I received a letter stating I have 30 days (more like 20) to transfer my 401K some where or they will automatically tax (huge hit) and send me a check for the balance.
Where/what should I do with they money to keep it invested/earning and not pay taxes from it being cashed out?
Current company is being acquired, 401K plan abruptly closed, where to transfer?
byu/Doublestack00 inpersonalfinance
Posted by Doublestack00
6 Comments
Read rollovers in the wiki
New employers 401k or an Ira
The one time I had my 401k terminated due to being acquired they gave more time and we had the option of moving it to the new company’s plan or a personal IRA.
I did the personal Rollover IRA myself to give me more options for investments. The only downsides of this are a few additional protections in 401k and the ability to retire before 59.5 such as at 55. The other downside is it may prevent you from doing back door Roth conversions in the future. Nothing I ever did.
To create a IRA, you can go to a brokerage site of your choice. Many people use Fidelity, though I used a smaller brokerage company. Open up your account on Monday, don’t put anything in it, and contact them to request what they need to roll over a 401k distribution directly. They will be able to help, and tell you what you need to get from your existing 401k company.
Do NOT wait until a check is mailed to you minus 20% towards taxes. To avoid the tax and fees at this point you would need to deposit it in the IRA within 60 days along with the missing 20% from some other source.
I could be wrong, but I don’t believe they can legally do that unless the value is below $5K. Regardless, roll it to an IRA at Fidelity, Schwab, or Vanguard. Put the funds in a low-cost total market index fund or a TDF.
Open an account at Fidelity, Schwab, or Vanguard. If you have both Roth and pre-tax money in your 401k you will likely need two accounts: a Roth IRA and a traditional IRA. Work with the transfers department at your brokerage to get the funds transferred over to the proper rollover account. Make sure that when they money arrives, you invest it — a lot of times when doing a rollover, your 401k funds will be sold and it is basically cash that is transferred. Check in when the money is transferred and make sure that either your chosen investments have transferred, or if it was transferred in cash, you pick new investments.
Had to do this. I rolled it into a fidelity IRA, then once I started with the new company rolled it back into the new company’s 401k. Here was the fun part. I did this all over the phone, but they never moved it. They were trying to contact me using the old company’s email address. My money sat in a non interest bearing IRA for 11 months. They made it right by giving me almost 40k in lost interest, but the lesson is, whatever you do, double check…
You dont have to do anything.If you like the terms they set and the place its in since your company doesnt have it anymore.They want to keep your money its just going to be an IRA now.