How do I get a 401k from my last job ?
If your term of employment has ended and you still have a 401k plan set up with them, you can still get the money to reinvest or spend by rolling out the money into an IRA (Individual Retirement Account). However, before taking the steps to get your money, determine if the money waiting in your old 401k plan should need planning. If it’s a few hundred or thousand dollars, cashing it out won’t be that bad, but if it’s a large amount, you need to think about your options.
Pay the taxes and penalties on your old 401k if you really need to access it. These fees would include a 10% penalty on the total amount and an income tax on the amount of money you received from the 401k throughout your last job. Before opening a rollover IRA, it is best to consult a brokerage company.
If your last employer transferred the 401k funds to a rollover IRA, you can now setup a new regular or specialized IRA, which would provide you tax benefits for future contributions. Although both of these IRA accounts would allow you to make future tax-free contributions for your retirement plan, be aware that you still need to pay taxes for the money when you plan to collect it upon reaching your retirement age. Talk with a financial advisor to help you determine which step is best for your financial
Be aware of the changes that would come to the minimums and maximums you are allowed to contribute or access from you 401k plan or IRA because these change annually due to inflation. If you feel that consolidating can benefit you, leave your 401k funds with your last employer and let it accrue interest until your retirement. When this is the case, you won’t have to pay penalties as long as the balance left in the account is above the minimum threshold determined by the IRS.
November 14th, 2011 at 8:03 am
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