DK1000 wrote:
- quote -

No, the employer can't legally just keep it, but depending on what it
is invested in and any fees charged, the $2800 could decrease in value.

The only way to not pay a penalty or taxes is to roll it directly into
a Traditional IRA. Well, unless you qualify for early retirement from
the 401k(usually age 55). You could also withdraw the money from the
IRA in substantially equal installments over your lifetime or convert
the Traditional IRA to a Roth(taxes but no penalty on both these
options).

- quote -

Generally employers pay out amounts less than $5000, they can do so
without your consent, so you may be getting a check or rolling it to
an IRA whether you want to or not.

Keep checking on it, so you know what they intend to do and so
you don't miss the chance to do the direct rollover.

- quote -

If you are receiving any disability insurance, a pay out from a
401k(not a rollover to an IRA) may reduce your insurance payment.
Not sure about Social Security Disability though. All the more reason
to roll it over. You can get the money out of the IRA, penalty free,
at age 59 1/2.

Watch where you set up you IRA. Brokerage firms and Mutual Fund
companies all charge annual maintenance fees and generally low
balance fees(often on accounts less than $5000), as do many Banks.
There are also fees if you ever transfer the IRA to another
financial institution. Fees can very quickly eat away at your
$2800 or any income you may earn on it.

If $2800 is your total balance in the IRA, you may want to check
into setting up an IRA with something like a Credit Union and invest
in a CD. They often don't charge any fees, so whatever interest you
earn is yours to keep. It's not fancy, but you'd earn a bit until
you can get the money out at 59 1/2, and the principal would be
guaranteed.

Frank

John Weeks wrote:
- quote -

Not if they make the check out to the investment company. They have to
withhold only if they make the check out to you.

Dave

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-9381E3.19474607062005[at]ip-lcc.supernews.net...
- quote -

Perhaps small amounts (havn't done that in quite awhile).

Mike

In article <kefpe.1505$I14.557[at]newssvr12.news.prodigy.com> ,
"Mike Craney" <mikecraney[at]sbcglobal.net> wrote:

- quote -

If you do that, the company that writes the check has an
obligation to withhold part of the check. You then have to
pony up the shortage or pay tax on it. You get the withholding
back on your taxes, but it turns out to be an interest free
loan to the government.

I don't know why you didn't run into that, not unless there
is some lower limit, and you had small amounts.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"anoop" <ghanwani[at]gmail.com> wrote in message
news:1118115663.559008.251140[at]f14g2000cwb.googlegroups.com...
- quote -

When I've left positions, I've always had the check given to me directly.
You have 60 days to get it into another qualified fund.

Mike

John A. Weeks III wrote:

- quote -

In some cases one might have to do the work oneself.

With my previous employer, the plan administrator refused
to deal directly with the brokerage doing the rollover.
They had me fill out the forms and say which brokerage
I was planning to roll the funds over to. They then issued a
check in the name of the brokerage (but stating on the
check that it was for my benefit) and sent the check to my
employer who then sent it to me. The process took months.

Anoop

In article <_5SdnahU-agBLjnfRVn-rw[at]adelphia.com> ,
"DK1000" <bwana1SPAMMENOTREMOVE[at]lycos.com> wrote:

- quote -

In theory, no. In practice, there a zillion ways to get screwed.
As a result, I'd pull it as soon as I could. But don't just ask
for a check. Go to a low fee broker or place like Vanguard, open
a self-directed roll-over IRA, and have them roll your money out
of the 401K into the IRA. By having them do it, there are no
taxes or penalties. If you touch the check, you lose, so don't
touch it. Let them do the work. In a self-directed IRA, you
own the funds, and nobody can mess with them. You call the shots.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"DK1000" <bwana1SPAMMENOTREMOVE[at]lycos.com> writes:

- quote -

Don't panic. Your employer can't keep the money. What you want to do
is roll over the 401(k) into an IRA to preserve its tax-exempt status.
Your employer or 401(k) plan administrator is required by law to offer
to do a direct transfer of the funds for you into an IRA or another
401(k) plan. If you do this instead of just having them send you a
check for the balance, there is no tax withholding on the money.

You have a few different options with the IRA. If you have an
existing traditional IRA account, you can just put the money there.
You can also open something called a "conduit IRA" just for this
money. As long as it's not mingled with any other funds, you can then
roll this over again into another 401(k) plan should you go back to
work with an employer who offers one. Another thing you might
consider is rolling the money over into a traditional IRA account and
then doing an immediate Roth conversion on it. You'll have to pay
taxes when you do the conversion, but you'll have more flexibility
with the money, and this makes particular sense if you have money
saved up from other sources to pay the taxes and can invest the entire
$2800 in the Roth.

-Sandra

Hi, I just got let go from a part time job last week, I was told I "no
longer have a position". AFAIK, I only have about $2800 accumulated in the
plan. I have friends telling me to pull the money out so I don't lose it. Is
that possible? Can the employer just keep it? On the other hand, I don't
want to pay a penalty or taxes on it, as my just new part time job doesn't
offer 401K. Don't know if I want to or allowed to start an IRA as I hear you
can't touch or even borrow against the money. My old job was with a W2, but
my new one, I'll be using a 1099 form for taxes. I don't want to leave my
money in the present 401K account, even if I'm allowed to, as I don't want
the b[at]$T[at]rd$ who fired me to make any money off of me. But I want a little
time to decide what to do with it.

I read on the 401K.org site that "If your account balance is more than
$5,000.00, you can leave your money in the plan"; but they don't say what
my options are for around $2800 or so. I don't want to lose it, and I don't
want to pay a penalty on it if I'm required to take it out. I think the
401K site also says it takes weeks for the final pay's deduction to make it
into the plan, so sounds like I need to wait a few weeks anyway?
(http://www.401k.org/401kFaq.html#9)

If it helps, I'm 52 years old, and also get Social Security Disability, but
am allowed to work a little bit. Thanks much in advance.