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Author: drbear One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75622  
Subject: Re: How does 401k work? Date: 11/26/1997 1:43 PM
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<<One tweak on this. If the amount you leave behind in your _old_ employer's 401(k) is
less than $3500 (something like that; it's been awhile, but I'm not far off), than that old
employer has the option of forcing your out of their Plan (there is an admin cost to
maintaining accounts, even old ones) by shipping your the remains of your fund. Since
it's going to you, this includes the IRS-required 20% wqithholding, for which you are
responsible for replacing within 60 days or paying taxes and tax penalties on.>>

<< Good point. And with the enactment of the Taxpayer Relief Act of 1997 the amount that
can be forced out is now $5,000.>>

Excellent points on all of the above. IMHO, in general, there is rarely any reason to leave 401(k) funds at a former employer unless there are unique investment opportunities that can't be found (or have prohibitively high costs or minimum balances) outside of the plan.

A follow-up question: Getting your money transferred out of your old 401(k) to another employer or IRA has never been a speedy process. In the past I think they had 60 days to process the request. Is this still the case? If not, what's the current rule?

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