I don't understand all I know about legalized money laundering, AKA rolling a 401K.

Backstory ...

I have been contributing to a 401K and receiveing a company match in stock at 60% for a while now ... maybe 20 years.
My comapny is being bought and taken private.
As I understand it, if the buyout is approved by the shareholders, my stock will be cashed out at the approved price and I will be issued a check.
Taxes will be withheld

Help needed ...

If I roll it into another approved option within the specified time frame, I can recoup the taxes next return. I understand that.

But I want to avoid the tax thing altogether. I want to maintain that 28% of the fund in my retirement and continue it growing.

I need some coaching on doing this as I don't understand all I know about it and time to educate myself is running out. Making a mistake or misunderstanding a small detail could have big financial ramifications.

My .02 is the best advice anyone can give you is to talk to a financial planner. I'm sure someone you know either is one or knows one that is good. Once you find him or her, the first hour, in which you discuss short term and long term plans, should be free. Even if you have to pay $100 an hour after that, it will be money very well spent. It usually doesn't take more than three or four hours to come up with a good plan. The key is to actually follow it.

I appreciate your input. And have thought about that.

But, how the hell do I find a "good one"? I have one shot at this and don't want to screw it up.

I just checked, and the company match portion is 6 figures. So, it's a chunk ...

Ask around locally. They are out there. Make sure they are certified, although that doesn't guarantee anything. We found a good one locally to us, Texas Wealth Management. Unfortunately, they have been so successful, I don't think they are taking any new clients right now.

Do you have a CPA to do your taxes? Ask him/her. That is how we found our planner. If not, ask friends who have CPAs for their taxes. Most CPAs know financial planners (or are themselves), because they are usually asked that question almost on a daily basis.

We were in the same boat, getting a nice lump sum stock conversion when the company I worked for was bought by sprint. Getting a financial planner was the best thing we did (beside killing a lot of debt).

Thanks, Gene. I have been asking around and sent a few notes to those who seem to be doing well. We'll see what sprouts from those seeds.

I, fortunately, have worked really hard over the last few years at eliminating debt, working towards retirement at 55 ... 7 short years away!

10 years left on my home, a couple nagging CC and medical balances, but zero car payments and everything is paid in cash. I keep jockeying the CC balances between 0% transfer offers and have wittled that down considerably.

Along the way, I have tried to amass the infrastructure to open my own business in order to supplement pension and retirement income.

I appreciate all advice ...

and who was that? i was Nextel up to a couple years ago. now my work life sucks ass thanks to Sprint.

Or I could sponsor a race car ... who should I pick?

Update ... there is an electronic avenue where I can roll the funds and then make investment decisions and it's a part of the group that administers the Company's pension plan. So, there is little to no cost to do the rollover and no check is ever cut.

That appears to simplify things significantly.

But, the account I had established was closed due to inactivity. I guess I procrastinated longer than I thought! Wheels are in motion to get the account reestablished.

It's gonna be tight ... I need to get this transaction completed in about 2 weeks.

I was going to say that you should have the option of just rolling the 401k into another qualified plan.

I have rolled two seperate company 401k's into a Merryll Lynch IRRA acount without any penalty or tax situation.

Will the new "company" have a 401k? As long as the money is rolled over (transferred) into another qualified plan (401k, IRA, etc...), then you shouldn't have any tax consequences now. If you have the 401k cashed out (distributed), you pay taxes (bad, mmm-kay!). Every time I've changed companies, I've moved my 401k over to the next one, and kept it growing. Now that I'm self employed, it's still at my former company, and they're letting me maintain it there (I don't think there's even a small administrative fee). Depending on how tight your company is, I'd ask your CFO or another co-worker that has their ducks in a row, or whoever has a hand in the stock buy-out. I'm sure they're doing what they can to minimize their tax liability... The company that administrates your 401k funds (we had John Hancock, which bought out Manulife) should be able to tell you as well. Get as many opinions as possible, but rolling over a 401k should be a simple 1 page form, and not require hours of financial planning.

Andris

I think others have covered it well, but ya, there should be a 401K trustee assigned to assist employees get their funds rolled correctly. I did this for the company I worked for when they sold out to Taiwan Inc. Your toughest choice will be who to transfer your funds to and then selecting which management options they offer. I went with Schwab. The actual transfer is a matter of checking the right boxes on the forms.

Hence my anxiety ...

A good tax person is worth their weight in gold! If you want to hang on to your $ you'll get one and keep working with this person as long as possible, going over your financial situation annually at minimum. They are not always CPAs or FPs but they usually are. Get references. Keeping on top of tax code is a full time job. Then there's knowing what to do with that information once you get it......

sign me-
daughter of a good tax man!

AND, if you are already itemizing your deductions, their fees are deductable off the next year's return!

Yes, part of what you pay them for is keeping up with the ever-changing laws, and stupid tricks the IRS is doing each year. Plus, when you get the little letter from the IRS, they can go a LONG way toward relieving a lot of stress.

If you can roll it over to an IRA, there is a way to do it, but you set up the account first, get the account information, and then have the funds transferred to the IRA. As others have said, there should be some HR person, or IRA trustee who can walk you through the maze of paperwork.

Paranet. IT Services consultancy that sprint thought would be a great idea to get into. Unfortunately, all they know is dial tone. After paying top dollar for it, and running it into the ground, they sold off the remains for pennies on the dollar.

Luckily, I was mostly in the division's corporate office, maintaining their datacenter, so got little interaction with actual sprintoids, up until the bitter end. I was one of the guys who turned the lights off in the data center on the way out the door, but only after packing up most of the server equipment and shipping it to sprint datacenters elswhere.

Interesting to note, that sprint eventually got out of that business, and the hosting business. I started working for the company who bought their hosting centers after they bailed. I have seen some systems that may be my old systems. ;-)

call Fidelity.. they are #1 in the 401k market.. i have been with them for 15yrs.. great people, free advice.. they wont steer you wrong.

Thanks everyone. Getting a lot of great info ...

I didn't realize there were any other ex-Paranet folks on here, that was a nasty deal. Sprint really screwed a lot of people over with that one, and gutted what was a really good company.

doing the same to what was Nextel. i don't know of a single former Nextel guy who is happy w/ the current enviroment.

I have Chris Lyons' number.
jb

Me too ... we've talked today

I just went through my 4th buyout in 12 years. I haven't even changed bosses (hahaha) since 1995.

Though each buyout, our existing HR department and the new companies HR departments worked on these items on a group level. As a group we were automatically rolled from the old to the new and we filled out some token paperwork. I am surprised that your current situation does not provide for this.

I currently have two 401k accounts as a result of the most recent buyout. My current 401k payroll contributions go to the new company's 401k program and my old account is "frozen" meaning that I cannot make contributions, withdrawals, take loans, etc. until they do a "rollover" next month. They plan to roll my assets from my old companies' 401k program and have sent me an e-mail with their default "mapping" of the old investment choices to the new ones. The defaults work for me so I have to do nothing to do but wait.

External to all of this, you always have the option to directly roll 401k assets to a qualified IRA. Peddlers of IRA are glad to help you set this up since they benefit from the investment increase in their companies. I DO know that it needs to be set up so that you never touch the money to avoid getting whacked with taxes. An IRA "saleman" will be able to help you out with this.

Mitch, my first step would be HR. If that didn't work, I'd call my 401k investment company next. If that didn't work and I was still nervous, I would call a IRA peddler.

My 0$.02