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View Full Version : OT: Rolling Over a 401(k) -- Advice, suggestions, tips.


Requiem
02-14-2013, 09:12 AM
Sup OM?

At the end of June I'll have the option of cashing out my 401(k) or the ability to roll it over into something else. I am leaning towards cashing it out since it isn't a huge amount and paying the withdrawal penalty + federal income tax rate. Since my state doesn't have an income tax, I won't pay any additional fees above that, so I see that as a good thing.

However, a part of me is thinking it might be smart to roll it over to an IRA or something where my investments can continue to grow and or make money. Has anyone ever done this before? Where is a good place to do it? Anyone have links to any resources? I'm pretty naive to some of this stuff, but I've read a lot of articles showing that there is a huge disparity amongst those who invest in their early 20s as opposed to those who don't.

Any information would be very helpful. Thank you all in advance.

Beantown Bronco
02-14-2013, 09:56 AM
You're 25. Unless you NEED the money to avoid homelessness, roll it over. Cashing out would be stupid.

huh??
02-14-2013, 10:02 AM
If you're not in a desperate position to need that money for something specific, roll it into something for the future. I don't know what the best options would be, as I am one of the dumb ones who never invested in anything and barely contributed to 401(K) plans that were offered at various jobs I've had. I figured I'd wait until I had a "real career" and could better afford to contribute to a plan. That never happened and I ended up wasting a bunch of years and opportunities that I'll never get back.

I can't offer any tips, but if you work with a reasonable sized company, odds are that there is someone you work with who is savvy in investing who can give pointers.

Pick Six
02-14-2013, 10:08 AM
Last year, I took an early withdrawal, on my 401(k). Yeah, that was stupid. My refund was cut, by 75%, from last year. Don't take money out, unless that's your last resort...

RhymesayersDU
02-14-2013, 10:15 AM
You're 25. Unless you NEED the money to avoid homelessness, roll it over. Cashing out would be stupid.

This.

OBF1
02-14-2013, 11:08 AM
Doing a roll over is quite simple... I did it a few years back with one of my accounts. Simply find the "right" 401k that works for you and talk to them, they in turn will get you the information you need to get it done. A short phone call to your current 401k provider and they will mail/transfer the money to your new fund.

There will be zero social security when you are ready to retire so getting a start now is very important.

Fedaykin
02-14-2013, 12:05 PM
Roll it over or leave it in the account it's in, don't cash it out. Start young, you'll be set. I started my retirement saving when I was 20, and I'm on target for a comfortable retirement by ~50 (not that I would, I like my career, but I could). Most people don't start if they do at all) until mid to late 30's, which is why they can't afford to retire until they're 65-70.


Anyway, off the soap box:

The biggest pro for leaving it in the 401k is that it's easier to access the money in an emergency (IRAs have fewer and more restricted early/emergency options)

The biggest pro for moving it to an IRA is that you'll have more investment options.

You can do a Roth IRA too, to be able to pull 100% of the principal out penalty free (and tax free distributions when you retire!), but you have to pay tax on the current principal up front, which could hurt.

If you don't know what you're doing, a good starter strategy is to put money in index funds. Even most professional finance guys don't beat the index funds over the long term.

ColoradoDarin
02-14-2013, 12:07 PM
Vanguard or Fidelity Roll Over 401k, fill out one form and they do the rest.

ludo21
02-14-2013, 01:55 PM
I work at MassMutual in the Retirement Plans Group and I would say to NOT cash it out unless as said you are indeed homeless or want to purcahse something you cant.

If it is a less amount the tax hit is not terrible, but one thing i have learned is it takes soo long to build retirement up it is not worth cashing it in and paying the irs a penalty as well, that sucks.

Roll it over to an IRA and let it invest in the market, and dont invest in a money market!!

TonyR
02-14-2013, 02:15 PM
Vanguard or Fidelity Roll Over 401k, fill out one form and they do the rest.

^ This.

https://personal.vanguard.com/us/whatweoffer/rollover/overview

https://www.fidelity.com/retirement-planning/learn-about-iras/401k-rollover-options

BroncsCheer
02-14-2013, 03:46 PM
roll it over into a traditional IRA

those investments typically have a "dividend reinvestment" feature that creates a 2nd earning engine:

1. The prices of the funds in the IRA go up and down (hopefully more up in the long term)
2. reinvesting the dividends increases the share count

you want ideally to have both price and share count increasing - that's how the compounding occurs. Even better if you can stick more tax deferred cash in there.

give a firm like Edward Jones, or Schwab a call - they will take about $40 a year and do all of the work for you.

don't take the $ unless you absolutely need it. you're of an age that you'll take it in the shorts on taxes, imo

razorwire77
02-14-2013, 07:59 PM
You're 25. Unless you NEED the money to avoid homelessness, roll it over. Cashing out would be stupid.

This. This.

ak1971
02-14-2013, 08:00 PM
Cash it in and go for all the strippers and blow it will buy

DENVERDUI55
02-14-2013, 09:25 PM
Cash it in and go for all the strippers and blow it will buy

This I would possibly throw in all down on red first then you could double it. At that point you could double the amount that AK is talking.

broncosteven
02-14-2013, 09:33 PM
Cash it in and go for all the strippers and blow it will buy

Or a half bag of skank weed and a hand job from an out of work male porn star in a Walmart parking lot in Req's case!

Seriously Req, your going to be glad to have that money when your ready to retire.

I would stay clear of Edward Jones the guy we met with was big on selling product. Fidelity is ok but I would find someone who you can meet with in person and keep everything on track as you grow up and your life and needs change. If you do go with a big firm Fidelity is OK for now but I would ask around, when you do ask any retirees you might know (realitives, the old guy you give handjobs to in the Walmart parking lot) who they used then contact the one who had the best return or someone was passionate about.

UltimateHoboW/Shotgun
02-14-2013, 10:08 PM
Sup OM?

At the end of June I'll have the option of cashing out my 401(k) or the ability to roll it over into something else. I am leaning towards cashing it out since it isn't a huge amount and paying the withdrawal penalty + federal income tax rate. Since my state doesn't have an income tax, I won't pay any additional fees above that, so I see that as a good thing.

However, a part of me is thinking it might be smart to roll it over to an IRA or something where my investments can continue to grow and or make money. Has anyone ever done this before? Where is a good place to do it? Anyone have links to any resources? I'm pretty naive to some of this stuff, but I've read a lot of articles showing that there is a huge disparity amongst those who invest in their early 20s as opposed to those who don't.

Any information would be very helpful. Thank you all in advance.

So says the 1%er. Pretty rich living high off the hog?

Requiem
02-14-2013, 11:55 PM
So says the 1%er. Pretty rich living high off the hog?

http://images.4chan.org/b/src/1360910944471.png

Hamrob
02-16-2013, 11:29 AM
Cash it out and you will be taxed heavily.

Roll it over.

Dr. Broncenstein
02-16-2013, 03:23 PM
The wife and I rolled over previous accounts into a self directed IRA, which then purchased rental houses at cash prices. The previous money that was sitting there doing essentially nothing is now real estate equity, which is now bringing in around 1200 bucks per house each month to the IRA.

Requiem
02-16-2013, 03:41 PM
^ Niiiiiice.

UltimateHoboW/Shotgun
02-16-2013, 04:21 PM
^ Niiiiiice.

All of a sudden you don't want to pay your fair share. You racist!

Requiem
02-16-2013, 05:48 PM
All of a sudden you don't want to pay your fair share. You racist!

Uncle Sam doesn't see a dime of that brown paper bag money. Ya know that IRS can't tax money.

broncogary
02-16-2013, 06:06 PM
The wife and I rolled over previous accounts into a self directed IRA, which then purchased rental houses at cash prices. The previous money that was sitting there doing essentially nothing is now real estate equity, which is now bringing in around 1200 bucks per house each month to the IRA.

Ah, real estate in an IRA. You gotta love it. :rofl:

rugbythug
02-16-2013, 06:15 PM
The wife and I rolled over previous accounts into a self directed IRA, which then purchased rental houses at cash prices. The previous money that was sitting there doing essentially nothing is now real estate equity, which is now bringing in around 1200 bucks per house each month to the IRA.

I did the same only with a friends company. Now it is all gone.

Dr. Broncenstein
02-16-2013, 06:28 PM
I did the same only with a friends company. Now it is all gone.

Did the property vanish?

UltimateHoboW/Shotgun
02-16-2013, 06:53 PM
Uncle Sam doesn't see a dime of that brown paper bag money. Ya know that IRS can't tax money.

Well if that wasn't racist of you to say.

Requiem
02-16-2013, 08:24 PM
Well if that wasn't racist of you to say.

Daft doodle.