2007-01-23 12:49:14 · 9 answers · asked by Justus 4 in Business & Finance ➔ Personal Finance
Question: how much is in this 401(k)?
In many cases, if the balance is less than $5,000.00, the current plan administrator will ask that you rollover the money to some institution. If the balance is $5,000.00 or more, then you might be able to keep the money where it is.
Second issue: are you happy with you current investment options?
If you are, then stay with the current plan administrator. If you are not, you might want to roll it over into a Rollover IRA.
Now comes the most sensitive consideration: if you can keep your money in the present plan, does the present plan allow you to take loans?
The number one mistake that a lot of people make is that they cash out their 401(k) money believing that they will save later on in life. The important thing is to keep your money invested now. But if you are starting your own business, the instance might occur when you might need to take a loan against you retirement account. Not all plans allow this--but if your present plan does, it make sense to keep it there (just in case). Bottom line: "loans" must be repaid -- so if you did take a loan and didn't repay it, would become a disbursement, and taxes, early withdrawal and penalties might occur.
A lot to think about.
Good luck with your new enterprise.
2007-01-23 12:58:31 · answer #1 · answered by seaportma 5 · 0⤊ 0⤋
If you don't need the money to start your business then leave it where it is. Especially if you like the investment's available. An earlier poster said they can't force you out if the balance is above 5k. This is true...but in many cases that number has changed to 1,000. This is because they have to roll the money over into an IRA in order to force out someone over 1,000. Business owners simply don't want to have deal with setting up IRA's for that so they changed their plan rules. My bet is your company did the same thing.
Once your business has become solid then I'd advocate starting up a solo 401k over a SEP any day. Reason is this...in a SEP you're limited to 20% of your income as a contribution. With a 401k you can put in a salary deferral PLUS 20% of your income. And, if you get employees then you can still get a good benefit without having to put out huge amounts for them.
Don't be shortsighted on this....anticipate great success with your company! That means waiting until YOU are ready to implement a plan that benefits YOU. You can't be forced to do anything here...if your ex-employer moves their 401k they have to provide you with ample notice. This means you will have time to find an IRA...no big deal. Leave it and concentrate on growing your business!
2007-01-24 04:11:47 · answer #2 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
You can do two things (assuming you have enough in there to worry about)....
1) Leave it where it is. The company you work for now needs to retain it for you.
2) Rollover to an IRA.
I used to be a proponent of #1, but ended up going with #2. Here's my story....I worked for large company A and had a 401k coordinated by Vanguard. When I left, I just left it alone for a few years. I still got statements, etc.
But then someone reminded me that if company A every moved away from Vanguard and went to another firm to coordinate the 401k, my money would also have to be moved. So I contacted Vanguard via their website, got the appropriate forms, and simply rolled over to an IRA under their control.
You can roll over at another firm, too. If you have a financial advisor, they have the right forms....and there are no penalties.
2007-01-23 13:03:33 · answer #3 · answered by CG 6 · 0⤊ 0⤋
You don't have to do anything with a 401K. Your previous employer should let you keep it in their plan. If believe the plan is restrictive, you could rollover into an IRA. There are rules regarding rollovers to make sure the distribution is non-taxable. Check with you broker for specific instructions. Last but not least, you can setup a 401K plan for your own business as well. Some administrators can accomodate rollovers into their 401Ks.
2007-01-23 13:00:58 · answer #4 · answered by gls_merch 5 · 0⤊ 0⤋
Congrats on starting your own business!
Roll your 401(k) over to an IRA, with the same investment firm. No taxes or penalties.
2007-01-23 14:19:39 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Many financial institutions have SEP's which are 401k's for the self employed. Check to see if you can roll yours into one of these plans.
2007-01-23 13:39:58 · answer #6 · answered by ladyharryman2000 1 · 0⤊ 0⤋
i think you should think about what u really want to do with your money, because thats alot of money, make sure you spend your money wisely, and if u have n e left over i would like about $500
2007-01-23 13:22:42 · answer #7 · answered by Anonymous · 0⤊ 0⤋
The smart thing would be to leave it alone until you retire, otherwise you will pay big penalties.
2007-01-23 12:57:13 · answer #8 · answered by ? 3 · 0⤊ 0⤋
Keep it! Do not sell!
You will be shocked as to how the money grows!
2007-01-23 13:11:17 · answer #9 · answered by traderb550 3 · 0⤊ 0⤋