401(k)s Are a Negligible Source of Income for Seniors

[haele]

74. Portability is only recent. And many 401ks are a mix of company stock and a handful of funds.

Since 1991, I've had 4 different 401Ks, and only one of them didn't have a company stock option (which I wasn't able to vest in, didn't last the two years necessary required that company). I have had to roll three 401ks into IRAs managed by the three different financial organizations that had run them; Lincoln Mutual, Vanguard, Fidelity. My current company uses Vanguard, but my previous Vanguard account was with a different company over 7 years prior, so the rules for those accounts aren't the same. My current employer, like two prior employers, used to be an employee-owned company, so a managed company share fund (max of 20% investment) was included as part of the 401K fund menu separate from whatever stock may be available in a different account for additional retirement investing (or public investing, once the company decided to go public). In my experience, managed company shares in the 401Ks tended to be a good pick through the mid 2000's; they usually tended to have a better return over the short run, which worked well in technical fields where people jumped companies every 3 - 5 years. I've got about $7K in managed company funds in my 401K, down from $9K six years ago before we went public. Just in time for the stock market bust (sigh).

Now, I might be able to roll the amount less the embedded company shares that I have in this account into another 401k as some sort of seed, should I have to find a new employer, but then again - it's company shares. I'm not up on the tax implications, but I don't think company stock is portable; I am under the impression that from what my company rules are that you need to buy them back or roll them into a money market fund in your 401K account, which is safer, but does not have a good a return as the stock may have originally had.

Haele