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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: of 75381  
Subject: Re: 401 roll over problem Date: 7/1/1997 10:33 AM
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Greetings, ritafree, and welcome to Fooldom.

<<I've just found out the company I work for has declared chapter 11 ... I'm concerned about the money I've invested in my 401K ... I want to roll it over in to something else but am a total novice about investing, in fact this is my first day at this web site.

Would it be best to get the money out quickly and just put it into a 6 month IRA cd until I learn more or should I jump right in and invest it all in something like a market index fund IRA? >>

First, put your mind at ease regarding the safety of the money you have in the 401k plan. Those funds are not subject to the claims of your employer's (or your) creditors. Additionally, your employer has absolutely no control over the monies in the 401k. That rests with an independent trustee who is charged with the responsibility of administering those funds for your benefit in accordance with strictly applied guidelines. Once deposited there, your employer is totally unable to remove participant assets from the plan.

You should be aware, though, that your rights to remove funds from the 401k are also limited. Normally, prior to age 59 1/2 you may remove your assets only if you change employers, retire, or die. Some plans do permit loans (and they have to be repaid) and/or hardship withdrawals, but the plan doesn't have to allow these options. Additionally, if your employer goes out of business, the plan may terminate and the proceeds would be distributed to you shortly thereafter. Right now, though, there's no way I can see for you to get your hands on the 401k funds. However, seeing as to how there's no way the 401k is subject to the Chapter 11 proceedings, that shouldn't be a major concern to you.

You say you're new to Fooldom. I assume from that you're also new to investing. That's great on both counts! You have wandered into a forum that believes you, as an individual, can do far better for yourself than most professional money managers. Provided, that is, you take some time to learn a few basic investment concepts and do some self-examination to see where you fit on the risk tolerance scale. Therefore, why not take some time now -- not later -- to be sure about what you want to do. Start first by reading The 13 Steps to Investing Foolishly, which you can access from the main, opening screen to The Motley Fool from the link under "Places To Start." They will suggest some important things you should consider. Then I suggest you toddle over to your local library, discount bookstore, or even here in the Fool Mart, and pick up some easily read, easily understood, inexpensive texts that will thoroughly explain how to invest in stocks using some simple systems that will take but an hour per year of your time (if you're slow) yet produce returns that put the majority of professional money managers to shame. I suggest and commend the following to you: "Beating the Dow" by O'Higgins; "The Dividend Investor" by Petty and Knowles; "The Motley Fool Investment Guide" by the Gardner brothers; "One Up on Wall Street" by Lynch; and "What Works on Wall Street" by O'Shaughnessey. All are well worth their low cost and the small investment in time it takes to peruse their contents. Get them and read them. You'll be glad you did.

While you're doing all that, also take some time to explore the various nooks and crannies of Fooldom to see what others are doing and what they're discussing. In the process, you'll gain a wealth of knowledge and information that will serve to claify how you want to approach this very personal issue. Don't be afraid to ask a question anywhere in Fooldom. Folks around here are great about answering questions and clearing up misunderstandings.

Again, Rita, welcome. And enjoy!

Regards.......Pixy
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