401(k)

[Bella_Vixen]

I have roughly about $1700 in my 401(k) from the 'Lounge, and my mom is suggesting that I cut my losses and cash it out.

I could use the money now (yes, I know that taxes will be taken out, but I'll still have a decent chunk left), but I don't desperately need it.

I won't be able to enroll in my current company's plan until July, which isn't making the decision any easier.

Any and all advice is more then welcome. :wave:

[Shabo]

I actually did a marketing project for a financial firm last semester, and I must say... the younger you are when you start your retirement fund, the more return you are likely to get from it. Now, no firm will guarantee a greater return, but statistically you are more likely to get better returns. I say, if you don't need the cash, keep it in there. You can try to transfer it to another company now if you would like, but you might not be able to. Sometimes they can be fickle about stuff like that. You will lose an awful lot of that if you pull it out of the account, so you should keep it in. I plan to start putting as much money into my retirement fund as I can when I start a full time job. I would rather live below my means now then worry about money later.

[Cutenoob]

This depends somewhat on your old 401K.

Usually, when a person is no longer employed with X Company, and they have less than $5000, the 401k is cashed out and sent to them. With taxes automatically withheld.

Do you need the money? No? Then DO NOT CASH IT OUT.

Go to Edward Jones, the brokerage. Open an IRA account, rollover. And start the paperwork to roll the $1700 out of 401k into the IRA - a rollover does not touch people's hands. Bank to bank - no cash out, no taxes withheld.

When investing for life, keep this in mind:
20's age group : 90% stocks, 10% bonds -low risk
30's age group : 80% stocks, 20% low risk
you get the idea.

The concept is that stock market returns have historically been better than straight bank cash / cd investments. And also, being a younger person, you have TIME to adjust ....OMG the Stock in Yobbo tanked!!!! Selll!!!!!!!...... a person in their 50's and 60's has much less time to fix Yobbo stocks.....

FYI: 65 1/2 mandatory age to begin withdrawal from IRA account (these fed laws were created before the baby boomers - avg age of death was around 70 80ish..)
A Traditional IRA you pay somewhat taxes at the withdrawl.

If you can - roll over the 401k . THEN CHANGE TO ROTH.

ROTH IRAs - the cash is taxed out of your pocket aka your take home pay. But it's not taxed when you withdrawal from the IRA when you retire.

Take this question into Edward Jones. Sit down and get an appt. Be prepared to answer some "what do I want" questions.

Good luck

Cutenoob

[wagegoth]

When my company closed down, I rolled my 401(k) into an IRA with my bank. It's done really well, and is very flexible.

I agree. DON'T CASH IT OUT!

When your new 401(k) starts up roll it over.

[Hello Kitty]

Don't do eettt! Plug in your info into an online 401k calculator and see how much your $1700 will grow. It is amazing! I put in 15% (plus a small company match) over 9 years and it's up over 100k. I would never cash out early, unless it was life or death.