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Retirement Planning – Moving Invested Funds

Q: I am a fireman in Georgia. I am 49 years old and plan on retiring sometime in the next few months. I have a 457 retirement plan that I have been putting money in since 1992. In the past, my employer has given us two companies to pick from to put this money into. I have been putting money into the same company all of this time. Now, my employer is changing to a different company and they have plans to move 100% of our balance into a new and different company that will be administering the my employer’s 457 plan. The money will be going into a comparable fund to what I am in now, but not the exact fund. I actually have two questions about this:

 

1. Since this 457 money is mine and 100% of has been money that I have put into it, can they legally make me change to a different company?

 

2. If I do have to change to a different company, wouldn’t that really mess up all of the ‘dollar cost averaging’ I have been doing since 1992?

 

 

A: Thanks for reaching out with your questions and congrats on being so close to retirement.

 

First off, retirement plans do change from time to time and the money typically has to be moved. Usually the new plan will offer similar options and it sounds like that is the case here, even though it’s not the exact fund. It is probably worth asking if you are allowed to do an early rollover…otherwise known as an in-service rollover, and move it into an IRA. That way you’ll really open up your investment options.

 

As far as dollar cost averaging is concerned, moving the money should not have a negative impact on you. The key is to keep the money tax-deferred as well. But in your case, assuming all the money is pre-tax, it will be taxed at your income rate as you pull it out.


 

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