transfer 401K to IRA?

Question

My wife has 401K with about 1,000 dollars vested balance
Just started a new job with no 401K option. Can she open an IRA to transfer the money to? I don't want to leave such a small amount in the old account. What are my options to do with this money?

Answer 1

Since the balance is small, you should consider rolling the funds into a Roth IRA Account and begin making contributions into a Roth IRA by payroll deduction or monthly draft of her bank account.The big difference with a Roth vs Traditional IRA is that you pay income tax today, but then the entire balance after years and years of investment growth in the account will be tax FREE when she retires and makes withdrawals. Tax free that's HUGE savings at retirement.

In fact if you have a 401k at work contribute up to your company's match program and if you can then max out a Roth account for yourself.

Answer 2

You should not be taxed if it is a direct rollover, assuming a traditional IRA and not a Roth. Remember they cannot make a check out to you it has to be a transfer from one to the other. I have 401K, Traditional IRA and Roth. I leave them alone as I can manage them better that way and pay less to the idiots. My 401K gives me some good options and is managed for basically no dollars, less than .15 where my IRA is managed by Vanguard at about .25 Consider that. Good Luck

Answer 3

It's called a rollover IRA, and sure she can open one with a variety of places like a mutual fund company, bank or brokerage.

You don't have options to do anything with the money, but she does.

If she "rolls it over" into a traditional IRA, there won't be any tax consequences now, it'll still be deferred. She could also move it to a Roth IRA, but would have to pay taxes on the money to do so, although not a penalty for early withdrawal.

If she doesn't roll it over, but just withdraws the money, she'll pay income tax on the amount, plus a 10% penalty for early withdrawal if she's under 59-1/2.

Answer 4

Yes, you can roll it to an IRA. The easiest way is to call the new company, Fidelity or whomever, and have them open the account for you AND deal with the rollover. They will do the bulk of the work for you.

This will prevent you from taking possession of the money and making sure it gets rolled over.

With only $1,000 they will probably require that you set up an automatic deposit each month to increase this amount over time.

Answer 5

usIf she has left the job with the 401k , she can roll it over it to an IRA if you can find an IRA that will accept a balance that low

Answer 6

She can roll it over. But, if she contributes to that IRA she cant roll it into another retirement account with another employer if she gets another job.