I am planning to stay at home with my 3 young children. Where can I put it if I'm not planning on contributing to it...should I cash it out? Oh, there isn't a lot in there maybe $500-$700. Guidance is appreciated.
2007-03-27 07:49:16 · 5 answers · asked by Tonia G 2 in Business & Finance ➔ Personal Finance
No, don't cash it out! You can transfer it to an individual IRA. Even a small amount can grow a lot before you retire. A conservative rule is that it will double every 7 years. You can also contribute to an IRA in the future. Choose a place with very little fees. A direct mutual fund may be the best place. I can't recommend one exactly, but check mutual fund familes on Yahoo Finance and call a few to see offers the best deal. I have a friend that uses T Rowe Price and likes it very much. Choose 2 nice mutual funds that have a nice 10-year track record. Recent returns matter less than long term. And then you won't have to think about it much.
There is nothing more important than saving early. It's the compounding of profits, not the contributions that count most! Any amount is helpful, even $50 a month and they will give you a break on fees if you contribute. While you're at it, consider 529 plans for your children or at least the oldest one-you can change the benefiary/child name later...
2007-03-27 08:13:04 · answer #1 · answered by Middleclassandnotquiet 6 · 0⤊ 0⤋
The company will notify you when its time to move it. They will most likely cash it out and send you a check.
DO NOT CASH THE CHECK.
Go to your bank and ask them to create an IRA Rollover account for you and deposit the check in the IRA Rollover account.
If you cash the check you will incur penalties and it will be considered a withdrawal which is addition to your income and therefore taxable. So your $500-700 will actually be worth about $300-500 net after taxes and penalties. So what's the use, you may as well roll it over as described above and let the interest accumulate until you need it during your retirement years, when you can withdraw it without tax.
2007-03-27 08:35:56 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you cash this out, they take 20% right off of the top, and then you pay another 10% at tax time. I had to take mine out when I quit to stay home. I had about 1,500 in mine, and just sucked up the penalty.
2007-03-30 09:00:11 · answer #3 · answered by kmf77 3 · 0⤊ 0⤋
Most likely the company will require you to move it. Just open an IRA and roll it over. Do NOT take a distro of it or you will pay taxes and penalties on it.
2007-03-27 08:14:21 · answer #4 · answered by Bostonian In MO 7 · 0⤊ 0⤋
based on amount, company will force u to remove.
2007-03-27 08:12:37 · answer #5 · answered by DLSMe 1 · 0⤊ 0⤋