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Greetings, Eeh, and welcome. You asked:

<<I am going to be leaving my job in the next two months but I do not have another job yet - I am moving to another state. I currently have about 2,000 dollars in my 401k account through my employer and I want to roll this money over into an IRA (so as not to get penalized) until I get a new job. I'm twenty one and know I have the opportunity to make some good decisions now; but, I need HELP! on how to go about setting up an IRA account. (I know you recommend index funds, and using discount brokers, but where do I start?) Can you help me, or give me some books/sites that are truly geared towards VERY beginner investors?>>

Any broker or mutual fund can help you set up a rollover IRA. Because you have less than $5K in your 401k account, your employer will probably force a distribution on you. Therefore, to avoid any tax hassles you should arrange for a direct transfer of that money from your plan to your IRA. Your plan custodian and your future IRA custodian both know how to do this, so just ask them what you need to do. They will guide you through the necessary steps.

As to where you should put this money, that's up to you; however, I would suggest that intially you use a money market mutual fund with an established fund family like Vanguard until you decide what to do. Take 90 days or so to investigate the possibilities you have and to learn a few things.

I assume you're new to both Fooldom and 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. 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 read them. 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. I also recommend you read my 13 Steps to Foolish Retirement Planning and my Foolish Retirement Plan Primer available at . Both will give you some insight as to what you can do. In the process of all that reading, you'll gain a wealth of knowledge and information that will serve to clarify 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.

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