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  #1 (permalink)  
Old 04-13-2009, 12:03 PM
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Default Moving from 401 K

I have recently switched the job using AC21. I have to move my 401K from my old previous company but here is the issue: in my new company I will not be eligible for the 401 till I complete 6 months with the new company.
If thinking of moving it to IRA account, please let me know what is the procedure involved?
I will really appreciate if some can suggest me what are my other options.
Thanks,
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  #2 (permalink)  
Old 04-13-2009, 12:07 PM
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Originally Posted by GCBatman View Post
I have recently switched the job using AC21. I have to move my 401K from my old previous company but here is the issue: in my new company I will not be eligible for the 401 till I complete 6 months with the new company.
If thinking of moving it to IRA account, please let me know what is the procedure involved?
I will really appreciate if some can suggest me what are my other options.
Thanks,


not sure who your old company's brokerage firm is however u should be able to shit all ur 401k to a roth IRA or whatever, however iam not sure abth te tax consequences...calling them is the best way to get ot know more
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  #3 (permalink)  
Old 04-13-2009, 12:22 PM
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Default

Quote:
Originally Posted by GCBatman View Post
I have recently switched the job using AC21. I have to move my 401K from my old previous company but here is the issue: in my new company I will not be eligible for the 401 till I complete 6 months with the new company.
If thinking of moving it to IRA account, please let me know what is the procedure involved?
I will really appreciate if some can suggest me what are my other options.
Thanks,
You have multiple options.

1> Just keep the money with your old company. This is possible if the balance is above 5K.
You can shift as soon as you set up a new 401K plan with your new company. Check with your current HR if they allow this. In my company, they do allow this.

2> Shift the money to a new/exsisting IRA.

Either case, first open the account and ask your current 401K custodian to write a cheque to new 401K/IRA custodian. If they write a cheque directly to you, they may withhold tax.
If you don't deposit within specific time period then you would incur tax and 10% penalty.

-GCisaDawg
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  #4 (permalink)  
Old 04-13-2009, 12:42 PM
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Default

Thanks gcisadawg.
I do not think 1st option will work for me since I was told by my old company that I SHOULD move my 401 K.
I do not have any existing IRA account kindly provide more details how I can set it up & how long it take to set it up?
Thanks,

Quote:
Originally Posted by gcisadawg View Post
You have multiple options.
1> Just keep the money with your old company. This is possible if the balance is above 5K.
You can shift as soon as you set up a new 401K plan with your new company. Check with your current HR if they allow this. In my company, they do allow this.

2> Shift the money to a new/exsisting IRA.

Either case, first open the account and ask your current 401K custodian to write a cheque to new 401K/IRA custodian. If they write a cheque directly to you, they may withhold tax.
If you don't deposit within specific time period then you would incur tax and 10% penalty.

-GCisaDawg
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  #5 (permalink)  
Old 04-13-2009, 01:13 PM
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Smile Vanguard/Troweprice

Opening up an IRA account is not a big deal. There has been lot of deals going on with different brokers. I think brokers would be Vanguard/Troweprice/Etrade,etc. Now, try to set up an appointment with a consultant of the aforementioned brokers and they will be more than happy to assist you with your own choice of funds for your IRA.
Best time to switch and choose your funds.

Good luck.
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  #6 (permalink)  
Old 04-13-2009, 01:25 PM
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You can open up an IRA account with any of the brokerage firms like Scottrade, Fidelity or Ameritrade. You usually open up an IRA account first on their website or by visiting their offices in your area. Then contact your company's 401K provider to transfer your 401K amount to the new account directly. They usually would sent you a check in the name of your brokerage firm like Fidelity.As far as I know the check cannot be in your name coz then the IRA would tax the 401k amount and also charge an early withdrawal penalty.So make sure they transfer it directly to the brokerage firm. If things are not clear, you can always contact the customer service of your brokerage firm to help you or walk you through.But I also found that many times the customer service people are not up to the mark and may even provide you with wrong advice. So its better you call several times and speak with different customer service people at the brokerage firm and verify all the information.

I personally did not like the fact that your company is forcing you to sell your stocks and mutual fund in your 401K account. This is bad as you may occur losses because of the bad market scenario.







Quote:
Originally Posted by GCBatman View Post
Thanks gcisadawg.
I do not think 1st option will work for me since I was told by my old company that I SHOULD move my 401 K.
I do not have any existing IRA account kindly provide more details how I can set it up & how long it take to set it up?
Thanks,
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  #7 (permalink)  
Old 04-13-2009, 02:18 PM
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I recently closed my Simple IRA (small version of 401K) account and requested the checks (they give seperate check for each fund) for myself. Generally there is a 60 days window to move those funds to a new IRA account in order to avoid 10% penalty and taxes. I have setup an IRA account with TDAmeritrade and planning to manage the funds on my own.
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  #8 (permalink)  
Old 04-13-2009, 02:46 PM
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Default

Quote:
Originally Posted by GCBatman View Post
I have recently switched the job using AC21. I have to move my 401K from my old previous company but here is the issue: in my new company I will not be eligible for the 401 till I complete 6 months with the new company.
If thinking of moving it to IRA account, please let me know what is the procedure involved?
I will really appreciate if some can suggest me what are my other options.
Thanks,
As someone already mentioned you can go for rollover IRA - most of major investment companies offer this (infact will be eager to get any business).

Its a bad thing that your previous company is asking to move funds - but in a way its a blessing in disguise. In many companies (and their 401k custodians like Fidelity) - they allow to continue your funds in the 401k even after you leave the company - but as a non-employee you would incur more expenses and/or closed for some investing options. So continuing in the older 401k is not a great option in most cases (unless your previous 401k had very good funds which are now closed for new investors). Rollover IRA's are also good for another reason - you have more investment opportunities. In most of 401k's the number of available mutual funds are limited - but in rollover IRA it becomes much more flexible (I have a Fidelity rollover IRA account and has many funds and also an option to trade stocks). When I moved from one of my former employers (a top software company) I was too lazy to do anything and left it there for next five/six years; later as I gained more financial knowledge I digged into the funds and fees and came to know how much more I was charged as a non-employee - then moved to my current rollover IRA.

If you are more adventurous, there are other options as well. You can rollover into a self-directed IRA that allows to invest you in small private companies. There are a few custodians who allows this. Lets say someone has 10K in former 401k account - rolling over into a IRA with traditional fin. companies like Fidelity will give you access to many mutual funds and stock; with a small set of specialized custodians you can invest this 10K in a startup or even in real-estate. The custodian helps in the documentation so that you and the new company are very clear about everything. The key is you cannot be the owner of the company or real estate that you are investing but you can invest in a friends company or real-estate. I went to this route for one of my account and invested in a friends company who own commercial real-estate - with a 8% annual return rate for last year I can say its my best performing investment account. Obviously this is not for everyone and need lot of leg work and an ideal opportunity to go for this - but thought of giving out my experience anyway.
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  #9 (permalink)  
Old 04-13-2009, 03:30 PM
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Quote:
Originally Posted by GCBatman View Post
I have recently switched the job using AC21. I have to move my 401K from my old previous company but here is the issue: in my new company I will not be eligible for the 401 till I complete 6 months with the new company.
If thinking of moving it to IRA account, please let me know what is the procedure involved?
I will really appreciate if some can suggest me what are my other options.
Thanks,
When you open an account with Vanguard ( my favorite for IRA) they actually have guides etc to help you out, to really make things smooth do not make out checks in your name, open the IRA account and choose to roll over existing 401(k) ( it will guide you through a process) also you will receive some paperwork from current 401(k) managemnet about your options and paperwork.

In most companies even though you will become eligible for match only after a waiting period you can still roll-over and make contributions. Check if you are confusing the two aspects.
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