[Whostheboss]

Originally Posted by rr006rbc

That's what the last company did to me too; that sucked. But I guess it was my fault for not acting quick enough to transfer it out.

That sucks, after reading your comment, i quickly called my old company. She said they'll keep the money in there until i make a decision. So i told her to mail me the paper works to get the roll over started asap! Hell no, i'm def not getting burn lol.

Originally Posted by vachss

Generally you'll want to roll it over into a traditional IRA. That way you don't pay tax on the transfer and you'll have more options (and probably lower costs) than you would leaving your money in the 401K.

One notable exception is if 401K has some advantageous fund options you can't find in an IRA. An example would be a Stable Value Fund with a good rate. Sometimes these are better than the bond funds you'll be able to buy in a conventional IRA. If you're just keeping your money in stock index funds though, your options are likely better in the IRA.

You can transfer some of the money into a Roth IRA if your income level allows it. Any pre-tax money you transfer will be taxed as ordinary income, but future gains are tax free. This is worthwhile if you expect to be in a higher tax bracket in retirement. If you expect your tax rate during retirement will be less than now then it's probably better to go with a traditional IRA.

An exception to this is if you have after-tax money in your 401K. Per a recent IRS ruling (last year) this after-tax 401K money can be rolled over directly into a Roth. Since you've already paid tax on this money this kind of Roth rollover is usually worth doing. Most of us, though, made most of our 401K contributions pre-tax, so this usually isn't a big component.

Caveat: I'm no financial planning expert, so take my recommendations with a grain of salt. I'm just a soon-to-be retiree who has recently been checking out my options.

I greatly appreciate your expert comment although you say you're no expect lol. I think i'll go the traditional IRA

Originally Posted by zx10guy

I started a Roth before I was phased out in being able to contribute any more to it. This does not mean I cannot roll over money to it. I did look into this option but decided not to take the huge tax hit right now with the amount I would have rolled into it from a previous employer's 401k. I didn't roll that money into my existing employer's 401k because the paper work was such a pain in the rear. I ended up moving that money into the financial arm of my bank as a traditional IRA.

lol, traditional IRA most likely.