# Looking for some advice concerning my 401(k) **URL:** \ **Category:** In My Humble Opinion\ **Created:** [November 4, 2017, 1:36pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662 "2017-11-04T13:36:02Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [November 5, 2017, 9:31pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/21 "2017-11-05T21:31:55Z")
> [@Bill\_Door](#): > > So where does the agents $700 come from, the commission fairy? It comes from the company that created and sells the annuity, and is derived from a number of things - the annual fees that you’ll eventually pay on the annuity, any upside opportunity that you are being limited from while in the annuity, etc. But it is an absolutely true statement that you do NOT pay the commission out of the annuity principal itself on the front end - jasg’s statement being a misleading one that I wanted to clear up. > [@](#): > > I have nothing against a salesman who honestly reports the fees and commissions paid, but someone who pretends not to be charging those fees is certainly lying by omission. Absolutely. So why are you lying about where the commissions are coming from? Again - they’re absolutely not coming out of the account itself, making it impossible to “[take] them years for the value of the annuity to recover [from the commission].” ---
**Author:** ![NAF1138](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/naf1138/32/3245_2.png) [@NAF1138](https://boards.straightdope.com/u/NAF1138)\ **Post date:** [November 5, 2017, 9:45pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/22 "2017-11-05T21:45:34Z")
> [@Bill\_Door](#): > > So where does the agents $700 come from, the commission fairy? You put in $10,000, and the account value shows as $10,000, but that’s not really true, is it? The value of a thing is what that thing will bring, and how much is that account worth? You can’t get $10,000 for that account, there are surrender charges that can run as high as 10%. > > I have nothing against a salesman who honestly reports the fees and commissions paid, but someone who pretends not to be charging those fees is certainly lying by omission. The surrender fee is more than the cost of the commission by a long shot (average annuity commission runs about 4% though some are as high as 8% some as little as 1.5% These commission rates have no bearing on the surrender fee which is pretty uniform from product to product.) And yes, if you fail to disclose surrender fees you broke the law and legal precedent currently says you will do jail time if caught. That said, legally also, commissions on annuity products can not come from policy funds any more than the TV adds companies run can come from policy funds. Those funds are actually locked. If you find someone who is actually a full time retirement planner with a track record and references, I promise they are more interested in making sure you are happy with their plan than how many extra dollars they can squeeze you for. Many will offer both services because the real money is in fee based planning. It’s not like fee based advisers don’t get paid just as handsomely (sometimes more handsomely) and don’t get me started on the hidden fees in most funds. Have you ever tried to figure out what fees you are really paying on a 401k? Try it sometime. It’s fun to realize that while you think you are paying 75 basis points you are actually paying closer to 6% a year which is why your 401k performance hasn’t reflected the actual stock market growth. Again, this isn’t directly my line but I have worked in adjacent fields long enough to know many good people and many crooks on both sides of this particular fence and the venom I often see directed at commissioned advisers by people who don’t know better and people with an axe to grind (:cough: Dave Ramsey :cough: ) gets my blood up. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [November 5, 2017, 11:12pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/23 "2017-11-05T23:12:12Z")
> [@Munch](#): > > Absolutely. So why are you lying about where the commissions are coming from? Again - they’re absolutely not coming out of the account itself, making it impossible to “[take] them years for the value of the annuity to recover [from the commission].” You know - I’m sorry that I implied that you are lying here. That’s out of line. There’s no need for a helpful thread for John Mace to descend into mud flinging. This topic has been getting a lot attention on the SDMB lately, and there’s been a tremendous amount of uninformed opinion flying around. I’m just trying to clear the air a little. ---
**Author:** ![ASGuy](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@ASGuy](https://boards.straightdope.com/u/ASGuy)\ **Post date:** [November 6, 2017, 2:13am UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/24 "2017-11-06T02:13:52Z")
> [@Bill Door](#): > > …if your other income is low enough in your sixties that’s an excellent opportunity to take out just enough to avoid bumping you to the next tax bracket… Totally agree with this. As soon as I turned 62 I started big distributions because I was no longer working and my income was functionally zero. I distributed just enough to keep me below the 37% bracket. > [@](#): > > You can go to $91,900 without getting into the 28% bracket. Disagree. I’m not a tax person but in order to stay below the 25% tax bracket my maximum distribution is about $37,500. That’s a pretty big difference from $91k. In any case, a financial advisor, even if hired only one time, is the way to go. With a reputable financial advisor you won’t need luck to come out in good stead. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 6, 2017, 3:52am UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/25 "2017-11-06T03:52:10Z")
> [@ASGuy](#): > > Totally agree with this. As soon as I turned 62 I started big distributions because I was no longer working and my income was functionally zero. I distributed just enough to keep me below the 37% bracket. > > Disagree. I’m not a tax person but in order to stay below the 25% tax bracket my maximum distribution is about $37,500. That’s a pretty big difference from $91k. > > In any case, a financial advisor, even if hired only one time, is the way to go. With a reputable financial advisor you won’t need luck to come out in good stead. You said 25%, Bill said 28%. You are talking about distributions, I assume Bill is talking about taxable income, which is going to include things beyond the distribution. And any investment requires good luck to keep you in good stead. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [November 6, 2017, 12:21pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/26 "2017-11-06T12:21:33Z")
The tax rates for 2017 says that the for taxable earnings between $37,950 and $91,900 the taxes owed are $5,226.25 plus 25% of the excess over $37,950, making the marginal tax rate 25%. That’s if you’re filing single. ---
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [November 6, 2017, 4:18pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/27 "2017-11-06T16:18:19Z")
> [@Voyager](#): > > John lives in California, as do I, and since our probate is so awful anyone with any amount of money sets up a trust. Everything I own pretty much is in the trust - cars, house, bank accounts, investment accounts. Can I ask about this? My mother just died this past summer, and for the accounts she had where she had set up beneficiaries, the money was transferred to me and my sisters immediately, without having to wait on probate. We’re all in Texas by the way. Now my mom didn’t own a house anymore, almost all of her assets were in investment accounts and IRAs. There was some smallish amount that we did have to go through probate. Is this not standard? ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [November 6, 2017, 4:36pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/28 "2017-11-06T16:36:11Z")
Sounds like your mom had set up standard retirement account beneficiaries and other accounts as TOD (transfer on death) accounts. Both bypass probate. I believe some states allow TOD deeds for real estate. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 6, 2017, 6:34pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/29 "2017-11-06T18:34:05Z")
> [@CurtC](#): > > Can I ask about this? My mother just died this past summer, and for the accounts she had where she had set up beneficiaries, the money was transferred to me and my sisters immediately, without having to wait on probate. We’re all in Texas by the way. Now my mom didn’t own a house anymore, almost all of her assets were in investment accounts and IRAs. There was some smallish amount that we did have to go through probate. > > Is this not standard? My brother had umpty zillion beneficiaries for his IRAs in Massachusetts, and it was the same deal. The IRAs were not part of his estate. I’m not sure about IRAs in trusts, since the trust does not die when the people do. Our beneficiary is the trust, not anyone else. So the money goes into the trust, and will be allocated to the beneficiaries of the trust depending on how it was written. My father retired before there were IRAs, so I didn’t go through this when administering his trust. There are rules about how quickly beneficiaries of an IRA have to take the money out, though. I assume it is state by state, but I’m not sure. My brother didn’t leave anything to me, which is the best thing he could have done - it was a mess, and I didn’t have to get involved. The trust is really useful for non-IRA assets like houses and bank accounts. It protect these from probate. ---
**Author:** ![NAF1138](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/naf1138/32/3245_2.png) [@NAF1138](https://boards.straightdope.com/u/NAF1138)\ **Post date:** [November 6, 2017, 7:43pm UTC](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662/30 "2017-11-06T19:43:32Z")
So anything with a designated death beneficiary will automatically bypass probate. This includes life insurance and IRAs. With the IRA it passes on as a new special type of IRA and the beneficiary needs to make some choices pretty quickly about how to handle that. [Previous page](https://boards.straightdope.com/t/looking-for-some-advice-concerning-my-401-k/800662.md?page=1)