How to Roll Over Your 401(k) When You Leave or Lose Your Job – The 401k Rollover
By Jeremy Vohwinkle with 141 Comments
The 401(k) Rollover Explained
Are you planning to, or have you recently left or lost your job where you had a 401(k)? The good news is that since these accounts are tied to your employer, once you cut your ties with that employer, you’re generally entitled to do what you wish with those funds. Unfortunately, a lot of people take unnecessary losses and penalties by withdrawing the funds. This can set your retirement back years, and tens of thousands of dollars. So, the best option is to opt for a 401(k) rollover.
The 401(k) rollover is ideal because it allows you to transfer your existing retirement account into another retirement account without being subject to unnecessary taxes or withdrawal penalties. Remember, retirement accounts like a 401(k) are funded with pre-tax dollars, and grow tax-deferred. That means if you take a premature distribution, the IRS is going to stick you with taxes on all of that money, and also apply an additional 10% penalty if you withdraw the money prior to age 59 1/2. This is a pretty raw deal if you don’t need that money for a dire emergency, yet so many people will take the penalty simply because they don’t know how to do a rollover.
Your Rollover Options
The first decision you need to make when it comes to rolling over your 401(k) is where you want to roll the money to. There are three primary options that I’ll discuss here and provide some of the benefits and drawbacks of each.
Rollover Into New Employer’s 401(k)
If you find new employment and they also offer a retirement plan such as a 401(k) or 403(b), in most cases they will allow rollovers into your new account. But is this a good idea?
Pros: The benefit of rolling into your new employer’s 401(k) is that it doesn’t matter how much money you have since there are generally no investment minimums on the fund options. If your rollover isn’t that much, you may find that you don’t have enough money to properly diversify your money with a particular mutual fund company. In some cases, you need a minimum investment of $3,000 just to invest in a single mutual or index fund at a fund company. If your 401(k) balance is low, say $5,000, it will be harder to diversify that money than if you were to move it into the new 401(k) where you could spread the money out regardless of how much you have to invest.
Cons: Aside from that primary benefit, there are also plenty of drawbacks. First, is that you’re losing a lot of flexibility. Remember, these are employer-sponsored accounts, so as long as you’re an active employee, you’re bound to that plan and its rules. This means you’ll be stuck with whatever investment choices they offer, and will not have access to your funds again unless you want to take a loan (if it’s allowed) or you terminate employment. In addition, a lot of 401(k) plans have relatively high fees. This is especially true for smaller employers. You could find that you’re paying on average 1% or more for each investment when you could easily find a comparable investment outside of the plan for half that.
Rollover Into a Brokerage IRA
Another common option is to roll over your 401(k) into a brokerage IRA account. This can be done at almost any financial institution, but most often people flock to the discount brokers where trades have low or even no commission.
Pros: Brokerage accounts provide the ultimate flexibility. In a 401(k) you’re typically bound to just mutual or index funds. This is great for most people, but there are a lot of other investment options out there. The biggest benefit in a brokerage account is being able to take advantage of Exchange Traded Funds, or ETFs. With thousands to choose from, low expenses, and no investment minimums since they trade like stocks, these can be an attractive investment vehicle for a retirement account. Not only that, but with a brokerage account you can buy individual stocks, mutual funds, individual bonds, and in many cases, even things like options and CDs. So, if ultimate flexibility is what you’re looking for, a brokerage IRA is going to provide it.
Cons: Even though there are many great benefits with this option, there are obviously going to be some drawbacks as well — the biggest being cost. Unlike investing in most mutual funds that just have a built in expense ratio, with a brokerage account you’re going to be charged a fee each time you place a trade with most brokers. And if you trade an ETF, you’re also dealing with recurring expenses built into the fund on top of the trade commission. Also, some brokers will charge a transaction fee to place a mutual fund trade that you otherwise wouldn’t have inside a 401(k) or if you had an account directly with the fund company. The good news is that you can eliminate most of these fees by opening a brokerage IRA with a free or discount broker such as Zecco.
Rollover Into a Mutual Fund Company IRA
The third main option for rolling over your 401(k) is to roll it directly into an IRA held at a mutual fund company. Popular fund companies include Vanguard, Fidelity, T. Rowe Price, and so on.
Pros: Rolling directly to a fund company will typically be the cheapest way to invest in their funds. There are no commissions, and in most cases, no account fees if you meet some basic requirements. It can also be helpful to stick with one provider so it’s easier to keep track of your investments.
Cons: If flexibility is what you’re after, this may not be your best option. For one, you’re basically tied to this fund company’s offerings. While most fund companies will have plenty of options to satisfy most investors, if you want to dabble in individual stocks, ETFs and so on, you’ll more than likely need to then open a separate account with a brokerage to do this. In addition, you have investment minimums to contend with. All fund companies are different, but most require that you have anywhere between $500 and $3,000 to invest in a single fund before you can buy any shares. For smaller accounts, this might mean being unable to invest anything, or only buy one fund until you save up more money to invest in another.
Your Rollover Step-by-Step
So, you’ve decided that you’re going to do your retirement savings a favor and roll over your 401(k), but where do you get started? Don’t let the process intimidate you. Sure, there may be some complicated looking forms to fill out and it might mean that you’re dealing with your life savings, but it isn’t hard if you know the steps involved.
1. Check Rollover Eligibility With Your Old 401(k) Provider
Before you do anything, check with your old provider. You want to make sure there won’t be any unexpected snags or fees and make sure that you’re showing up as a terminated employee. They can’t release the funds unless you’re terminated, and I’ve often seen cases where your employer doesn’t notify the plan provider, and you’re still flagged as an active employee in the system. Then when you try to do the rollover, it doesn’t go through, you’re not often told why, and it is up to you to make the contacts to get that resolved. So, save yourself some time and make sure you are cleared to move the money and that there are no unexpected penalties, fees, or restrictions.
2. Obtain Rollover Forms From Old Provider
If you’re already on the phone with the old provider checking to make sure you are free to move the money, you can also use this time to ask for the required paperwork. In most cases, you will need to submit paper forms in order to initiate a rollover, so you’ll want to tell them that you intend to roll the money over, and that you want the forms needed. They will either send them to you in the mail, or you may be able to request them via email or by fax. There are some providers that will only require a rollover request form from your new plan, and if that is the case, simply move on to step 3.
3. See What is Needed for the New Provider
Next, you’ll want to check with your new account provider to see what they require in order to accept the rollover. Whether it’s a new 401(k), brokerage account, or mutual fund company, each will have their own unique, but similar process. In some cases, you may be required to open up an account first, and then submit a rollover form. In other cases, the account creation and subsequent rollover may all be part of the same form or process. Either way, determine how they require it to be done, and make sure you have all of the appropriate information from the previous provider to complete everything.
4. Complete the Forms Properly
This is an important step, especially if you’re doing it on your own. All of these forms may have a lot of information, and to make sure things go as smoothly as possible, you’ll want to make sure you fill it out correctly. For instance, if your rollover form from your previous carrier asks what type of distribution this is, you want to be sure to choose a Direct Rollover. This ensures that the funds are made payable to, and go directly to the new account. This often requires information as to how to make out the check or where to wire the money. This is information that you’d need to obtain from the new provider.
If you have questions at this stage, call the company and ask for help. Whether it’s questions with your outgoing provider or incoming, don’t assume and just fill it out the best you can. Sometimes just an unchecked check box, or an overlooked signature can kick the forms back and delay the process for weeks. In the worst situations, you aren’t even informed there is a problem and it can drag this process out forever. So, save yourself some trouble and make a quick call if you have questions.
5. Submitting the Forms and Follow-up
Once completed, it’s time to submit the forms. Whether it’s forms for both providers or just the new one, you’ll need to mail or fax them to the appropriate location. But your job doesn’t stop there. You need to stay on top of this process. There is a nasty habit of outgoing providers to make it difficult for people to pull their money out. If something is wrong with one of the forms, or they never receive anything, you aren’t always going to get a call or letter right away alerting you. They don’t want to see those funds leave, so they aren’t going to be quick to tell you something that will speed that up. So it’s up to you to follow up on your own in most cases. If you haven’t received your check, or the funds haven’t been deposited after about two weeks, I’d make a few calls and make sure all parties received the appropriate paperwork and that they are in good order. If not, you may need to have them send the forms back so you can correct the error, or simply provide some information over the phone. Either way, don’t assume that everything is going smoothly behind the scenes if you don’t hear anything.
In many cases, you will receive a check for the full amount of the rollover in the mail. It is then up to you to make the deposit into the new account. Make sure the check is made out properly, and submit it for deposit with any required deposit forms. If you previously called and they said a check has already been issued and mailed, keep an eye out for it. Again, you want to be on top of things if it doesn’t show up so that you can have a stop issued on the check and a new one sent. And don’t hang on to the check once you receive it. Get it deposited as soon as possible and out of your hands so that you don’t forget about it, it gets lost, etc.
Making the Right Choice
As you can see, there are many different options available to you when it’s time to do a rollover. There isn’t a right or wrong answer, as each method has its own pros and cons. So, don’t become paralyzed by the choices or process, because the worst thing you can do is withdraw the money unnecessarily. Obviously, there may be some financial emergencies that may dictate a rollover isn’t the best course of action, but for most people, this will go a long way in helping you achieve your retirement goals.
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bwarfield Nothing to be very concerned about in terms of taxes. As long as you roll it over properly into an IRA there are no tax consequences for doing so. And once the money is in the IRA it remains tax-deferred until the money is withdrawn. So you can buy, sell, trade, receive capital gains and dividends, and all of that within the account and it will not trigger a taxable event. Instead, you defer all taxes to withdrawal, at which time the money you take out is then taxed as income.
My latest conversation: How to Turn a Hobby Into a Business
Thanks for the info.
I am 53 and had to take an early distribution for financial reasons from my previous employer profit sharing program. I would like to rollover (within the sixty day time period) a percentage of it into a IRA or such to defer the income, taxes, and penalties under next year (when I will need to take an early distribution of it then). Can I do this or is there a time period that I will have to leave it in the IRA? Thank you.
how long can a investment comany take to rollover my funds to another ira??
It depends on the company, but generally speaking it can take a few weeks for the entire process, although it can happen sooner. If it has been a few weeks and you haven't heard anything you may want to follow up with them and see if there was a problem. Sometimes it's just a minor issue with the paperwork and they are slow to contact you about what is needed to push the roll over through.
Mother in Law is 63 and quit her second full time job and has $5000 in 401 k fund. what is her best option? Cash out, she is over 59 1/2? Her annaul income is less then 40000. How much tax and pentalty would she have? What would her benefit be if she rolled it into another IRA?
Don't forget those of us GenX'ers who are facing or dealing with reality of divorce! QDRO's are a main asset for many of us, and there is VERY little help out there!
This is a HUGE transaction and lots of the regular 401k rules are different
What is the special emergency situation that the president promises that you could withdraw 25% of your retirement without being penalized?
My husband became disabled and recently resigned from his job after getting Social Security/Disability. I have been diagnosed with a terminal disease and we were wondering if once we rollover his 401K plan to an IRA can we take a distribution without penalty for medical costs? We are both under age 59 1/2. Thank you.
I left employment with a company in 2004. At that time I decided to keep my 401k money in their account since I didn't have 401k at my new job yet. I still have an account with the old company (managed by Diversified Investment), but now, almost 6 years later I'd like to just rollover into my current employer's account (managed by ING).
Can I do that now, even though I haven't recently left employment? Or has my window of opportunity to rollover passed?
My wife has been out of work due to medical reasons for about 7 months. She is 60 yrs old and its still up in the air weather she will be able to go back to work.
Her 401k contributions of course have been stopped as well as the match from the company. So her money is just sitting there with no match or weekly contributions. Should / can my wife roll her existing funds out of the 401k to a IRA or other option even though the company hasn't let her go? And if she can do this and is finally released from the Dr to come back to work, can she start a new 401k? I know it sounds crazy but there are no stupid questions...right?
Jeff, not a stupid question at all. The short answer to your question is "probably."
By law, you cannot roll over your 401(k) while still employed, but there are a couple of exceptions. The problem is that the exceptions are not all universal for all plans.
The good news is that since your wife is 60 she is above the 59 1/2 age exception. The bad news is you'll have to contact the plan provider to see if they allow rollovers for participants who are above this age limit. Many do, but there are some sticklers out there.
I also believe this rollover limitation only applies to your pre-tax deferrals. I'm not 100%, but I don't think this applies to vested employer contributions. So at the very least I would think regardless of what the plan allows you should be able to roll over any vested employer contributions without issue. Again, check with the plan provider.
To make things even more confusing, some plans also allow for in-service withdrawals. This means that you're allowed to take money out while still employed if you meet the age requirement. This is a bit of a workaround because if you can do in-service withdrawals even if they don't allow a direct rollover you could take the money out and then deposit it into an IRA. The problem with this route though is that most plans will withhold taxes from any distribution, so even though you're rolling those funds over you won't get the entire amount because it will be held for taxes and you'd have to come up with that extra cash to deposit back into the IRA on your own. Then you have the whole paper trail for the IRS to keep on top of.
So, there's no easy answer, but it's quite possible that you will be able to roll over part or all of her funds in this situation. But the first thing you'd want to do is inquire with the plan provider and see what they allow and go from there.
My husband was terminated way back in 2001 and we just came across his paperwork to have his 401(k) cashed out or rolled over, but his previous employer is now saying that he had a timeline and that his 401(k) was probably invested in the other employees accounts? As you can tell, I don't know anything about 401(k) plans...is it legal for them just to absorb his money without having him sign something? HELP!
Well, it is possible that the plan changed during that time and it is possible that it could mean the money automatically got invested in something else, but the money shouldn't be gone or otherwise tied up. It will still be governed under the 401(k) rules unless something very strange happened.
So, unless your husband received an actual check from them due to a forced cash out, the money is still somewhere. He will have to find out who the new plan administrator is if it has changed and contact them to see what needs to be done in order to release those funds.
I used to work for the US government until I decided to quit my day job 3 years ago to venture into business. I decided to keep my money there as it was one of the options. Recently I am contemplating whether I should roll over my account to my stock broker for more flexibility. My TSP is doing good but it does not have more options to choose from. I would like to try to do a direct transfer to an ETF type IRA account.
I work for a co. That has a 401k but I didn't join up but they started holding out on their own is their anything that can be done about them doing this
Thanks bryan
What is the difference between IRA AND IRRA? I have just rollover my 401K account to Merry Lynch (because I lost my job, and the only option I had was to take my money out or rollover to IRA). The account is opened under IRRA (Individual Rollover Retirement Account). I went to my local library to find more about this type of account, and the librarian couldn't find anything under IRRA.
Once you have been laid off, it is important to speak to a professional about your 401K options because of taxes, penalties, and other fees that most people are not aware of. I personally work in the finance industry and see many clients who have the same questions.
I am being let go fro mmy jon 10/1 I have 35 K in a JP Morgan account ( 401) I'm being told I can not take a partila distribution. Rather than pull it out I was told I can roll over to IRA ( can I roll it over to a Brokerage account ?) When the check it sent to the IRA I can ask for a distribution. is this corrrect. Not the whole amount just a percentage.
Thanks,
Pat
Hi,
I am 73 as of 6/26. I was laid off in February 2010. I rolled my 401K into a Rollover IRA in June. I have taken no distributions from either account. I know I am now subject to MRD rules, but since I did not take a distribution by 4/1 am I now in trouble with the IRS? When should I take my first and second MRDs?
Thanks,
Terry P
Terry, that's a good question. If you were still working this year and your only qualified retirement funds were in that company's 401(k) you didn't have to take an RMD anyway, as you probably know. Since you were laid off in this calendar year the April deadline wouldn't apply. That deadline is for your first RMD after you hit the age trigger, and it's the April of the following year, which gives you a little more time.
So, you should fall under the December 31st deadline for withdrawals starting this year. I suppose it is possible this event might qualify you for the April deadline of next year instead, but to be honest I haven't encountered a situation like yours before so I'm not sure if that would be granted to someone in this situation or not. You could always check with a tax professional if you are unsure, but at the very least you should plan on making an RMD before the end of the year to keep the IRS happy.
I also have not heard of a fee to rollover a 401(k) into an IRA, but these days, it seems there are fees for everything. Is it related to a minimum balance, or just a $100 fee? I am curious to know who the financial company is also. You can e-mail me directly at my website if you don't wish to post it publicly. Sorry for your inconvenience. I disagree strongly with the idea of a 'rollover fee'.
I'm in the process of rolling over my company 401k to a traditional IRA and just discovered the exit fee. I would have hoped that market pressure (or regulations) would have prevented an institution from charging to withdraw funds -- seems greasy to me.
The 401k is at www.theonline401k.com, the fee is $95, and it appears to be a flat fee. From the rollover page:
"Please note: A $95 fee will be charged to you, the participant, to cover the administration, processing, delivery and year-end reporting (Form 1099R) of your distribution."
Sounds like an opportunity for a class-action lawsuit against theonline401k.com ... has anyone started one and need another signature?
I wish I read this before I enrolled in the company 401K. Not only did they stop the match but ewhen I left the company and rolled over the 401K into an IRA the financial company charge a $100 fee! Apparently it is in the contract.
I will read the future 401K contract thoroughly before I sign up. I've moved three 401Ks in my career and never have I been charged a fee. Having said that, from my experience with the financial company I shouldn't be surprised.
People often use their retirement funds like a checking account. This habit is not proper future planning. By the time one reaches retirement age, he or she has about $10K per year to live off of. An unfortunate reality is that more and more seniors are living below the poverty line. Decades ago people used to save, on average, over 12% of their income. Now the average is negative 1%. We must educate ourselves and be prepared to make well informed decisions.
Hi Sam,
Thanks for your question. That doesn't sound typical on the part of Fidelity as a 401(k) Sponsor. Normally, when someone takes out a loan, the loan automatically becomes a withdrawal upon leaving the employer, and is subject to all taxes and penalties.
In other words, if you had $10,000 remaining in your 401(k) after the loan, that amount would be used to repay the loan balance.
That solves the loan problem, but creates another one. Your 401(k) account which had been $20,000 would now be close to nothing. If you don't have a job yet, there are a lot of things you can do to create income. Lawncare, pizza delivery, handyman repairs, etc. Think of skills you have and use those to get some cash flow going. That may sound obvious, but it is also true.
As far as your job search, contact local employment agencies to help with your resume, also try networking with sites like Facebook, and Linked In. There are jobs available, and they go to the people who do a great job of networking and marketing themselves.
I hope I was able to help a little, Sam. Thanks for your question. Feel free to contact me at the website if I can help further.
Hi Dean,
About a year ago things at work really slowed down so while I was still employed I took a loan out of my 401K accout to pay off my truck in the case that I was laid off. Now a year later I was laid-off again in April and they do not plan on bringing me back. I received a letter from Fidelity talking about my loan going into default now. I am 31 years old, had 20K in my account, took 10K out to pay off my vehicle and have an outstanding loan balance of $8,500. I still do not have a job and don't have the 8,500 sitting around to re-pay the loan. Any ideas on what I could do since I still don't have a job? Thank You.
I have an idea. Sell you car.
Hi Jana,
Good call on putting the money into an IRA.
Regarding your question, the answer is Yes, you will be taxed at your normal rate and penalized an extra 10% if you are under 59 1/2.
Let's say you had $10,000 in the 401(k) and you are rolling it into an IRA. You want to take $1000 out. The $1000 will be taxed and penalized accordingly. Since you already have the check, you will most likely need to show what your IRA rollover deposit actually was. The records for this example would show a $10,000 check paid to you and $9000 deposited into the IRA. So your taxes would need to account for the other $1000. This would be counted as ordinary income.
I hope that helps.
Hi-I had a question.. my employer terminated our 401k's at our company about six months. I finally got the distrubition check for my 401k amount made out to my bank. I am putting that money into an IRA today.
Can I take out let's say a small amount of money from it before it gets transferred into an IRA? Do I get penalized in this process? Right now-it's not invested in anything per se.
Thank you
Hi KC
I will attempt to answer here.
1. If you are talking about a 401(k) contribution, that money should have gone pre-tax into the 401(k). You won't need to file it seperately on a 1040. If you are talking about a Traditional IRA contribution AFTER you rolled the 401(k) over, then the IRA contribution would be listed on your 1040.
2. The max contribution to an IRA is $5000. You and your spouse can each put in $5000. If you or your spouse are over age 50, you can add $1000 as a catch up, which means your max would be $6000 total.
3. When you roll over the 401(k) it becomes a Traditional IRA. You are taking the money from an employer plan and putting it into your own plan. The Traditional IRA is tax-deferred just like the 401(k).
The Roth IRA is not tax-deferred. However it is not taxed when you take money out. You can change your IRA into a Roth by paying the taxes due on it.
I hope that helps. Contact me with any further questions or if you would like to reserve a copy of my new book, "Help! My 401(k) Has Fallen - And Must Get Up!" which will be available in print shortly.
I rolled over my 401k to T. Rowe Price, which is the third primary option mentioned in the article. My questions are...
1. Is my contribution deductible? If so, should it be listed in Form 1040, line 32?
2. Is the maximum amount equal to $5000? (married file joint)
3. Rollover 401k is not the same as traditional IRA or roth IRA, true or false?
That's all for now. Thank you so much.
Leslie,
Re your 03/21/2010 post:
What firm or company do you represent? Does it have a website?
Because the economy has been so volatile and also because the 401(k) is such an important part of retirement, its best to hire a professional.
My new book "Help! My 401(k) Has Fallen - And Must Get Up!" is written in layman's terms to help you get more out of your 401(k). Whether you are 25 or 65, whether you have $2000, or $20,000 or $2 Million, you can get something from this. Click on my name for details.
Knowing when and how to execute a 401k rollover is an important part of planning for your retirement in an increasingly volatile economy.
JDC,
There are companies like....http://www.mtrustcompany.com/ that allow partial roll-overs into alternative investments like gold, real estate, and managed futures. Partial rollovers like this will allow you to increase your risk appetite while also allowing you to take advantage of the lower risk vehicles such as annuities through your local bank.
You could clarify the availability of rolling the 401K into a tax free annuity. Many allow re-investing in the annuity at the time (e.g. 5 years) it matures, and you don't have to take payouts.
Also, you may choose to take out only a portion of the money. You are only taxed on what you withdraw.
No, you should do a rollover and take a 72(t) distribution if you need the money immediately. That will allow you to avoid penalty at your age.
I lost my job in the year I turned 55. Can I take my 401(k) approx. $100,000 as a lump sum, just paying the taxes and no penalty?
Does anyone have advice for those of us towards the younger range of Generation X (mid-30's) on how to balance risk with safer investments?
I'm opting to rollover my 401k using my community bank. The financial advisor there came recommended. I was told they have many vehicles for investing. As I research what to do before my meeting with the advisor, I would really appreaciate advice from the savvy investors out there. Again, how to balance more aggressive options with safer ones? Thanks!
This is commonly referred to as the "same seat rule".
Scott G,
It does not guarantee rollover eligiblity. More and more companies are trending toward mapping the assets directly from 401(k) to 401(k) without giving the retained employees an option to roll out of the employer based plan. It is important to understand, under ERISA, there is no legal requirement that the employer must allow the former worker to roll their balances to an IRA. You'll have to wait and see what is offered to you.
Very good question Scott! I would suggest speaking with your HR rep to see what your options are. Often in a case like this, the buying company also acquires the 401(k) plan and your 401(k) is changed to the plan which they use. Again, it makes sense to check with your HR person.
If it is eligible for rollover, and you live in the South Bend, IN area (either IN or MI) I may be able to help you with the rollover, if you would like help.
Contact me at my website.
I understand the concept of rolling over a 401(k) to another qualfied account. In order to do a rollover, you must have lost or left your job. My company most likely will be acquired by another company soon. Does that count for rollover eligibility? I would be leaving my current company (which no longer would exist) and be an employee of the acquiring company.
Hi Leanna,
First, let me congratulate you & your husband for doing a nice job of saving in his 401(k).
Having said that, I would really discourage you from using it to buy a car. He will need that money for later. By withdrawing it early, that $10,000 will be subject to taxes and a 10% penalty. Because of tax withholding, he may have to take out $15,000 or more to get the $10,000.
What other ways have you looked at to buy the car? There has to be another way to do it - second income, other savings, a different car, besides using the 401(k) money. Once you take it out, it's like pulling a tree out by the roots. you have to start over.
Your other question was about rollovers. It's customary to roll over 401(k) funds to a Traditional IRA. Like the 401(k), taxes are deferred on this until money is taken out. You will NOT pay taxes or a penalty on any amount rolled over to an IRA.
The other type of IRA is the Roth. You can convert the Traditional IRA to the Roth if you choose - by paying the taxes due on it. Once the money is in a Roth, you won't pay any other taxes on money you take out. Withdrawals would still be subject to a 10% penalty until age 59 1/2.
I have a new book, "Help! My 401(k) Has Fallen - And Must Get Up!" which will be available in May. You can contact me for more information (click on my name). You can also get a FREE report - "The 5 Biggest Problems With 401(k) Plans - And How To Fix Them!"
Leanna, I hope I was able to help. If you are in the South Bend, IN area, I can also talk with your husband more about the rollover. Thanks.
My husband lost his job of 15 years in 2009 due to the employer moving to another state. He has not found other employment yet. He is 40 years old and has $60K in an employer sponsored 401K. He really needs to take a partial withdrawal (10K) to purchase a new vehicle. We talked to the current plan provider and they said he could as long as he rolled the remainder to an IRA. We have no idea what kind of IRA would be the best.
Raquel, I would really discourage that if I were you. You don't list your age or how much is in the plan, but if you are younger than 59 1/2, you will pay taxes and a 10% penalty. I have seen people who had $20,000 in their 401(k), which was reduced to about $11,000 or $12,000 after taxes being withheld and the 10% penalty. Plus, like pulling a tree out of the ground, you will need to start over in your retirement savings.
My new book, "Help! My 401(k) Has Fallen - And Must Get Up" deals with issues such as these and helps people just like you to get more from their retirement plan. You can contact me through my website for more info and also get a FREE report - "The 5 Biggest Problems With 401(k) Plans And How To Fix Them". Hope I can help, Raquel.
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I'm going rollover and old 401K into a on-line brokerage account and manage it myself. I've researched investments strategies and will likely use IBD's CANSLIM. My question is whether there are any tax issues or mistakes to avoid in rolling it over and trading stock myself?
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