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Author: wquay Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: 401 K Roll Over Date: 5/10/1999 6:46 PM
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I've got a 401K from my previous employer, that has OK results for the last 4-5 years, since I left that company. I've been primarily in the Stock, or the Equity Fund Options. My full service broker has suggested that I roll this over to my account with him, and he will do more for my money. I have some attraction to moving this money into an IRA that I could have more diversity with, but I'm still considering the angles. I have a fairly good broker, but am in the process of locating and starting a discount brokerage relationship.

Is it feasible/possible or foolish to consider rolling this 401K to a discount brokerage account, or are there some risks with the 401 IRS tax laws, etc...?

BTW, I'm almost 44 years old, so have several years before I expect to be getting distributions from this account.
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Author: jocave One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10458 of 75335
Subject: Re: 401 K Roll Over Date: 5/10/1999 7:19 PM
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<<<<<
've got a 401K from my previous employer, that has OK results for the last 4-5 years, since I left that company. I've been primarily in the Stock, or the Equity Fund Options. My full service broker has suggested that I roll this over to my account with him, and he will do more for my money. I have some attraction to moving this money into an IRA that I could have more diversity with, but I'm still considering the angles. I have a fairly good broker, but am in the process of locating and starting a discount brokerage relationship.

Is it feasible/possible or foolish to consider rolling his 401K to a discount brokerage account, or are there some risks with the 401 IRS tax laws, etc...?
>>>>>

You are free to roll your 401(k) anywhere you'd like-- full-service or discount-- or keep it where it is. Generally, Fools believe they can get better returns than through investing in the limited funds offered in 401(k)'s.

Tax-wise, there's no problem. Assuming you do a trustee-to-trustee transfer (i.e. you never get a check), there's no taxable event when you roll you money over.

There are minor differences in the rules governing IRA's and 401(k)'s, but they don't affect most people. I'm not an expert, so others can correct me, but I believe the main differences are:
- IRA's require you to start distributing money at 70.5, which I don't believe 401(k)'s do.
- You can begin withdrawls from an IRA before 59 if you take "substantially equal periodic payments" calculated based on your expected ife span.
- If you ever need to shield assets from creditors, 401(k)'s are safer than IRA's. Most states protect IRA's just like 401(k)'s, but some may not. Roth IRA's get even trickier.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10464 of 75335
Subject: Re: 401 K Roll Over Date: 5/11/1999 7:51 AM
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Jocave in an excellent response wrote in part:

<<There are minor differences in the rules governing IRA's and 401(k)'s, but they don't affect most people. I'm not an expert, so others can correct me, but I believe the main differences are:
- IRA's require you to start distributing money at 70.5, which I don't believe 401(k)'s do.
- You can begin withdrawls from an IRA before 59 if you take "substantially equal periodic payments" calculated based on your expected ife span.
- If you ever need to shield assets from creditors, 401(k)'s are safer than IRA's. Most states protect IRA's just like 401(k)'s, but some may not. Roth IRA's get even trickier.>>


Just like an IRA, a 401k plan must start minimum required distributions when a retiree reaches age 70 1/2. The only exception is for a person who is still employed and participating in the plan.

Also, if you are not working for the employer sponsoring the plan, you may make penalty-free withdrawals from a 401k as early as age 55. Those younger than that may use "substantially equal periodic payments" just as they can in an IRA.

Regards..Pixy

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