quesion on rolling 401k

[boombatty]

I recently left my job, and don't really know what to do with my 401k there since I never had 401k before. Its not much money in there at all, but still I know that if you take it out, you pay taxes and penalty. So one thing I know is that I need to roll it, but I don't know anything beyond that.

 

What are my options? or what is the best option? what do I roll it to?? How do I do it?

 

any advise will be appreciated.

 

Thanks!

[Izmunuti]

You basically have three options: leave it where it is, roll it over into an Rollover IRA, or cash it out. I wouldn't cash it out.

 

To do a rollover you simply call up the brokerage company you plan to use and tell them you need to roll over a 401K. They will hook you up with a specialist who will send you all the forms. You fill them out and send them off. That's about it.

 

When all the dust settles all the money in the 401K will be in your new Rollover IRA account. You may have to pick new funds if the old ones aren't available with the brokerage company you selected.

 

Iz

[54regcab]

If it's under $5K your employer may not let you leave it there. I've had good luck with T.Rowe Price on my investments you might want ot give them a quick visit online and do a little research. Give them a call if you like, they were VERY helpful to me as a new investor and offer many good no load mutual funds. PRWCX was my choice, but your choices may vary depending on what your goals are.

 

T.Rowe Price

[boombatty]

Thanks for your replies I really appreciate it.

 

Yeah, like I mentioned, its not much at all and definitely less than 5K.

 

Can I just roll it to any kind of IRA? like Roth IRA? or does it have to be a "Rollover IRA"? And is there a minimum amount I need to open the account to roll my 401k into? cause its my understanding that I need to open the account first, before I can roll the money into it? or is the fact I'm rolling the money enough to open the account?

 

thanks again!

[54regcab]

The T.Rowe Price 401K rollover specialists are avalible @ 1-800-341-0040. They can give you all the details.

[Izmunuti]

Thanks for your replies I really appreciate it.

 

Yeah, like I mentioned, its not much at all and definitely less than 5K.

 

Can I just roll it to any kind of IRA?  like Roth IRA?  or does it have to be a "Rollover IRA"?  And is there a minimum amount I need to open the account to roll my 401k into?  cause its my understanding that I need to open the account first, before I can roll the money into it?  or is the fact I'm rolling the money enough to open the account?

 

thanks again!

<{POST_SNAPBACK}>

 

As far as I know, it has to be a Rollover IRA. Roth IRAs are great, but you can't roll a 401K into them.

 

If you're doing the Rollover, they'll create the new account at the same time. Once you have a rollover IRA, you can roll subsequent 401Ks into it.

 

As for minimums, you'll have to call them and ask. I use Fidelity and they're great but usually have a $2500 minimum for new accounts.

 

I guess, if we're talking a really small account, a couple hundred bucks or so, you might get stuck where you can't leave it at your employer and you can't roll it over. Maybe it's more trouble than it's worth and cashing it out might be best.

 

Iz

[boombatty]

Thank you very much.

 

Yes I thought of Fidelity cause my roommate uses them I think, but they do have $2500 minimum according to their website, and the amount I will be rolling will be around $1350.00....

 

I haven't been working very long (well, at least at a place where they had 401k, and still in grad school...) so I guess I could cash it out, and start fresh again when I get a new job, but I just don't feel too good about paying the penalty and the taxes right now even though its not that much money...

 

Well, thanks for your advise. I will look into T. Rowe Price and if I can't use their service, I will just go with Scottrade.com

 

Thanks again!

[54regcab]

Don't acsh out, T.Rowe only required $1,000 in some of thier funds. Your $1,350 will look more like $800 if you cash it out.