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Joe Anderson, CFP\xae and Alan Clopine, CPA discuss why the father of the 401(k) regrets creating it. Plus, the worst mistakes you can make with your IRA and 401(k). Original publish date January 14, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro

01:46 \u201c[For today\u2019s topics,] I\u2019ve got ten important considerations for 401(k) rollovers, and Ed Slott\u2019s three fatal IRA (individual retirement account) errors.\u201d

02:59 \u201cTed Benna, in case you don\u2019t know, is known as the father of the 401(k) and we was a benefits consultant with Johnson companies, and he was among one of the first to come up with the notion that American workers should set aside their own pay pre-tax for retirement.\u201d

04:02 \u201cHe and other early proponents dislike what the 401(k) has spawned. The tool was never meant to serve as the main means by which workers save for retirement, but that\u2019s precisely what it\u2019s become \u2013 it\u2019s increasing the financial risk for workers along the way.\u201d

08:25 \u201cThe other thing he doesn\u2019t like about the 401(k) is he says \u2018I helped open the door for Wall Street to make even more money than they were already making. That is the one thing I do regret.\u2019\u201d

11:36 \u201cA majority of retirees rolled over their 401(k) to an IRA at retirement.\u201d

14:29 \u201cLet\u2019s say you go back to an old company, you could roll all of your 401(k) into that new 401(k), that avoids the required distribution until you\u2019re retired.\u201d

20:03 \u201cWhen you think of an appropriate globally-diversified portfolio with a rebalancing strategy, a rebalancing strategy simply means that whatever asset class you have that\u2019s done really well \u2013 you shave some of those profits off\u2026and buy an asset class that hasn\u2019t done as well \u2013 you\u2019re constantly selling higher and buying lower by discipline...you take the emotion out of it.\u201d

22:57 \u201cThe true value-add of an advisor is to take a look at what the strategy is, what their plan is and coming up with the tax alpha if you will, because if you can reduce the overall tax liability of the income that you\u2019re trying to produce, that\u2019s more money \u2013 it\u2019s a rate of return. If you look at rebalancing when markets go up and down or sideways to keep that risk parameter based on your goals \u2013 that\u2019s huge.\u201d

29:24 \u201cHere\u2019s another one (mistake) that\u2019s irreversible. This is when you have a non-spouse rollover\u2026let\u2019s say you inherit an IRA from your father or mother and you roll it over into your own IRA\u2026you may not realize this but it\u2019s a prohibited transaction. That\u2019s treated as a full distribution.\u201d