I will be leaving my job early next year and have a 401k. My husband and I will be going into business for ourselves. I'm looking for advice as far as what to do with the 401k. I'm new to all of this and I'm not sure where to go from here.
The answer depends somewhat on when you plan to retire, how old you are, and the account balance. Generally if your balance exceeds a minimum, about $3500, then you have the option of leaving the money in the 401K account until retirement if you like. If less than that minimum, they can force you to close the account and either transfer to an IRA or take distributions and pay penalties.For most people, transferring to an IRA account is the best choice (but if the 401K is good one with good investment choices, reasonable fees, and decent rules, leaving it there can be OK.) If the sum involved is not huge, then conversion to a Roth IRA can be a good idea. If you make no cash contributions to the IRA, you may move it to a future employers 401K at any time in the future.IRA and Roth IRA are usually best because you can choose your own custodian and have many investment choices. Conversion to Roth IRA requires payment of current income taxes on the amount converted, but then no further income taxes are due in retirement--usually a good deal, but taxes on conversion can be forbidding in the case of large accounts.Best of luck to you.
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