No. of Recommendations: 0
Greetings, G.F.W., and welcome.

As a total novice, I need your sage (Foolish) advice re above.
I contributed for a short time to a 401K plan. Company went Belly-up, end of 401K plan.
My questions: Can I convert this amt. into a Roth, (or regular type) IRA?
If so, Is there a Tax or other penalty for doing this?
If conversion OK, may I then nominate investments of my choice, using that money?
If so, may I change these investments at a future date?
I'm thinking along the lines of investing above money in the 'Foolish Four' and updating from year-to-year.
Hope you can help.

You may indeed convert your 401k money to an IRA. If you want one within which you may trade stocks yourself, you should establish what's called a self-directed IRA at a broker of your choice. Any broker can help you do this. To avoid any and all tax hassles in doing so, tell them and your plan administrator that you want to arrange for a custodian-to-custodian transfer of the funds from the 401k to the IRA. Again, they will guide you through the administrative steps and forms completion necessary to do that. After the money is in the self-directed IRA you are free to trade at will whenever you want.

The only drawback that might exist is the amount of funds in the 401k. You say it was only open a short time. That implies there is very little cash there. And that implies that the costs of trading may be a big drain on the potential returns in a small portfolio. However, that's something you will have to evaluate for yourself.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.