I was recently layed off from my job and now have been given the option to rollover my 401k. Is this something I should do and if so which IRA. At the moment I have a Roth IRA that I have already put the maximum in for the year. The majority of my current 401k is in an index fund. Thanks for your help.
chrewick,Were you also given the option of leaving the 401(k) account alone? If so, that might be an option until you find other work. If not, you'll have to set up a Traditional IRA to hold this money. You cannot roll 401(k) money into a Roth IRA.If you roll the money to an IRA, it's best not to receive a check, but to have it done in a "trustee to trustee transfer". If your administrator says they can't do that, make sure the check is made out to your new IRA trustee, with the wording "FBO chrewick", but of couse use your real name (I don't take anything for granted).Also, if you roll this money to a Traditional IRA, and do not add any additional contributions, the IRA will qualify as a "conduit IRA" and may be rolled back into a new employer's 401(k) plan if the new plan allows.
chrewickI was recently layed off from my job and now have been given the option to rollover my 401k. Is this something I should do and if so which IRA.Do Nothing. you will not be forced to rollover your 401 unless you are below the minimum investment threshold (usually about $5000) or the Plan has a stipulation that you must.right now you are busy looking for a new job, you do not need a distraction. and it is possible your new employer will accept a 401k transfer to their 401k. you will have plenty of time to make that decision Later.401k's can only be rolled over to a Traditional IRA. if you choose to roll it into a Roth later, but you will have to pay the taxes to do that. At the moment I have a Roth IRA that I have already put the maximum in for the year. The majority of my current 401k is in an index fund. a 401k to IRA to Roth does not fall under this rule. the $3000/yr max is for new moneymost mutual funds charge an IRA maitenance fee (10 to $25/yr) and/or a low balance fee. this is often waived for account totals >$10k to $50k.good luck in your job search.joeC
Chrewickand if so which IRAforgot. but this is simple to answerNo Load, No Fee, No 12b1 fee, mutual funds. also ask what they charge to maintain the IRA before hand and about low balance fees, other charges.joe
Two other possible advantages of staying in the 401k:1. Access the funds sooner w/o penalties (55 vs. 59-1/2).2. 401k is protected from creditors.
kshimizu,You wrote, 2. 401k is protected from creditors. Many states protect IRAs from creditors as well. Check the following website for the specifics in your own state: http://www.ici.org/issues/99_state_ira_bnkrptcy.html- Joel
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