quite my job not planning on returning to work for a few months what to do with my 401k?

Answer 1

You can leave it with the company it is in or you should be able to roll it over to a mutual fund, ira or some other investment.

Do not cash it in, you will owe taxes and penalties.

Answer 2

First of all, you need to know when you're eligible to receive your distribution. Some plans allow for this to occur immediately while others allow you access to your balance as soon as administratively possible after the close of the plan year.

Once you know you're eligible to request a distribution you will need to obtain the paperwork (or in some cases complete one online). It's also possible that your former employer will send you paperwork whether you request it or not.

What you do with it depends not just on your personal decision, but also on your former employer's distribution policy. Depending on your balance, you could be left with no option at all.

If your *vested* balance exceeds $5,000 you can elect to keep it in the 401(k) plan. This what happens if you do not return your distribution paperwork.

If your vested balance is less than $5,000 then it's possible you can be "forced" out of the plan. Your money would either be sent to an IRA in your name or your account balance would be cashed out. In the latter case, you would receive a check (payable to you) for the amount of your vested balance, minus 20% for federal tax withholding.

When deciding what distribution option to choose (cash out or else roll over to personal IRA or your next employer's retirement plan) you need to understand the tax implications. Rolling it over is a non-taxable event. The money retains its "qualified" status and is not seen as part of your income. However, if you cash it out that money is seen by the IRS as regular income. You will pay 20% up front and you will also owe a 10% early withdrawal penalty (if you're under the age of 59 1/2) as well as any additional tax on the amount when you file your taxes for this year.

Regardless of the reason for distribution, you will receive a 1099 indicating what type of distribution occurred that you must file with your normal 1040.

Do not cash it in. You will lose 10% of it and have to pay taxes on the entire amount. You're not just looking at losing about one third of the value, you're also losing the benefit of that money when you reach retirement age. That amount will grow a lot between now and then, so you're really screwing yourself over if you go with the short-term benefit.

Answer 3

Do a google search for "Rollover IRA"

You need to take the money from your 401K and put it into a Rollover IRA account.

Answer 4

Don't spend it. Let it sit. You will regret it if you spend it.

Answer 5

welcome !!!

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