401K when you leave a job

hyacinth003 · ‎03-12-2010

Wondering if anyone has knowledge of what is out there for this situation. Have done lots of reading, but would sure appreciate real life ideas.

If you leave a job (retire) but don't want to start taking from the 401K for awhile. I know you can leave it there, you can take the money (minus tax), start withdrawing it, or transfer it to another plan. Seems like leaving it in place subjects it to market ups and downs, which I would think you wouldn't want.

Just wanted to know if anyone (with all the smart people here) know more about this than I do!

Hyacinth Wink

dobiesrule · ‎07-24-2014

I think you have summed it up pretty well. If you don't want to leave it with your former employer and the market because you are worried you might lose money if the market declines, you could roll it over to a CD although the interest would be minimal. Depending on your age, don't withdraw from it if you are under 59 1/2 (I think that number is correct) due to penalties. Best thing to do is talk to a financial advisor. HTH

Kathlen · ‎03-09-2010

I converted the 401K into an annuity that sends me a check every month for the rest of my life. Plan manager walked me through the process ... took no time at all.

Check with the people who manage your 401K on your various options.

esmeraldagooch · ‎03-10-2010

My husband rolls it over to a Edward Jones account so he can select what he invests in.

CelticCrafter · ‎03-09-2010

My husband recently left a job that had a 401k plan and we decided to roll it over directly into a new qualifying plan.

He could have left it where it was but we wanted more control over it.

Aside from that, their fees were ridiculous. They charge a $50 fee for every withdrawal that would be made once he decides to start drawing from it.

If you do decide to roll it over, make sure the check is made out to the new plan you decide on. If the check is made out to you, you will be subject to penalties and taxes.

terrier3 · ‎03-10-2010

Just a suggestion - No matter which way you decide to go, make sure you find out EXACTLY what fees will be charged for managing your money.

401Ks are notorious for having high, hidden fees. Only recently was a law passed allowing people to discover exactly how much of their investments are going into fees. A 1% or 2% charge can REALLY add up...if you have one million in your 401K, $20,000 a YEAR could be going to fees! That's a LOT of money you are losing, when it's easy to find no-load funds or low cost advice.

Still Raining · ‎03-30-2014

401ks are notorious for having a limited array of investments and extraordinary high fees so in general you are better rolling it over. In any case it should already be integrated into your overall retirement plan, so it is very simple to find the same type/class of investment somewhere else. Not sure of your age, but 401ks and IRAs have a different age limit for withdrawal and different borrowing rules. I am sure you have already found the rules about the timing and method of the rollover and waiting period for further rollovers. Once you decide on where to roll it over too, that company should take care of the details of the direct transfer leaving you with nothing to fret about.

Other than that, it will just be like before but with a different name.

chickenbutt · ‎03-09-2010

What Still Raining said!

We've rolled our 401K funds over to IRAs over the years so that WE can have control over how the money is invested. With a 401K, at least with the ones we've had, you don't have any control over how the funds are invested at all.

Financialgrl · ‎03-13-2010

If you are not yet 59 1/2, any withdrawal from a 401k has an IRS penalty of 10% IN ADDITION to the taxes you'll have to pay bc it is a tax deferred account.

I'd NOT leave it where it is now but that's me and remember Enron and WorldCom of the past and the chaos their bankruptcy caused? Even with better consumer protections today, it could very well mean a lot of hassle until the lawyers work it out and you could end up losing part of it.

Since you are not sure I'd personally talk to a financial person. Your comment about it sustaining market ups and downs is not a bad thing but that's where a financial person would help - but you need to find someone that has your interests in mind (fee based planners, etc).

You've gotten very good points from above - more flexibility and lower fees possible elsewhere and Celtics comment about not accepting a check for the total amount of your 401k - do a financial institution to financial institution transfer cuz if you are handed a check, you may not have to worry about taxes coming out all at once at that time but you have certain time limitations allowed for an IRA rollover and if you pass that deadline, you definitely will owe taxes on all of it at once and come tax time, huge surprise!

One last thought - dobiesrule said exactly what I was thinking. For your money to remain safe and never lose any part of it means little to no interest in conservative type accounts like a money market or CD. But whatever you do doesn't mean its an all or nothing proposition. Money in CDs and MMs etc won't keep up with inflation but you can decide how much money you probably won't need/access for longer term and allow some of that to stay in stocks and move any amount you need shorter term to the more conservative monetary vehicles like CDs/MM that won't lose money.

Good luck.

Melania · ‎06-12-2013

On 3/20/2015 terrier3 said:
Just a suggestion - No matter which way you decide to go, make sure you find out EXACTLY what fees will be charged for managing your money.

401Ks are notorious for having high, hidden fees. Only recently was a law passed allowing people to discover exactly how much of their investments are going into fees. A 1% or 2% charge can REALLY add up...if you have one million in your 401K, $20,000 a YEAR could be going to fees! That's a LOT of money you are losing, when it's easy to find no-load funds or low cost advice.

^This!!!