RE: little advice/ just got info on my 401k
 

This is some great advice I would deff. roll it over to a IRA . If you cash it you will loose big time !

Ron

RE: little advice/ just got info on my 401k
 

How old are you???

The first thing you should do is offer to pay a tax accountant $100, and take him to lunch, ask him for his advice. Do not use your accountant, or anyone related to you, you want to speak to some onewho DOES NOT HAVE a dog in the hunt.

I hate to disagree with some of the poster's above, but I do not like financial advisor's. They will ALWAYS have their best interest in mind.

I have a degree in Finance, Accounting, and Wood Science. I am also 2 semester's short of my MBA. I have been doing my own and other people's retirement accounts for years. Be very careful.

As I asked above, your age is very important here.

The second most important thing is your willingness to take a risk. And your tolerance for risk taking, and your personal tolerance for taking a loss. These factors are very important, the most important time not to pull out of a stock or fund is in a falling market.

As stated above you can roll your account over into an IRA. There are two types of IRA's. A Traditional and a Roth. The accountant you hire for an hour should be able to advise you as to which IRA is better for you.

Another question is are you fully vested in your company's contributions??? Most vestation periods are 7 years.

Someone suggested above to read, read, read, that is good advice. The more you read, the more you will understand what people are telling you. You need to talk to a few different professional's. But as stated above, you need to make sure they do not have a dog in the hunt. Tom.

RE: little advice/ just got info on my 401k
 

I am 30 and just started the 401k last year, it is not that much money. just over $2500 in it.

I spoke with my wife and we agreed with what is going on with the job market in my area. it maybe better overall to go on and take the hit, pull it out and put in the savings for a rainy day. like my unemployment runs out before I get another job.

kinda of the near over the far right now.

6 apps. out no calls and going out and putting more in and talking to the one that has been out the longest.

RE: little advice/ just got info on my 401k
 

If you take the money to savings you pay tax, to save paying the tax you must do a direct roll over to another 401 or IRA. You can get an IRA out for emergencys but you pay the tax when you doif you don't need it right away save it . If you take the money you also lost saver's tax credit for 3 years. If you put it in an IRA use 1 year so you can get it out without bank penalities.

RE: little advice/ just got info on my 401k
 

Cory If you are less than 59 1/2 yrs old and do not rollover,you will pay an early withdrawal penalty on top of the 20% federal tax. By all means talk to a financial advisor.

Charlie

RE: little advice/ just got info on my 401k
 

Roll it into a 401k right now and then pick safe investments at least for the next year or so. Do not withdraw it you'll pay the penalty in a lot of ways. Put it in a Schwab or TD ameritrade account as they offer advice others pretty much want to sell something and have higher fees.

RE: little advice/ just got info on my 401k
 

If you are only 30 years old I definitely would not spend the money. I would roll the account over to a ROTH IRA. You will have to pay the taxes to roll it into a ROTH. But there is no penalty, only the income tax. If you are not working then the income tax would not be very much. The benefit of the Roth is that you accrue income tax free for the rest of your life. Just imagine what that money would be worth in 35 years, tax free. Tom.

RE: little advice/ just got info on my 401k
 

If you have the check, isn't it too late to do a roll over? It is my understanding that you cant evertouch the money. It would have to be a trustee to trustee transfer. Better save it cause with taxes and penalties the gummint is gonna want close to 40%.

If you dont have the actual check, definately do a rollover. They are going to kill you if touch it before you are 59 1/2. Another thing, roll it into a roth ira at your age and you should come out way ahead 30 years down the road. Not tax deffered like most 401k's, so you will have to pay some taxes now. In the future the income of the ira will be TAX FREE! I wish I could figure out how to never pay taxes again on the rest of my income! Should be a great deal for you. Another benefit is that if for some reason you (really)need the money, you can get it with no penalty, because you already paid the taxes on it when you invested it. You can get back up to what you put in, just none of the income it creates until you are 59 1/2.

Dang HEAD types really fast! But he is right!

RE: little advice/ just got info on my 401k
 

Cory,
I'm not a financial expert but did work in that industry for a while and have been through what you are going through a few times. Along the way I havehad my share of hard knock lessons and still have a lot to learn.

You've gotten some good advise above. There are some basic things you need to consider in this situation. First, the most important money you invest is the first money you invest. Why, because it has the longest time frame to take advantage of compounding. At 30 years old you have at least 35 years till retirement. That $2500 if invested for 35 years at a very conservative 6% will become $19,000+, at 8% close to $37,000, at 10% around $70,000 and at 12%about $132,000. Over that amount of time in a proper investment you should be able to average somewhere in the 8 to 12 percent range based on past stock market performance for that length of term. However, just waiting 5 years can lower the results of the same $2500investmentat the12% return to about $75,000. Obviously the earlier you start to put money away the more it will grow and or the less risk you have to take to get it to grow. With this in mind I would encourage you to roll the money over to a self directed IRA with a company you trust and get some good advise from a finacial expert who is not just a salesman for some financial company.

Second, consider how much income you needat retirement. Using the rule of 72 you can figure out what your present income would be equal to when you retire, that amount may not be enough to retire on but it will illustrate the point. The rule of 72 works like this, take 72 and divide it by the average rate of inflation, the result is how many years it takes for cost to double, i.e. for an average of 3% inflation 72/3=24, so every 24 years your salary would need to double just to stay at the same level you are at now. Using the above example and a 35 years till retirement time frame, your retirement income will need to be 35/24 or 146% higher than it is now. If your making, for example, $25,000 now, you would have to have an additional $36,500, or $61,500 per yearjust to stay even. This means your early investments need to have as long a time to build as you can give them so you can build that nest egg that is needed to retire with dignity.

Another figure for investment needs at retirement is for every $1,000 dollars a month income needed you should havearound $150,000 invested at an 8% return. Based on the $61,500 ($5,125 per month)example above you would need around $769,000 invested at retirement to generate that much income if your getting an 8% return. If your getting lessreturn you would need more money invested. Again, the earlier you get started the better.

The hit you take by cashing out the 401K will be around 30%, maybe higher so I would think long and hard before choosing that option. Good luck and seek competent advise from someone highly recomended and not just a portfolio salesman.

Sorry for the long winded response.

RE: little advice/ just got info on my 401k
 

I think one of the times I had to roll mine over there were some people cashing them in and between the penalty and taxes they were paying 38%. Thats alot to lose no matter how much ya have!!