|
Users viewing this topic:
none
|
|
Login  | |
|
401k - 8/8/2008 1:09:35 PM
|
|
|
reach
Posts: 1344
Joined: 4/12/2005
Status: offline
|
Hi,
I have money in 2 401K's
I was laid off from one job and hired on someplace new. Then before I moved my money over to my new account, I was laid off again. (So sad)
So, I now have 2 401K accounts. I had thought that I would have a job by now, so I could move the money over, but it has not happened yet. So I think I would like to combine these into one account.
What is the best kind of account to put the funds in? I would leave them there till I get another 401K going, then I would transfer the money again.
Or would you move the money at all?
I like one account for my own purposes. I don't want to lose money because I forgot where it was. Also, the old, if something happened to me, I would like the money to be easy to find.
|
|
|
|
|
RE: 401k - 8/8/2008 2:30:20 PM
|
|
|
GroupW
Posts: 2865
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
Status: offline
|
Generally speaking, I tend to believe that 401k plans have somewhat higher plan expenses than what you can find in an IRA. As a result, I generally don't recommend rolling your old 401k money into your new employer's 401k plan. Now, that's not a 100% consistent rule - for example, my previous employer covered all plan expenses so there was no incremental burden being absorbed by my investment.
In general though, I typically advocate rolling those funds into an IRA or other tax-qualified vehicle to avoid paying the penalties and taxes for early withdrawal. Depending on the amount in question, your age, income, and tax status, a Roth IRA may make sense, but usually not. Typically, the plain old vanilla IRA is usually the best option.
Simple answer: yes I would move the money and probably into your basic vanilla IRA.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
|
|
|
|
|
RE: 401k - 8/8/2008 3:26:04 PM
|
|
|
NoShow
Posts: 454
Joined: 5/10/2005
Status: offline
|
I don't believe you can directly move 401(k) money into a Roth, rather you have to first put it into a Traditional IRA (actually it's a Rollover IRA, but is more similar to a Traditional IRA, than a Roth IRA), then if you qualify, can move it into a Roth IRA.
If you move it into a Traditional IRA that already has money in it (or a new Traditional IRA, where IRA money is later added to it) you can come up against some co-mingling issues, if you later choose to move the money into a 401(k).
Another consideration, and this does vary by state, is that 401(k)s are Retirement Plans, while IRAs are Individual Retirement Arrangements. And they are governed under different sets of laws.
As an example, in some states, if you are sued and there is a judgment against you; they can go after your IRA to apply towards the judgment, but not your 401(k). In other states, the 401(k) and IRA has the same protection (I don't believe any state allows them to go after your 401(k), but not your IRA).
|
|
|
|
|
RE: 401k - 8/8/2008 4:37:19 PM
|
|
|
BlueAdept
Posts: 95
Joined: 4/18/2005
Status: offline
|
If you move the funds from a 401K to a IRA, and then from the IRA to a Roth you will have to pay the taxes on the funds. Roth accounts are invested with money that has already been taxed, that is the reason you have to pay the taxes. So while it could benefit you to do that rollover, you need to do it when you have the funds to pay the taxes.
It does make sense to do that, unless you are some how in a high tax bracket now.
|
|
|
|
 New Messages |
 No New Messages |
 Hot Topic w/ New Messages |
 Hot Topic w/o New Messages |
 Locked w/ New Messages |
 Locked w/o New Messages |
|
 Post New Thread
Reply to Message
Post New Poll
Submit Vote
Delete My Own Post
Delete My Own Thread
Rate Posts |
|
|
Forum Tools
Printable Version
