Been in Honeywell 15 years, finally taking the leap and escaping for another secure opportunity, what should I do with my 401K and the Honeywell pension? I still have 15 years till retirement? This is an honest question to others who have moved on.
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For both your 401k and Pension (assuming Plan B as you have 15yrs), suggest you roll them over into an Individual IRA so you retain the tax benefits and only pay income tax after 59.5yrs and you start withdrawing without penalty.
It was stated that Voya is low cost. Also look at Vanguard which is the financial industry low cost leader. They have many different investing funds available. Recommend you do some reading and get informed. Suggest you stay away from "loaded funds". If you want someone to help you invest, make sure you are talking to a CFP who has a fiduciary duty only to you. Most all others in finance world as "salesmen" working on a fee/commission basis that comes out of the money you entrust to them to manage.
As the other poster mentioned. The Honeywell/Voya 401K plan fees are lower than most other companies and certainly better than going with Edward Jones! I left Honeywell 18 months ago and looked into moving my 401K. There was no option that was as inexpensive as the Honeywell plan so I left my funds. Invest in the index fund(S&P)...it has the lowest fee.
Compounding fees are something most people don't look into. Financial advisors charge 1% and that seems low but once you add on the fees for their funds it balloons to 3-4%. That's what Ameriprise charges my mother but I can't convince her to change.
Federal law requires that a benfit plan provide for vesting either 100% after 5 years or 20% per year beginning at 3 years. If you have less than 3 years, then you will lose the company contribution, more than 7 you get to keep it. Between 3 and 7 years, depends. IIRC, the 401K is 100% at 5 years.
I recommend to everyone that they get the Summary Plan Descriptions for the benefit plans that apply to you and understand them when making personal decisions.
Hi to all. What about if I have been in Hon only two years and found another job? Do you know if I loose the money paid by Hon to the plan?
The $733 drop at 62 is buried in the pension plan regs for the plan I have. It took a financial advisor a week (no charge to me) to go through the huge stack of papers and find that in the fine print. Evidently they assume because technically you can collect social security at 62- not that most will but you can- they drop the amount of pension down $733 a month at that point. I have the Bendix plan just FYI
One thing that is good/better than average at Honeywell is the 401k fees. I had a few 401k plans that I left in place when I changed employers and found that the fees at Honeywell are lower so I rolled those plans into this one. Unless a new employer offered a better fee basis or an IRA offered a substantial fee saving (and when I looked they did not) I would leave your 401k with Honeywell.
Thanks for the clarity and info on the Roth versus traditional. I will be starting both immediately.
To the poster about the drop of $733 dollars in the plan once one reaches 62 years of age - can you please clarify? Thanks!
The only problem moving to a Roth is you will take a huge tax hit since Roth is after tax dollars. Moving to a regular IRA is seamless and will give you a broader spectrum of investments to choose from. It's seamless because regular IRA, like your 401k, is pretax dollars. Roth is a great investment though for future investments- since it's after tax money used for initial investment, you pay no tax on the gain when you cash it in. Pretty sweet! Right now you can start a Roth for as little as $50 a month but in April 2017 the rules are changing to a minimum $5k to start. Those that start early with a smaller amount are grandfathered in at that smaller amount. Just FYI
Depending on how much you have in your 401k- I would check out a financial advisor. We took ours to Edward Jones for advice- had several very informative and very useful free meetings. They also gave us great advice about the pension. Our only regret was that we didn't seek that advice out years ago. They went through the pension plan thoroughly and showed us that first of all the growth (in ours) pretty much stops once leaving Honeywell so once stabilized with a new job the advice was to start drawing on is ASAP to maximize the amount. We found out in the fine print that at age 62- whether you are or not- the plan drops $733. So drawing early is beneficial if you are fully vested to do that.
I would seek out someone professional to get advice from.
I would move to a Roth IRA!!! Contact an investor and maybe your insurance company can assist with securities.
I would move the funds to the stable fund until you land the new role. After settling in you can either manage your funds within the Honeywell account or roll it over into your new companies 401k. Stable fund account ensures you don't have to worry about your money during the transition. You won't earn much but you will lose nothing. Outside of company 401k, the banks will charge you a percentage (3-5%) for you to put your funds under their account - not really worth that IMO.