UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: Watty56 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 75384  
Subject: Re: When you retire or change jobs Date: 2/12/2006 8:57 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
There is a major drawback to leaving the money in either the old or new companies 401K instead of rolling it out to an IRA. That is (as I understand it) that if you and you spouse should happened to both die (like in a car accident) then the 401K cannot be inherited by your kids without it being automatically distributed and taxed. An IRA can be inherited without normally being immediately taxed. This could result in greatly reducing your estate needlessly.

To me it looks like the only big plus of a 401K is that you can take penalty free withdrawals at 55 instead of 59.5. There are also times when you have company stock in a 401K where there could be tax implications with rolling it out.

Greg
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Berkshire Hathaway

Starting a Small Business
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
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