Should I close my 401K account when I quit working for the company and has only $1500 in the account?

Question

I have two 401K accounts form previous companies I was working for. But one of them has only $1500 in it. After resigning, the account was set up by under one of the mutual company.

I have been paying around $30/year for the fee for the last 5 years.
Do you think I should close the account even though I have to pay 10 or 20% of penalty fee?

I am not sure if it worth keeping paying the annual fee for that account when there is no money going in there and has only $1500.

Could you give me an advice?
Thanks.

Answer 1

The best way and good thing to do is to transfer the account to a roll over IRA or roll over to a 401K that you have right now.

The way to do it is to call the mutual fund company that takes care of your previous employer's 401K and ask them for a Roll-Over Kit. This the term for it. The Kit will walk you through the whole process. Its not a difficult thing to do.

It is better to open a Roll-Over IRA that you can contribute to and benefit from. Do not choose to pay a penalty unless you have to.

Good luck!

Answer 2

If the institution where your 1500$ 401 K sits allows a rollover for amounts that small then you should do that. It does not cost anything. You create a rollover IRA at an online broker like Etrade or Fidelity and follow exactly the procedures they tell you. If you make a mistake you may end up with the penalty but if it goes directly from the 401 K into the rollover IRA without you "touching" it it's fine. No penalties, no costs. Many online brokers don't charge for their IRA accounts.

And later you can consolidate other 401Ks in this one. The advantage is also that you can chose better among many thousands of investment options and make a better (tax deferred) gain. Just because 401K plans usually have only a limited choice of often expensive and avaerga perofroming funds. But if you roll it over the investment choices are plenty and under your control.

If you just take the check it's not just the penalty but also taxes you owe. Why give that money away? I wouldn't.

Answer 3

I would roll it over into an IRA if I could, or put it into the other account. There should be some way to move it without having to pay a penalty.

Answer 4

Talk to your financial person, I think that you can roll it over into an IRA without paying the penalties. Check to see if you can combine them, or if you have to set up separate accounts.

Answer 5

Don't close it since you have a substantial start. Roll it over into your bank or credit union and continue to pay the maximum allowable into it each year. You will thank me for this advice when you reach retirement age!

Answer 6

It has to be a business decision, based perhaps on whether the £1500 earns enough to cover its costs.

Why can't it be converted to an IRA or combined with another perhaps?

Answer 7

ROLL IT OVER TO YOUR NEXT JOB...ITS ALWAYS GONNA BE THERE...