Leave your old employer and thinking about doing a rollover IRA with your 401k?
I personally think it's a great idea. At your employer-sponsored 401k, you are limited in what you can choose to invest in, whereas a good rollover IRA program will allow you to invest in almost whatever you want -- individual stocks, mutual funds, exchange-traded funds (ETFs) and index funds.
That, right there, should be enough of a reason to rollover your 401(k) into an IRA plan. I recommend you read ING's guide to rollover IRAs. It has a lot of great information and background.
Plus, as long as you rollover properly directly from the old 401k provider to the new IRA provider, you won't incur any negative tax effects or penalties. If you cash out your 401k from your old employer after you leave your job, however, you WILL incur penalties: 10% penalty for early withdrawals, in addition to applicable federal and state taxes... They will typically take out 20% right away to go toward your federal tax liability, in addition to that 10% penalty you still have to pay. Cashing out your 401k early, in other words, is a terrible idea.
If you have left your old job, I see few reasons why you shouldn't do a rollover IRA. Of course, consult the experts and your financial advisor before doing so, as I am not a rollover or retirement account expert.
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