Rich Carreiro <rlcarr[at]animato.arlington.ma.us> writes:

- quote -

However, bear in mind that there are several potential downsides
to doing so. First - at some point you'll want to do *something*
with that money in the old 401k - whether it's roll it over to
an IRA, start taking distributions, whatever - and when that time
comes, you'll have to deal with the old company and their agents.
If it's a large, well established company, that'll probably not
be a big deal, but if it's not, it can be a pain.

I've had both types of situations and when I wanted to do a
rollover from an employer who'd mostly shut down, it was a
bit of a trick to track down the right folks for dealing with
it.

On top of that, unless the investment options in the old
company are fantastic, you can probably do better - and
have an easier time of it - in a self-directed IRA. You
don't have to roll the old 401k into a new employer's 401k -
you can roll it into an IRA at any brokerage company or
mutual fund company and in all likelihood have both better
investment options (with lower fees) but much better access
for managing it via web pages, etc.

But you can generally just leave it with the old employer
for as long as you like, so there's probably no rush and
no worry. Whether you leave it where it is, roll it into
the new employer's 401k or roll it into an IRA, the only
thing you really want to avoid if at all possible is
liquidating it - ie. taking the money out and into a
taxable account and/or spending it. If you do that, you'll
pay a 10% penalty, and taxes, and have wasted a huge
opportunity to get yourself some tax-deferred growth.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

kastnna wrote on [Fri, 9 Mar 2007 11:56:51 -0600]:
- quote -

Then that's not forcing you to cash it out. Just to move the monies.

"jIM" <noreplysoccer[at]hotmail.com> writes:

- quote -

[snip]

- quote -

You make the taxes up out-of-pocket when completing the rollover.
Since the whole distribution was rolled over, there would be no penalties.
And of course, whether or not you make up the difference, you claim
the $2,000 withheld when you file your taxes.

Example:
$10,000 distribution is made with $2,000 withheld in taxes, so
you receive $8,000.

If all you do is deposit the $8,000 into an IRA, you'll owe income
tax and penalties on the $2,000.

However, if you take $2,000 from somewhere else (savings, borrow it,
whatever) so that deposit $10,000 into the IRA, there will be no
income tax or penalties.

In *either* case, when you file your taxes, you'll add that $2,000
to the "tax withheld" line of your 1040 (the same line where
the income tax withheld from your paychecks is reported).

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

On Mar 8, 5:04 pm, "rick++" <rick...[at]hotmail.com> wrote:
- quote -

Oh yeah we can. If an employee is separated from service and the
account value is below an amount specified in the 401(k) plan
documents a check can be issued to the account holder and the account
closed. The account holder may then rollover the amount into an IRA
within 60 days without penalty.

This is especially common in industries with high turnover (we do it
with car dealerships ALOT).

To the OP, why would you want to keep it in your old 401(k)? You have
limited control/access to plan admins, no ability to contribute
further, and the fees in 401(k)s are often higher than a rollover
IRA.

I think some brokerage houses only charge $10.00 annually on IRAs now.
Even on $1000 that's only 1%. Plus you can continue to contribute and
will likely have a wider selection of investments.

- quote -

We were dating at the time... so I didn't know what happened until
after the fact.

If IP withheld the taxes from the distribution, how would someone
recover the taxes and penalties?

"jIM" <noreplysoccer[at]hotmail.com> writes:

- quote -

They can "cash you out" in the sense that they can forcibly
close the account and send you the money, but that doesn't
take away your option to put that money in an IRA (as a
rollover from a qualified plan to a traditional IRA) and
so avoid all the taxes and penalties on it.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

- quote -

I'm guessing you endorse the 401K check directly into the IRA account.
Add in penalty dedcutions until you get them back.
That way you can probably justify you never took possession of the
funds.

jIM wrote on [Fri, 9 Mar 2007 03:59:49 -0600]:
- quote -

You couldn't have then rolled it all over, including any witholding,
into an IRA and then received those penalties back the next April?

On Mar 8, 6:04 pm, "rick++" <rick...[at]hotmail.com> wrote:
- quote -

My wife was forced out of a 401k from a former employer because she
had a low balance (1k?). International Paper cashed her out of it, we
had to pay the penalties associated with the cash out.

- quote -

No one can force you to cash it out.
Bu they may ask to transfer it to a roll-over IRA with another
institution.

- quote -


Each plan will be different. if you don't have much invested in the
old 401k, your employer may cash you out... you would then have to pay
taxes and penalties on withdraw.

The best answer is to check with your old company. Check the 401k
plan rules, in particular.

"Taps" <tapsen7[at]gmail.com> writes:

- quote -

Absolutely. I still have 2 401K accounts from previous employers as
well as the one with my current employer that I'm actively contributing
to.

As well as leaving the old 401K money where it is, and rolling it over
into your new 401K plan, you can also roll your old 401K money over
into an IRA. This can make sense if you want to do a Roth conversion
on the money, or if neither the old nor new 401K plan offers a good
selection of investment choices and you want more control. If you do
decide to move the money, be very careful to do what is called a
"direct rollover" so that you don't end up being liable for unexpected
taxes and early withdrawal penalties.

-Sandra

"Taps" <tapsen7[at]gmail.com> writes:

- quote -

Yes.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Hi,
Had a question if I can 2 401k accounts. This is the scenario :

Had a 401k account in my previous company. Left that company and
joined a new company. The 401 k money is with the previous company.
Can I leave it there and open a new 401k account in the present
company. I know you can roll it over, but I was wondering if its
possible to do the above.

Thanks.

Tapan.