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rollover $1,200 401(k) to IRA

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Filed: K-1 Visa Country: Canada
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Recently I lost my job and I need to rollover the money from my 401(k) into an IRA. The amount is about $1,200. A friend suggested Vanguard but I saw on their website that the min. amount for rollover is $3,000.

I don't want to take the money as a lumpsum now since I will have to pay taxes and penalty, but I don't know where to move this relatively small amount without paying too much in fees.

Can somebody please give me some advice? Thank you!


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Filed: Country: Pakistan
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Recently I lost my job and I need to rollover the money from my 401(k) into an IRA. The amount is about $1,200. A friend suggested Vanguard but I saw on their website that the min. amount for rollover is $3,000.

I don't want to take the money as a lumpsum now since I will have to pay taxes and penalty, but I don't know where to move this relatively small amount without paying too much in fees.

Can somebody please give me some advice? Thank you!

call whoever was managing the 401k. for example, if it was fidelity - call them and ask what options they have. tell them you are thinking of going to another brokerage - they usually have incentives or a need to keep investments inhouse. don't like people rolling into an IRA outside of their institution. give it a shot - nothing to loose.


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Some investment companies can actually do the rollover for you (paperwork, etc) over the phone without a minimum. But I'm not sure how Fidelity does it, so yeah give them a call. It's ideal to keep your investments in one company to save costs (breakpoints). You will have to roll it over to a Traditional IRA first and decide later on if you want Roth Conversion.


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Filed: AOS (pnd) Country: India
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Check with your investment firm, Normally if you quit your job you don't really have take the money out, you can leave it where it is, later on when you start working and the new company has a 401k plan you can do a rollover.

In a rollover they send you check, YOU DON"T CASH IT, you just foward it directly to your new 401K so it's like you never see the money.

Another option: You can call your investment firm example something like Fidelity and let them know you want to convert your regular 401K balance into an IRA, they would gladly help to keep your business.


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Have you checked with your local banks, sometimes they can give as good a deal as the investment places.


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Filed: Timeline

Nikita2Charles,

Not necessarily. If it's a small amount the company can force you to take the money out. I don't know what the cutoff is, but $1,200 is for sure below it. His company can close out the account and send him the money whether he wants them to or not.

Yodrak

..... Normally if you quit your job you don't really have take the money out, you can leave it where it is, ....

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Filed: Country: Belarus
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A friend suggested Vanguard but I saw on their website that the min. amount for rollover is $3,000.

I have all of my rollovers from past employers at Vanguard and I highly recommend them. However that does you no good because of their $3000 minimum to start a new account.

Not all mutual fund companies have such high minimums and I'm sure an afternoon on the internet investigating other fund companies will turn up something. I have a small position in the Nicholas Fund and the minimum to start an account is $500. It pretty much tracks the Large-Cap stock market and is a good general purpose fund.

http://www.nicholasfunds.com/NF/overview.html

Of course, you can always buy an IRA CD from your local bank to roll your distribution into.


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Filed: Country: China
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The Vanguard Star fund has a $1000 minimum (I think it's the only one; others are $3000-$25000). So that's an option. It's a balanced fund, 60% stocks, 40% bonds. There is a $10 annual fee for less than $5000 balance in any fund in an IRA, charged in June. (I own that fund, and started with it because of the low minimum.)

I've also heard people recommend T Rowe Price and TIAA-CREF for low-minimum IRAs, but don't have any personal experience.

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Filed: Country: Canada
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When you do a rollover, make sure that the brokerage that operated your 401k does not make the check out to you... If they make the check out to you, they have to withold 10% for the penalty fee.. even if you do roll it over...choose where you want the money to go and have them cut you a check that is made out to your new brokerage with your new Rollover IRA account number on it... a lot of the time a brokerage will let you establish a Rollover IRA and give you an account number before you get your old brokerage to cut you a check. This way you can just have your old brokerage wire the money directly to your new brokerage and avoid the 10% penalty...

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Filed: Lift. Cond. (pnd) Country: India
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When you do a rollover, make sure that the brokerage that operated your 401k does not make the check out to you... If they make the check out to you, they have to withold 10% for the penalty fee.. even if you do roll it over...choose where you want the money to go and have them cut you a check that is made out to your new brokerage with your new Rollover IRA account number on it... a lot of the time a brokerage will let you establish a Rollover IRA and give you an account number before you get your old brokerage to cut you a check. This way you can just have your old brokerage wire the money directly to your new brokerage and avoid the 10% penalty...

This is critical and actually is called a Direct Rollover. Be sure to tell your 401k administrator you want to complete a Direct Rollover. You will probably need to set up/complete initial paperwork at whichever financial institution you go to.

And actually if you do not do a Direct Rollover but do a "regular" Rollover instead, your 401k plan will be required to withhold 20% for federal income tax - this is NOT optional. Then to not have to claim this as income on your tax return, you would also need to come up with this dollar amount and roll that into your IRA. And if you are under age 59 1/2 you would also have to pay a 10% IRS penalty tax. I know it sounds crazy, but this is how it works with 401k's and IRAs.

I am sure most people here meant the Direct Rollover process, but probably just did not know the terminology. Your 401k administrator should know this though. And actually they are required to tell you all your options. However I know that in many companies, unfortunately the admin does not always have a clue.

If you have any other questions, please ask them. I work for a bank and in my previous position for about 9 years I was considered the IRA guru and did all the training for our insititution.

Good luck!!

Lori


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