what happens to this acct. after i'm gone? I already asked HR but they just came back saying that they can send me forms when I'm ready to take a distribution or a roll over, what does means? how can I borrow from this acct. if I need the money now?
2007-10-31 05:48:01 · 8 answers · asked by Ecco 7 in Business & Finance ➔ Personal Finance
Wow thanks everyone you guys are helping me a lot.
2007-10-31 06:24:59 · update #1
You have several options with the account. If it is over $5k then you can leave it there (and you might pay higher fees for maintenance). You can roll it over into your new employer's plan or a rollover IRA, keeping it's tax advantaged status. You can liquidate it, but that comes with a 10% penalty and everything you take out is also taxed as ordinary income (and is no longer growing towards retirement).
You cannot borrow against this money if you are leaving. Any outstanding 401(k) loan becomes due in 30 (or 60) days from leaving the company (whether by choice or not -- it's one of the big risks in taking a loan from a 401k). You would have to pay it back immediately.
When putting money in a 401k or an IRA, you should really plan on not getting to that money until you are 60. Otherwise, don't even bother putting it away!
good luck!
2007-10-31 06:05:13 · answer #1 · answered by Rush is a band 7 · 1⤊ 0⤋
You might or might not be able to just leave it in their plan until you retire - each plan has different rules on that.
Taking a distribution means just taking the money - don't do that, you'll lose the benefits of a 401K and pay a huge amount of tax on it.
Rolling it over means moving the money to a new account. If you go to a new employer who has a 401K, you might be able to transfer the money into their plan. Or you can put in into a "rollover IRA" with a bank or mutual fund, and it will stay tax-deferred and you won't pay any tax penalty for moving it.
2007-10-31 13:11:38 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
If you have over 5k you can leave it in the 401k although the adminstrator may charge you a higher maintenance fee, check with your HR department.
You can also roll it over to an IRA with no penalty. I think you have 6 months to do that (not sure on the timing).
Whatever you do don't be tempted to just cash out.
You will have to pay all taxes plus a 10% penalty.
Unless there's a dire need for the money leave it in a 401k or IRA.
2007-10-31 12:56:45 · answer #3 · answered by Bill 7 · 1⤊ 0⤋
Check with the company that manages the 401k if you need a loan. Most will let you borrow half the balance and pay yourself back (with interest) over several years. This won't affect your taxes since it's a loan, not a withdrawal.
Otherwise, let it sit unless you don't like the investment options or performance. Any broker / financial planner would be heppy to help you roll it over to a new fund.
2007-10-31 12:55:09 · answer #4 · answered by scott.braden 6 · 1⤊ 0⤋
relax - the money isn't going to disappear. Like they said, there's paperwork for you to fill out if you want to roll it over it to an IRA or withdraw -it. If you take the money out and don't roll it over to an IRA - you will have to pay income taxes on the distribution, plus a 10% penalty if you are under 59-1/2
2007-10-31 12:52:27 · answer #5 · answered by Anonymous · 1⤊ 0⤋
you want to Rollover into another 401K account
do a Roth IRA. If you take distribution you will owe
taxes on the amount and pay a deductible for early
withdrawal.
2007-10-31 13:20:28 · answer #6 · answered by Anonymous · 2⤊ 0⤋
You can let the funds sit there, roll it over to another 401 or IRA, or cash it out. If you cash it out, you will have to pay taxes on it and report it as income. If you are about to leave the company, and want to borrow against it anyway, just have them cash it out and a check will be mailed to you.
2007-10-31 12:52:07 · answer #7 · answered by iamtooproud 5 · 3⤊ 1⤋
BUENA SUERTE CON TODAS ESAS MUY BUENAS RESPUESTAS.
2007-10-31 23:10:33 · answer #8 · answered by Anonymous · 0⤊ 0⤋