Question:
I'm leaving my job and taking a few years off to go to grad school. I have a 401k with my employer. Do I need to take that 401k and roll it over into an IRA, or can I just leave the money in the 401k account?
Answers:
If you have less than $5,000 you will need to roll it over or risk having them distribute a check for the full amount, which you will be taxed on. If you have more than $5,000 you can roll it over or leave it. If it's doing okay, the company isn't going out of business anytime soon and you aren't in a hurry then you don't need to do it today. I would do it eventually though.
alot of the time you can transfer the $ into your new jobs 401k
You can do whatever you want, but a rollover is a good idea. If you dont work for the company why would you let them invest your money?
You can pick who invests that. A 401K rollover is simple and normally free. Then you control who invests your money, not your former employeer.
Dont believe me, call anybody that worked for Enron.
Get it out as fast as you can.
Check with your last company (the one with the 401(k)), and ask if there are any penalties for keeping your money in the account. Most often it is fine, but sometimes they'll require a minimum. However, they are required by law to inform you if you'll receive a penalty for keeping your money in their account. Best of luck in your new position!
You can leave the 401k with your employer (if you have worked there the minimum time...6 months I believe). Later, when you get a new job after grad school, you can transfer the 401k to that of your new employer.
If you decide to roll it into an IRA, don't mingle other IRA funds with it...keep it strictly a rollover IRA. If you keep it segregated, you will be able to roll it into your new employers 401k plan.
If you don't feel comfortable keeping it in your current 401K, you can move it to something called an "Individual K" through a broker or financial planner, then roll it into the 401K in three years with your new employer.
The choice is (usually) yours; you can either leave it where it is, or you can have a check written to an IRA account and "roll it over". The best reason to open an IRA and roll the 401(k)assets into it is that you are not then limited by the investment options offered by your former employer.
Good luck in school!
If it's under 5K, then roll it over. If it's a much larger amount, you can keep it there if they have good investment choices. Expenses in most large company 401Ks run about 0.1% to 0.3%. Expenses in an IRA run about 1%.
This article contents is post by this website user, HiAnswer.com doesn't promise its accuracy.
More Questions & Answers...