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401k Matching: A Contrarian View

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
June 16, 2020 8:03 am

401k Matching: A Contrarian View

MoneyWise / Rob West and Steve Moore

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June 16, 2020 8:03 am

You often hear that one of the best investing decisions you can make is to max out any employer contributions to your 401k, because it’s free money.  But what if that money isn’t so free?  On the next MoneyWise Live, hosts Rob West and Steve Moore discuss some seldom talked about strings that are attached to 401k matching contributions.  More facts you need to know about your 401k on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

Finishing Well
Hans Scheil
Rob West and Steve Moore
Finishing Well
Hans Scheil
Finishing Well
Hans Scheil
Finishing Well
Hans Scheil

Success everybody knows the first investing decision. You should make is to max out any employer contributions to your 401(k) because it's free money right. But what is that money isn't so free to someone talk about for 401(k) matching contributions come with strings attached. You should know about today financial planner and teacher Rob West goes over those for us that will take your questions and calls on anything financial at 800-525-7000 800-525-7000 lines.

I'm Steve Moore 401(k) matching a contrarian view that's next on moneywise line Rob, I'm shocked, shocked, I say we always tell listeners to max out their employer's 401(k) contributions first and now we find out that's not the case.

Not exactly. I still think that's the best policy for most people. Most of the time, there's the qualifiers but were looking at a different point of view and this comes from a recent Forbes article that will link to them today show notes just go to moneywise and click on the show.

The ideas that some investors might be better off delaying 401(k) contributions in favor of making the maximum contribution to a Roth IRA. Can we talk to bit about the Roth in the past as well, but specifically, why would this be the case. Well, several reasons actually. The first is something called vesting.

You may not realize it, but when you start making contributions to a company 401(k).

The company often doesn't begin matching those contributions right away.

In fact, the first year. Your employer may make zero contributions. This is to protect the company from losing money in case you suddenly find a general better job somewhere else now. The company is required to invest at least 20% of employer contributions after two years.

A lot of companies use a three year vesting schedule will put in 1/3 of the promised match after one year, two thirds after two and then the full matching after three years, but some companies have a five or even a seven year vesting schedule. Others have something called a cliff schedule where essentially you'll get all of the money. After two or three years. In that case you wouldn't get anything if you switch jobs too soon.

Okay I think I'm confused on the cliff thing. So what's that all about again. Well, essentially just after two or three years you get all of the money and so it so you don't get much on the cliff and okay it sounds scary. It's like the boss wants to talk you want to meet him over here next to the cliff and over is ugly like that. Sorry, that's Doug Britton digging up past job history in my mind aren't but you'd still be able to roll the money you contributed to your new employer's 401(k) or an IRA right that's true yeah you wouldn't have to leave the money behind that now there's another reason, though, that a 401(k) may not be the best option for some people and it's called a Q DIA here we go with the terminology.

A qualified default investment alternative and what is it that's what happens if you have to sign up to have the money deposited in your 401(k) but you don't designated to go into a specific fund or funds. So in that case, the money goes into the Q DIA essentially means the 401(k) plan is making the decision for you and that may not always be in your best interest. Now a lot of 401(k) plans use a basic target date fund for the Q DIA we've talked about this before. These are the funds where they give you a basketful of investments. The change over time to lower your risk as you near retirement. In general we think target date funds are fine, especially if you don't want to take us hands-on approach to your investing there. Sort of a set it and forget it approach, but there are some drawbacks. They don't necessarily perform as well as more actively manage funds and they may have higher costs within a 401(k) that if you choose a target date fund with an outside brokerage firm. You can easily avoid the old Q DIA by designating that your contributions go to a fund of your choice. So why would that be a concern. While the problem is, according to a recent Vanguard study half of the people of the 401(k) have all of their money in a single target date fund and that's a growing trend and that indicates that an awful lot of 401(k) investors really don't want to take an active part in their investments. But if that's the reality is, in a target date fund even one in the 401(k) a good option for most people who don't want to be hands-on. I certainly think so. And that's also why think contributing enough to your 401(k) to get the employer match is still the best option for most people, especially those who'd rather not be watching their portfolios all the time.

Yes, there are definite advantages to a Roth IRA over a 401(k) like the tax-free growth and withdrawal in retirement. Of course many more investment options and pop probably lower maintenance fees. We can talk about that after the break for a moment more okay and we will do that and will take your calls open lines and 800-525-7000. This is moneywise live. Many people are experiencing financial challenges such as credit card debt downsizing that in jobs savings.

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Typically something that we talk about so give us a call if that's what you're thinking about today 800-525-7000 that we've been talking a little bit about 401(k) matching's or 401(k) matching and are there different approaches and Robbie were pointing out that there's the 401(k) but then there's the Roth and that might be better for some people in the in the last thoughts on this before we get phones yeah the big idea here coming from this Forbes article that came out recently was. If you have a vesting schedule you're knocking to get the match right up front, you may be better off with the Roth at least until you're going to get the match and then make sure you really think through and have a hands-on approach to your investment strategy.

Even if that's the use of a target date fund. But don't just leave it up to the fund management company to decide that. Make sure that the funds are selected fit with your investment strategy and style. The Roth does have some advantages. We talk about this often begot the tax-free growth. The withdrawal in retirement tax-free. Many more investment options.

Certainly more control over how the fee schedule works but to take advantage of them. You've got to give up that employer matching in order to get those benefits and so I think if you get the matching majority of people would be better off starting there because that's free money you're not you get that guaranteed return anywhere else but once you get to the If you will, of the match that I think switching over to the Roth and using both strategies simultaneously is a good approach for most people. Okay now I hate to muddy the waters further. But let's stick our towing a little bit if we can now there's there's a Roth IRA at which we talk about a lot but then there's also a Roth 401(k), every getting too confusing. When I mentioned that all you know the same idea applies to the Roth 401(k) is the Roth IRA same tax treatment. Just within a company-sponsored plan which means you can get that matching so what I would say is typically those are to want to opt for the Roth 401(k) are going to be those folks who are younger, they have time on their side there to get the full benefit of the tax-free growth. They have the ability to put in a bit more because remember you putting in after-tax dollars you actually have more working for you than if you were to make a contribution and then get the deduction on it so I like the Roth a lot. There's also a case to be made about doing both. Because then you got the tax-deferred and the tax-free money working for you and you can choose which is best to draw from in retirement based on which one is the most tax advantages.

So I like to the Roth 401(k) a lot and I think for especially young people, it's a great option right great again.

Our phone number if you'd like to speak with Rob today about anything. 800-525-7000. Let's begin by going out to Dallas, Texas hi Peter, thanks for holding and how can we help you what a friend like you want. No, not really hypothetical really going forward. I'm a Christian and I love the Lord, but not content small church in my time but in all's going to some issues that I needed help but it wasn't available for me because were so small and I was just wondering I will have to go to a bigger turn to get help, but I think that's accurately right or yeah well Peter. I hear what you're saying you know the local church is clearly a part of God's plan. I love it pastor JD Greer says he says it's it's God's plan a and it really is minutes where we invest our lives the body of Christ, regardless of the size of the congregation doesn't matter how big the physical dwelling is for the church. It's about the body of Christ coming together and that could be in house churches that could be a mega church and everything in between and clearly no churches have varying degrees to which they have resources to help those in need. A small church may not have. Obviously, that the same resources. The larger church does not let me ask though. Does your church have a clearly identified benevolence fund that they used to help those in need my knowledge.

You know I would know you know okay I think that would be a good question to ask, but you know, for me, what's far more important is that it's a Bible believing church where the gospel is preached. Doctrine is far more important than the church's financial situation and that it's a community of believers coming together and clearly based on the scriptural model in the New Testament that would include believers helping each other and the others are role to be played there, but I would. I would really not use necessarily the degree to which they can provide financial assistance as the litmus test for whether that's the place that God has planted you. I would really pray through it and if you feel like that's where God has you that I would fully invest your life and not only being a part actively of worship, but in serving in that local church engaging with the body and the fellowship of believers and to the extent you have a need along the way making that need known to the church because perhaps either through a benevolence fund that's been clearly identified or through other means. Even in a small church. I would imagine that there but you know can be some assistance along the way whether that's designated already in advance or whether that's somebody within the body and made aware of that need, and then stepping up outside of that, but that for me would be far more important than the church's ability necessarily to to meet those needs in terms of how you select where God is planning you. So I would visit with your pastor and perhaps have this conversation. Make your needs known, but then also make sure you're fully invested in terms of serving there in that local fellowship. Great answer Rob and Peter. I hope that hope that helps you and will pray that God gives you direction.

If you try to determine his will for your life. In this regard. Thank you very much. Oberlin, Ohio hi Lori, what's on your mind, and I call on what you guys started with the program, exception, 401(k), and I just started a brand-new job in my second career and after 90 days the employer what match 3% of 401(k) being based on what you said earlier when I'd be better off not going with them and for all about IRA or regular CD because I really don't know. I have to wait two or three year you mentioned yeah well I would check that it's in contact the HR department or whoever administers the plan for the company to find out what those parameters are. If, in fact, though after that 90 day probationary period. You can go ahead and start earning that match. That's great. Let's go ahead and fully take advantage of whatever portion is available to you for the remainder of 2020, but what you may find Lori is that if you have the ability to contribute retirement funds beyond what you will be able to put in for 2020 and have it matched fully up to the 3% after that 90 day probationary.

If you have the ability to do more and that fits with your plan, meaning you don't don't have other more pressing priorities like giving goals or building your emergency fund paying off credit card debt.

But if you do have all those met and you want to do more. That's where it could be that the Roth will give you the flexibility to go ahead and contribute what you plan to contribute for this year.

Given that this is a newer job in early to have a portion of the year available to you for those salary deferrals so I would get more information. Find out what the when they're going to start providing the match what that allows you to do for 2020 in the 401(k) and then just evaluate that against what you had planned on doing.

In total, and that's where the Roth may come into play. Okay, Lori does that help a little bit. Thank you.

Thank you, thank you very much. And with that I think maybe will a pause just a little bit here will reconfigure some buttons and knobs and listen to some music and then come back and take your phone calls on anything financial know Michael and Elizabeth were coming your way. So please don't leave us. This is moneywise live with Rob last time Steve Moore if you like to visit us online. We'd love to have you do that. Check out our website moneywise will be right back after this many people adopt an attitude toward marriage and finances that it will all work out somehow. Sadly, it often doesn't financial woes can devastate a marriage but there is a better way. God's way, money and marriage God's way by Howard Dayton will help you discover God's approach to growing your finances and strengthening your relationship with your mate and cultivating godly joy, money, and marriage God's way is available when you click the store and moneywise here is my free. We are no longer under the law does not mean that we have that we are under that condemnation

We would not think we would think it frees us not to condemnation condemnation talk and that the lot that Carl himself current state going over our heads are not enough. You will be in you will never be good and not you can never keep it together.

You will always fail you will always be everything you have always been going condemnation continues to think about who we really believe ourselves to be in Christ personal attorney with what we believe.

We believe no way many people adopt an attitude toward marriage and finances that it will all work out somehow. Sadly, it often doesn't financial woes can devastate a marriage but there is a better way.

God's way, money and marriage God's way by Howard Dayton will help you discover God's approach to growing your finances strengthening your relationship with your mate and cultivating godly joy, money, and marriage God's way is available and moneywise John 1335 tells us.

By this all men will know that you are my disciples, if you have love for one another and if we cannot help you today.

We'd love to hear from you.

In fact, we've got a full complement of lines right now.

Terry and Angie were coming in your direction.

But let's say hi to Michael first, Mike you're in Sarasota. Good to have you what's on your mind. Thanks you will never call very good advice like I worked for a government that offers FRS the Florida pension and when I started about three years. I started the first year I didn't pick one of the retirement plan so I automatically put into the 401(k) rather that I would rather borrow are the. The pension plan. So when I made this when I found this out the mail. I called you but you any in order to go into the pension plan.

There was a lump sum of $3500.

Think, is it worth spending the money because I want that pension plan that was the whole why doctors want to benefit so versus the 401(k) and the pension. What is your take on on that just between the two level. Well, I like the pension plan. I think you know, obviously, one is going to give you a fixed payout for life when you retire versus one that you have a little bit more control over. In terms of making the investment selections and so I think really just need to think through which option you know is going to give you the most peace of mind in retirement. Usually you have one opportunity though to change plans in the Florida retirement system in the that's my understanding is that you can actually convert over to the pension plan from the investment plan one time. If you talk to them about that opportunity to switch know what you yeah well I think you know that's where you need to start is first of all decide which one you like. You mean you know it's it's like he yelled investing in a retirement plan with a stock and bond portfolio versus using an annuity you know some people like to come to transfer the risk of the investment performance. In the case of an annuity to an insurance company and have a guaranteed payout that they convert into a an income stream for life at retirement and they just like the idea of knowing that they don't have to watch the ebbs and flows the market. I tend to prefer the more traditional approach of investing which is to build a well diversified high quality stock and bond portfolio that fits my goals and objectives. Be systematic in my contributions and let that do what it does. Over time, and then benefit from that lump sum in retirement that I can then have a little bit more control over.

In terms of management and how I might want to use that and if I need a larger portion of it than just the monthly payout because of a major medical expense or something that comes up in that season of life.

You obviously have access to the principal as opposed to just getting the monthly check. So I kinda prefer the investment plan but there's nothing wrong with the pension sided Florida retirement system is a very effective retirement system and I think is you said that's one of the reasons you're there.

So I think you just need to really compare both options look at what's available to you in which one is going to give you the greatest piece of mine in retirement. But depending on where you land. I would explore with them this opportunity. It's a one time opportunity to change plans and actually move from one to the other because that should be available to Michael. We hope that helps.

Thank you very much for your phone call today. St. Louis, Elizabeth, we have just a couple of minutes. What is it, how can we help that I very good. No problem know how you how I don't have to go in part that going back yeah did tell me Elizabeth, what it would take for you to go back to school like let's say you were to push the pause button and work right now and just save like crazy and keep your income.

Keep your expenses at a minimum. How many more years do you have and what is that translate into in terms what that's can cost you will I know I could probably take care portability by now. Think about three or four years and then are you pursuing a marketable degree India have a good sense of what you want to do and what that translates into in terms of unexpected base salary coming out of college with a degree in degree. All I looking like education, your okay so couple of thoughts where you have to had to break your number one I would push the pause button on more schooling and just keep your expenses at a minimum, I want to send you our career direct assessment at no cost and allow you to explore. Perhaps how God's word use.

You think and pray through where he's leaving secondly with the car.

I like the idea of you getting rid of it with negative activity equity you want to sell it to a private party. If you can cover the balance. Otherwise, you probably want to stay with it and try to pay it down just as quickly as you can until you get to a breakeven standpoint, then the line that will talk a bit more often.

More moneywise with Rob West this. How should we as Christians think about and testing. What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is possible to love God and love our neighbor in the very practice of investing we design investments for performance and better world so you can invest for the future with a sense of wholeness and purpose. We call this investing that makes the world rejoice. More information is Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested.

Learn more by calling 800-791-6225 or online at CH ministries.more Moody radio verse of the week for Father's Day is found in Genesis 18, 19, I have chosen so that he will direct his children and his household after him to keep the way of doing what is right and just so that the Lord will bring about what he has promised. Genesis 1819 Moody radio verse of the week of snow for just us thinking over again by that was Ronald Clay's life in prison one day and hopelessness. He cried out for God's grace I say that our hearts wanted to change the radio was there for Ronald in prison today as many theological seminary preparing for ministry. Read his story this month's Free newsletter. Go to my Moody might be

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Learn how to save and invest and give wisely to create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise live to work. Signed an executive order on policing the order aimed at encouraging best practices and tracking officers with excessive use of force complaints in the rose garden. The president stressed the need for higher standards. The order comes as Senate Republicans prepared when bail their own packager policing proposals after Democrats did the same.

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The judge in San Ramon, California, will formally sentence PG&E later this week. Stocks rose on Wall Street that I'll gain 526 points today. The NASDAQ was up 169 S&P 500 ahead 58. This is SRA news moneywise live in a place where we do our best to help define God's plan for your financial life and that's because the Bible is replete with hundreds of verses that deal the way we make our money spend our money and asked her money find God's financial plan for our specific lives and again if we can help you with that. We love to try 800-525-7000.

Let's continue on by going to Anderson, Indiana hello Frank, what's on your mind right about purchasing a new home and I have the money to purchase new home and financing for wondering what the stock market doing to refinance another mortgage or the money out of money. I have already saved up when you say refinancing you don't have an existing mortgage right now you know you got on all help in is that the plan Frank is this house that's going to replace your current house or is it going to be is truly a second home in your keep. Both of them now going to be my primary red I see it, so really what you're looking for here is just a temporary stopgap because you don't want to have to sell this one first and then find a temporary place to live if you couldn't coordinate the closing dates on both.

So, as a matter of convenience you want to go and purchase the other. The house and then take your time in selling your current residence, is that right.

Okay. All right. And what kind of encounter we talking about you.

You mentioned investment account of these qualified accounts like retirement accounts are the taxable accounts. There okay and others stocks and bonds okay in you with the cost of the home be considerably less than the total balance of the stock and bond portfolio. Okay, so you could manage that from a tax standpoint because I just don't want you to end up with a huge tax burden by you. You having to go and liquidate a bunch of investments that were longer-term holdings or have considerable appreciation in a taxable account. If that doesn't make sense but you feel like you could manage that with your advisor and I may need get on my advisor and find out where the when we could liquidate so that I can purchase a new home outright tell the current home and in that money you now to either back into the investment mortgage yeah and I think that's really the question here because you know there's a couple of pieces that work number one I'll start with the nonfinancial side which is kind of what I call the peace of mind. Test the just says if you you and if you're married, you and your wife are you going to sleep better at night knowing you don't have any debt, no encumbrances, you have ultimate flexibility. You owe nothing to anyone and that just feels good. Or perhaps you have the conviction around that because I think the certainly permissible what you're talking that Harry not violating a biblical admonition.

There are clear warnings in Scripture about the use of debt, but you lavishly manage your financial affairs quite wisely. And so I think given that you got the flexibility to go.

Both directions but if you either have a conviction or give you greater peace of mind and know your debt free that I wouldn't even consider the financial benefits of borrowing and preserving that the investments I just go for it and feel really good about that. If though you say no II feel like given where we're at financially the assets that we have. We don't necessarily have a particular conviction about being debt-free right now, then I'd say you know you could go ahead and take out that mortgage rates are at historic lows. We think they'll be here for for quite a while, you could take out a small mortgage or you could finance a bit more and keep that money working for you and on paper. You'd probably come out better if you have a long time horizon and you understand the risks inherent in that so I don't think there's a right or wrong decision here, but I would have that open and honest conversation about whether you do have a conviction or it would give you greater peace of mind and then I would also take a look at the investment strategy and the tax implications of liquidating a portion of that portfolio and allow that to factor into your decision because taking out of a mortgage temporarily and then paying it off for taking out and keeping it if you're comfortable with that at these low rates certainly can make some sense for somebody in your financial position that you follow that where we were at your guy great but we appreciate you calling.

Thanks for listening there and Anderson's are thanks very much Frank I bless you Chicago Angie, thanks for your patience and for holding what's on your mind, not one. Yes. Is it a Roth 401(k) or traditional Roth or is it a Roth IRA you're talking about. Got it okay yes it's probably the decision. The decision they're asking about is whether you want to traditional 401(k) or a Roth 401(k). Both are offered inside the plan that's made available from your employer, and so you just have to choose and both have the matching so that's great Angie.

Do you mind me asking your age 35 okay you know I really like the Roth for somebody in your position and you don't get the tax deduction but you're young and you're going to have a lot of years the men were talking potentially three decades before you're gonna need this money may be more, and that's a long time for this money to gross. If you go and pay the tax.

Now get that money working for you and all the growth over the next 30 years. Let's say is gonna be tax free and not putting a drag on the investments. You know, needing to be paid in retirement. Even in the traditional it will put a drag because their insistence on a retirement plan. So I misspoke there but you won't have to pay that in retirement you pull 100% of that gain out completely tax free and that be a real benefit for you so I would go one of two ways that either go all all with Roth or split it between the Roth and the traditional half and one half in the other and that we get a bit of a tax deduction but you still have some of the tax-free money growing for you as well I wouldn't go hundred percent in the non-Roth option and you were glad that you called today and it sounds like you're heading in the right direction. We wish you the very best with that.

Thank you very much you listening to moneywise live with Rob West. If you haven't visited our website in a while I'd urge you to do that. There are some great resources.

Many of them are absolutely free and there are some new resources including Rob the new money wise he make his tell us about that. It's a quarterly publication right it is to gather the current edition is around financial hope some great articles and resources there. We got a new addition coming out to later this month to be all about families that preparing for your wedding as an engaged couple.

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It's all going to be covered there in the new E magazine along with a new interview we just recorded with Chante felt on some new research related to money and marriage and thriving in that relationship. So get signed up now moneywise and mention Steve just real quickly.

Here are the middle of June were in the summer we could really use your assistance in supporting moneywise media you can donate quickly and easily. Moneywise, just click the donate button. We are listener supported and we would be great and Steve would thank you Rob it's moneywise live Rob West and I were really glad that you're out there today will be right back after this is a great deal more about our money than most of us imagine Jesus is more about our use of money and possessions and about anything else, including both heaven and hell in managing God's money, author Randy Alcorn breaks it all down in a simple, easy to follow format that makes it the perfect reference to look you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available when you store moneywise wire. I will guard you and I'm here to help you understand God's purpose for your life to the eyes of a layman. The freedom that our Constitution guarantees open Sheriff 800 half many of those in power actually believe we should not be allowed to share faith in public servants of even come under scrutiny regardless of what you voted for ever.we currently have a present and outspoken champion for religious liberty in our Congress and supports abundances but this can change for the next election cycle. All the speaks of the urgency of the great commission battle for the soul. American spiritual, not political, it can only be won by all of us are known by his name, honoring God's call to share his love with everyone every day. He said the know your disciple by your love is tied to report for duty.

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You need help doing that. Go to singer-songwriter Matthew West when I feel the Lord pressing the pause button. I want my instinct to be suppressing. Whether it was the time Matthew had to be completely silent for months after focal point surgery or the recent pandemic that canceled all of his concerts and sand pressing the me, and the me and let me transform you once again pressing into the Lord. This means acknowledging your need for God and spending time those spiritual disciplines that Billy Graham said strengthen your relationship with God.

Every situation of life to remind us of his love and I made a incisor relationship with comes along some Jesus Christ died on the cross and rose reminder of God's love find peace with with the Billy Graham evangelistic Association. Would you like your life to be infused with joy. Would you like to interject an internal dimension into even the most ordinary day, author Randy Horn says you can when you discover the treasure principle and a concise powerpack style is newly revised and updated book offers a six step plan to finding the pleasure and eternal rewards of the treasure principle what you discover. Life will never look the same treasure principle is available when you click the store, but moneywise is last time Steve more than we do something here that I normally do with the end of the program. Well I just want to think Judy Crone she's our producer Courtney Young for handling your phone calls today Amy Rios is doing all of our high-tech engineering yes we use digital things around here.

Or so I'm told Jim Henry, of course, doing all research and continuity altogether they make a wonderful technical team doing all the things that neither Rob or I know how to do, but I do know how to get the hotel for 800-525-7000 St. Louis, Missouri hello Brad have a question I try to prepare for how and talking to my credit download find my credit score so that was to little little over three years ago I gave my life to try to get out of debt. That was my goal. I got I paid off my truck in my house my house my truck and my student loans and I did that last year so now I'm getting out of debt and saving up for a house and got $30,000 saved up my game plan was to get 20% of 20% down on 150,000 dollhouse, but when I try to get preapproved, they said I don't have a credit score because I've been paying on anything so I wasn't sure if you had any advice or not. I had not my plan to put it on the house that also if you have any any of my method when I would start Brad by pulling your own report and your score be surprised if you don't have a score that given the history that you described. Even though you may have a lack of outstanding revolving or installment accounts right now that are active, you have enough history that you're talking about, that there should be a report out there.

You should have a score, a lack of credit can hurt you so I realize that you have this conviction. I'm delighted to hear that you are now debt-free. That's a great place to be and I would even say even to the detriment of your credit score. It's a really good place to be. There are some ways to rebuild it, but I just start by getting a baseline as to where you're out and that's going to involve you doing two things.

Number one is I go to annual credit annual credit and I pull for free report from each of the three bureaus quite a credit skews me Trans Union echo facts and experience and I would review each of those reports. They are three different ones, although they should contain much of the same, if not all the same information in your gonna want to be making sure that it's all accurate.

There's not any inaccurate information on their that's either outdated or it's not yours that's reflecting an account that never belong to you anything like that that you can dispute and have cleaned up so I think that's step one step two is going pull your credit score as well, which is a separate process you can do that that's probably good to be the easiest place or nerd either of those will allow you to pull your credit score and I just be interested to find out where you're at in terms of what you can do to rebuild your credit, which may be required for you to qualify for the type of loan you're looking forward the competitive interest rate you're seeking, would be to open a credit card either a secured or unsecured credit card you have an automatic charge on there every month something that's budgeted that you plan to do this pay for on a monthly basis and want to spend money just for the sake of building credit. But let's get a budgeted recurring charge to hit that account every month and then you go in and pay it off every month and that's going to be reported to your credit file with you having an active account with you being an on-time payer and the balance is good to be very low. Obviously it's gonna be zero. By the time the Puritans because you to pay it off, but even the charges that you make during the month are going to be so low that they'll actually work in your favor because any balance below 30% of your credit limit is is good to be positive and if in fact you do need to rebuild that score by being an on-time payer every month using that credit card that's can help you rebuild that and it could be that you have to delay this purchase six months until you get that establishment. Let's start with those three steps and if you have questions. What you pull that file and you don't understand something you're seeing them. Just give us a call back and Brad again to get your score and not have to pay for it its credit card with a K credit,.com or nerd I will remind you and anyone else listening that the reason they're able to give you this information for free is because they also at the same time want to assure you of the things that you can purchase so be very careful about where you click it like most websites these days there. The buttons and you probably don't want to click on them unless you really know what you're reading and I and you're being thoughtful about it but we wish you the best and I love how much you save for your down payment so far. Sounds like you're really heading in the right direction.

Thanks, West Palm Beach, Florida hi Norma, what's your question today I prior to retirement from a prior employer. There are no job now money. What about great old company. Should I just have them all in one night.

Is it a 401(k) 043B that you have with your previous employer. Okay, so there are going to be fees inside of it. In fact there there always fees there's administrative fees. And then there's these inside the mutual funds that you have selected.

Whether it's TI AA or Vanguard.

Those are both great fun companies. There versus their peers.

Their low cost and very high quality, but there are fees there, and often what we find is that when you are no longer an employee and it's staying with the previous employers plan those fees tend to go up a bit so you may be paying even just a little bit more you know the real benefit to moving that either into your current 401(k) or 43B with your new employer or an IRA, but particularly if you moved in your current plan is just the simplicity because then you don't have, to keep up with two accounts. You don't have to keep up with two investment allocations. You don't have to keep up with you just all the paperwork associated with that and overseeing it so from simplicity standpoint. I kinda like the idea of you rolling it in to the new plan and then just picking your investments again with a great fun company there like Vanguard and you got everything in one place and it just makes life a little simpler. Anytime we can simplify our financial affairs. I think that's a good thing. So I would probably do that if you were somebody who wanted to bit more control over your investment strategy being able to pick the particular investment you want, not limited to what's inside the plan that I'd say you could go to an IRA with that money. But if you're comfortable with what you're doing inside your new plan that I just wrote in there and keep things fairly simple.

Okay Norma thank you very much and let's try to squeeze and Barb if we can. She's calling from Indianapolis and what your situation by pension.

Now and I really don't draw money. My retirement have no I tied at my church and like to make to fill out the form that the money directly to you because I don't have a Roth. I just have a standard so that and I'm always going to have to pay taxes and my question should I do you think it's a good idea to go directly.

That's a great question, Barb. What you're referring to.

There is the Q CD. It's a qualified charitable distribution. Couple of things on that number one is the RMD's the required minimum distribution that normally you have to take on a retirement account over the age of 70 1/2 now over the age of 72 based on some recent changes does not apply to the year 2020. Because of the cares active what's happening with the pandemic so you exit don't have to take anything out this year just because of that, so you could just continue to do your giving what you have been and you would not have to satisfy that required minimum so you could just let that money grow and therefore you wouldn't create a taxable event by pulling it out. But in future years. I do like this idea of you not taking the distribution and in fact just sending it directly to a not-for-profit organization like your local church, however, that is gonna require that you roll that that 401(k) over to an IRA because the qualified charitable distribution that can't come out of a 401(k). It has to come out of an IRA. That's not a taxable event but you would have to open an IRA, perhaps with the same company you are ready with no Vanguard or Fidelity or something like that Charles Schwab you transfer the money over again not taxable and then you could make sure the investments match the strategy that you're comfortable with the mix of stocks and bonds, but then you can also set up that automatic qualified charitable distribution to your church satisfy your annual required minimum distribution and it would not be a taxable event and therefore your church would get a larger sum because they're not been having to get from you the amount after-tax DFO that though there's a lot of moving pieces. There I think. I really need that.

So I've been having it rolled yes yes so I think that be a great option for you if you don't have an advisor. I think you could benefit from a godly financial planning and investment advisor.

You can find one there in Indianapolis some great ones moneywise just click find the CK God bless you five things you thanks Barb have a great reminder of the remainder of your day moneywise live is a partnership between Moody radio and moneywise media so that you joined us today. The program is something that makes you smile tell a friend to join us again tomorrow will be back with another edition of moneywise live

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