After 4 years with my current employer, I decided to take another job elsewhere. My 401K that I acquired while there is performing VERY well. I was wondering though, now that I am not employed there will of course be no more payroll deductions nor employer matching going to the fund.... What should I do? I am now doing contract work and as such do not have a 401K that I can rollover to and to be honest I really don't want to move this money because the funds that I am invested in with the current plan are great. I've earned a return since inception of approx 28% and so far this year alone the return has averaged 32%.
Is it possible to contribute to a 401K on my own, by sending in money or setting up a draft on my checking account? I always thought that you had to make contributions through payroll deductions. If its possible to make contributions, I could do that with no problem, I'd even be able to contribute as much or more than I was before.
Any guidance is appreciated.
2007-10-01 15:58:07 · 9 answers · asked by YahooVista 2 in Business & Finance ➔ Personal Finance
1) You can leave it there....as long as your account is over $5000 they can't force you to take a distribution. Leave it until you're ready to roll it over; either into an IRA or another qualified plan.
2) You can't make new contributions to it. You must be employed and earning income from the plan sponsor. But there might be a way around this depending on how small your prior employer is and whether you left on good circumstances. If you set up your own company to do the contract work you have the ability to set up your own 401k. However, another 401k that's already in existance also can allow you to adopt their plan. Not likely they would want to do it but it's possible....you can see where I'm going with that.
3) if it's not gonna work that way you can set up your own plan. It would be relatively cheap and worth it do over a SEP which is limited based on income. 401k costs about $700 to set up and about $750 a year to administer. Coud be cheaper depending on your balance and who you use...You're looking at a solo 401k.
2007-10-02 03:36:32 · answer #1 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
You're right. If you put in 5%, they put in 2.5% which is a 50% match on your contributions. For your old 401k, I would roll it over into an IRA at Vanguard or Fidelity (I like Vanguard personally). Put it in a Target retirement fund for now, until you have the opportunity to learn more about asset allocation. It's important to learn some basics of investing so you can manage your money intelligently. It does not have to be complicated because you don't need to know everything. I don't recommend leaving old 401k money at the old company - take control of it in your own IRA as you'll have many more investment options available to you, and almost certainly at a lower cost. To get started learning about investments, I recommend learning about the Boglehead philosophy. It's simple and easy. I linked a page below where you can get started. Don't be intimidated by thinking it's too complicated - it isn't. If I can do it, anyone can.
2016-05-18 21:49:16 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Sounds like a good idea to leave that investment there as it is performing very well. You do have the option of rolling most 401k's into a rollover IRA account at Fidelity or similar places, where you could also invest on your own as an option.
2007-10-01 16:19:10 · answer #3 · answered by Anonymous · 1⤊ 0⤋
I believe you might still be able to leave your prior contributions in the 401K plan. But you cannot contribute any more to it. Do check with your company's 401K administrator and see if you can leave it there as long as you can. Since is doing so great, leave it there if you can. I would suggest you to look up the fund that 401K is invested in, and try to invest in similar profolio with an other retirement account.
2007-10-01 17:29:29 · answer #4 · answered by Anonymous · 0⤊ 0⤋
A couple things to consider:
1) Who administers your 401k (e.g. Fidelity, Vanguard, etc.)? What are the funds in which your 401k assets are allocated? Depending on the answers here, you may be able to replicate your 401k asset mix in a SEP-IRA.
2) You might consider contacting a broker-dealer (e.g. Fidelity) to speak with a licensed representative about your options. Most firms will consult with you regarding the topic free-of-charge or obligation.
2007-10-01 19:27:59 · answer #5 · answered by andrewunknown 1 · 0⤊ 0⤋
Many employers, not all, will let you leave your 401K money in their plan even if you leave the company, but you can't continue to contribute to it. If you want to, you can take it out and roll it into a rollover IRA.
2007-10-01 16:36:55 · answer #6 · answered by Judy 7 · 1⤊ 0⤋
401(k)s are only through your employer's payroll deduction. Sorry, you can't add more. You can open a SEP IRA if you are paid 1099 income. Unlike a traditional or Roth IRA, this is invested on a pretax basis and you can put in up to 25% of your net income after self employement tax deduction.
2007-10-01 16:07:32 · answer #7 · answered by Anonymous · 1⤊ 0⤋
It is possible to continue to contribute, but it depends on the plan. Some companies require you to make a full withdrawl. There ususally is a max of 90 days to roll over into another 401k or look into a roth IRA. I would take that time to investigate funds. You can also roll over to a trading account and purchase shares of mutual funds thru a online trading site such as tdameritrade. This will allow you to continue to invest in the funds you already hold. I hope this helps
2007-10-01 16:15:50 · answer #8 · answered by Glynis 3 · 0⤊ 4⤋
I thik you can still contribute to it, but will have no matching funds.
2007-10-01 16:06:09 · answer #9 · answered by bored 2 · 0⤊ 2⤋