Will Trice wrote:

- quote -

Relevant to anyone transferring, though, and a good thing to be aware
of. I had a client shift from another advisor to a Schwab account, and
there were funds there that were not part of the Schwab no-fee mutual
funds, so she took a commission hit on the funds we decided to sell. Had
it been done before the transfer, there would have been no fees.
JOE

Sandra Loosemore wrote:
- quote -

This may not be relevant in this case, but some institutions do not give
you an option on how you want your equity transferred, as cash or as
asset holdings. This recently happened to me with E-Trade. I used
their form to transfer an IRA from usbancorp, expecting E-Trade to
liquidate my holdings at usbancorp and transfer cash, thus avoiding
trading fees at E-Trade since I intend to sell these assets. Instead, I
now have shares of several mutual funds that I don't want. I may have
no right to expect E-Trade to do this, but they are checking into it for
me anyway. The option was definitely not on their transfer form (that's
why they're checking into it). Had I been thinking, I would have gone
to cash before transfering.

-Will

nikhilchopra[at]gmail.com writes:

- quote -

That is only true if you withdraw the money instead of rolling it
over. If you do a direct rollover into another qualified plan, there
are no taxes due and no withdrawal penalty.

- quote -

This is a fairly small amount of money, and you might find that it
simplifies your long-term record-keeping and planning just to roll it
over into your new employer's 401(k) plan instead of having to manage
two accounts. Alternatively, if you already have a traditional (not
Roth!) IRA, you can merge the money into that. The way to start is to
ask the plan which will receive the money for a rollover contribution
or rollover deposit form, and follow the instructions. A lot of time
they arrange it for you so that you just give them information about
your old account and you don't have to fill out a separate withdrawal
form for that.

-Sandra

nikhilchopra[at]gmail.com wrote:
- quote -

Definitely roll it over. Open a roll over IRA account at an investment
house (brokerage, mutual fund company, even a bank), and ask your 401K
administrator to roll that money into the account.

The taxes could be a lot higher than 20%.
It would be at your highest tax bracket, plus the
amount could puch you into an an even higher
tax bracket.

In article <1162169777.044628.236200[at]e3g2000cwe.googlegroups.com> ,
nikhilchopra[at]gmail.com wrote:

- quote -

If you are withdrawing the money with the intent of spending
or otherwise not putting it back into an IRA, you have the
withholding, the penalty, and you have to pay personal taxes.
That can amount upwards of 50% of the money. The best advice
here is to not even consider that option.

The option that I would suggest is to do an "institution to
institution rollover" into a rollover IRA account. You can
go to a bank or stock broker, or most any financial institution
and do this. The vendor that you pick will get the money directly
from your 401K, and you never touch it. That way, there is no
fees and no taxes. Most institutions have very low minimums and
fess for these kinds of IRAs.

Once you have the money in an IRA account, you have to decide
how to invest it. Go with stocks unless you have some reason
not to. Most folks need the exposure to the market to avoid
outliving their money.

You also may have the option of rolling your old 401K into
the 401K at you new place of work. Check with the plan
administrator at your new workplace.

The bottom line--never set yourself up to handle the check
when moving 401K and IRA money around (not unless you really
know the rules and know what you are doing). It is very
easy to make a mistake that simply cannot be fixed.

-john-

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

nikhilchopra[at]gmail.com wrote:
- quote -

They mayhave their own level at which they withhold, i.e. maybe under
$5,000 and they don't?

But more important, you will owe taxes and 10% penalty when tax time
comes. I urge you to open an IRA and request the money be transferred
directly to the IRA account. (BTW, the IRA may be invested in a Mutual
fund, CD, or ETF, but you should not put it into an annuity under any
circumstances.

JOE

I have changed employers recently, and I am trying to see what my
options are as far as rolling over the money. The past employer's 401k
website for me, says I can either rollover the whole amount, or
withdraw the whole amount.

I understood from reading some material on the internet that my past
employer 401k administator would charge 20% taxes, and then I would
have to pay another 10% penalty. The account has less than 3000$
vested. I am wondering how is the past employer allowing me to get the
whole amount even without a rollover. Just want to understand if I am
missing a part of the equation here.

Thanks