advisor. And, there are no special tax breaks for self-directed IRAs, if anything the rules are more complex and the fees are higher. If you call these groups you’re probably speaking to a telemarketer and not someone with a securities license. And even if you strip all of that away, you’ve got to remember the fundamental problem precious metals, or if you want to be generous, crypto has: the only chance you have of gaining in value is if you can find someone to pay you more than you paid for the “asset”. As opposed to stocks, there’s no potential profit distributions in the form of dividends, because there’s no revenue to begin with, there’s no potential compounding of interest, and the market tends to either be illiquid, as the case with precious metals, or controlled by a small group of insiders, like crypto.
https://www.cftc.gov/sites/default/files/LearnandProtect/MetalsIRALies_0.pdf
3. Michelle: Last article of the day. In our first segment, you equivocated the annuity shops with Blacktip sharks, which while aggressive, apparently rarely kill someone when they bite them, according to Google taking “smaller bites”, which still sounds ridiculous and horrible. What I took from you was that your particular concern was that these annuity shops often put a high percentage of their client’s assets into annuities. I decided to see if our old buddy “Stan the Annuity Man” agreed with you, so I found an article written by Stan simply titled “What Percentage of Your Portfolio Should Be in Annuities?”. Stan says no more than 50% of your total investible assets should be used to purchase an annuity. I did other research and found articles referencing 75%. So my question to you is this: is it 50%? Is it 75%? And how does an annuity salesperson do higher than 75% of a client’s investible assets, according to you, sometimes the whole kit and caboodle?
Josh: First, there’s a reason the annuity shops are Blacktips and not the more deadly Bull sharks or Great Whites: there are worse things than being stuck in a fixed index annuity because it does have some downside protections. You may eventually lose the inflation battle but if you get the desired capital preservation and income production from an annuity, so be it. You could be losing your proverbial ass to a Great White selling you a Gold IRA or crypto or paying ridiculous fees to a Bull 401k Rollover Shark. I think the percentage of investible assets allowed into an annuity varies by the type of annuity. But to answer your question about how salespeople get super high percentages of a client’s assets in a sale: the salesperson lies on the application. Fortunately, most if not all A rated respectable annuity insurance companies do significant due diligence on a client’s assets. But there are insurance companies willing to look the other way, or at least not ask for a bunch of proof of the client’s assets, especially if it’s a large annuity sale.
https://www.stantheannuityman.com/learn/what-percentage-of-your-portfolio-should-be-in-annuities
Listeners, if you want to set up a follow up conversation with the team at Gulf Coast Financial Advisors, it’s easy. 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. There are flexible meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, a 30-minute zoom, or my preference, an in-person meeting at any of our 3 office locations: Downtown Fairhope, Orange Beach just down the road from the Wharf, or in Mobile near the intersection of Dauphin St and I-65. Reach out to us - we would love to meet you!
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, joined by co-host Michelle Lee Melton-Null . 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, so if I don’t have anything intelligent to say, just replace me with AI. I like making predictions, sometimes I hit the bullseye, sometimes I swing and I miss. Is there any crow to eat? Let’s get at with Josh’s Crystal Ball and Big Mouth and find out.
Michelle: So, whatcha you want to talk about today Josh? Iran? Politics? Religion? Gas prices? Inflation? Crypto? So. Much. Good. News. Lort. I’ve got a new one for you: Private Credit. According to multiple news sources, private credit is not having a great time in 2026. Given that private credit is something that gets often gets introduced to high new worth investors, I wanted to give the floor to you to explain what it is, why it has been struggling in 2026, and most importantly, get a prediction from you about how all of this is going to play out and why it matters to investors that are not in private credit:
Josh: When private-equity firms and other companies that aren't banks lend money to businesses, such as software companies and auto lenders. Banks often are more reluctant to lend directly to these businesses, which they see as riskier bets — but they're still exposed to them, because banks do lend to private credit firms. The private credit sector has been growing for years and is now estimated to be a $3 trillion industry,
Well, listeners, I hope you enjoyed a little peek into how we form our opinions and make predictions. We invite you one last time, if you would like to have a no-pressure, no-obligation conversation about your investing goals and retirement dreams, you can call us at 251-327-2124, or find us through 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, all the way to an in-person meeting at any of our 3 office locations. You can find GCFA offices in downtown Fairhope, or Orange Beach off Canal Road, or in Mobile near the intersection of Dauphin St and I-65. Reach out to us - we would love to meet you!
That’s our show for this week! I want to give a huge thank you to my co-host Michelle, thank you to the producer of the show, Payton Null, thank you to our show sponsor, Providence Partners and Jay Stubbs, thank you to our awesome radio station, FM Talk 106.5 out of Mobile, many thanks to the provider of our show music, local band Sloth Racer, 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!
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