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Financial Planning / Tax Strategies


Subject:  Re: Planning for 2013 Date:  3/9/2013  11:13 AM
Author:  vkg Number:  118009 of 127613

I just got a new job, and the company does not match 401k. Should I still put money into the 401k, or just put my money straight into a Roth IRA?

Also, what do I do with the 401k from my previous employer?

How does the quality and cost of investments compare between your current and previous employers 401K plans?

As previous noted, 401K plans have different distributions options than IRAs. If you are planning on accessing the funds between the ages of 55 and 59 1/2, it is advantageous to leave the funds in a 401K.

You have 4 choices:
1.) Leave it with your previous employer
This is often not the best choice. If the balance is large enough to be allowed to leave it, it is a good 401K plan and you will continue to track it, it can be a good option.
2.) Roll it into your current employer's plan
If your current employer has a good plan and allow roll-ins, this is a good option.
3.) Roll it into an IRA
IRAs provide more options than 401K. It requires more decisions, and often is the best choice.
4.) Distribute the 401K
This is the worst choice. The distribution is taxable, and probably subject to state and federal penalties.

or just put my money straight into a Roth IRA?

This decision needs to be made based on your overall financial plan. IRA and 401K contribution limits are separate. You can contribute to both.
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