Being in California, the FIRST and MOST important suggestion I have is to NOT ever roll either of your 401(k) plans to an IRA. California is notorious for its extremely weak asset protection laws regarding the IRAs. 401(k) plans have the rock solid ERISA protections. Think of it as you are getting free umbrella insurance for $4 million (total balances in all of His and Her 401(k) plans) -- since you will need to purchase such insurance at least in that amount if you were to roll them to an IRA.
Second suggestion is to consolidate previous 401(k) plans into current plan, for both Him and Her, to make it easier for RMD calculations when the time comes. If you leave them as is, you are responsible for making sure you take RMD from each of those plans. A single $10k RMD is easier and simpler than $5k RMD + $3k RMD + $2k RMD from three different plans, for example. Since you plan to retire very soon, make sure you initiate these rollovers soon. You will very likely not able to make them once you do retire.
Why the Lord Abbett High Yield fund? High Yield is just a synonym for junk bond. Presumably you are invested in a bond fund for some perceived safety? If so junk bonds are the wrong place to be in. They crash when the stock market is crashing. You are also directing a substantial chunk of your balance into this fund. Too high and unnecessary risk in my opinion.
Last point I wanted to make: if you are in a 22% tax bracket now, with $4 million already in 401(k) plans, you are likely looking at 28% or more tax bracket in retirement. Why are you deferring taxes now at 22% Federal marginal rate now, only to be paying 28% or more tax rates later? Unless you have plans to move to a no-income-tax state in retirement? Consider switching to Roth 401(k) contributions for both Him and Her. Almost too late now for 2024, but plan for 2025 at least. Is there any flexibility in your plans to do In Plan Roth Conversions?
Second suggestion is to consolidate previous 401(k) plans into current plan, for both Him and Her, to make it easier for RMD calculations when the time comes. If you leave them as is, you are responsible for making sure you take RMD from each of those plans. A single $10k RMD is easier and simpler than $5k RMD + $3k RMD + $2k RMD from three different plans, for example. Since you plan to retire very soon, make sure you initiate these rollovers soon. You will very likely not able to make them once you do retire.
Why the Lord Abbett High Yield fund? High Yield is just a synonym for junk bond. Presumably you are invested in a bond fund for some perceived safety? If so junk bonds are the wrong place to be in. They crash when the stock market is crashing. You are also directing a substantial chunk of your balance into this fund. Too high and unnecessary risk in my opinion.
Last point I wanted to make: if you are in a 22% tax bracket now, with $4 million already in 401(k) plans, you are likely looking at 28% or more tax bracket in retirement. Why are you deferring taxes now at 22% Federal marginal rate now, only to be paying 28% or more tax rates later? Unless you have plans to move to a no-income-tax state in retirement? Consider switching to Roth 401(k) contributions for both Him and Her. Almost too late now for 2024, but plan for 2025 at least. Is there any flexibility in your plans to do In Plan Roth Conversions?
Statistics: Posted by lakpr — Tue Nov 19, 2024 6:31 am