Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120780  
Subject: Re: Roll 401k to IRA or to another 401k Date: 12/30/1998 2:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
[[ (I am 25, so retirement is far far away, but at the same time, small decisions now
can have major impact later :-)]]

Okey Dokey...

[[ I had a 401k plan with my previous employer which has about $10k in it. I have
just become qualified to start participating in the 401k equivalent plan with my
current employer. Now I need to decide among the following courses of action:

1) Roll over 100% of the previous 401k to my current employer's 401k
2) Roll over 100% of the previous 401k to an IRA
3) Leave it with the previous employer]]

Right...those are basically your options.

[[ Here are the plusses and minuses as I see it. I'd be grateful if you could point out
anything I have wrong or anything I have missed:

(1) Roll-over to 401k is better because:
I can borrow against it for my first home.
I can borrow against it for personal emergencies.]]

But you'll be stuck with the crappy mutual fund investments provided by your 401k administrator. Remember that in your 401k you can't invest in individual stocks. My experience with my clients has been that the ability to control you own funds far outweighs the borrowing issues.

[[ (2) Roll-over to IRA is better because:
I have control over how the money is invested.
? - I assume this will be a Traditional IRA that I convert into?]]

Right...it'll be a Rollover IRA...a traditional IRA. There will be no taxes or penalties to pay when you make this conversion. And then, if you deem it advisable, you can convert this IRA to a Roth IRA and potentiall earn TAX FREE income. You can learn more about the Roth IRA in my series of posts in the Taxes FAQ area. Check it out.

[[ (3) Don't even know if this is possible.]]

Check with your previous employer 401k administrator. But in my humble opinion, this would be the WORST of all possible decisions. If you want to keep your 401k alive, you might as well transfer it to your new employer if nothing else.

Hope this helps...
TMF Taxes
Roy

Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. There is still time available to do that tax planning (and tax saving) before the end of the year. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

The American Energy Revolution
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement