[Yasemin]

Looking for some advice.
Husband was injured at his workplace & upon settlement, he did have to resign from his position.

We now see, upon looking at his 401K, we saw that he needs to move his money out of the 401K that he had through his job.

He will be 57 in October. It’s about $130,000. I’m thinking that we can only transfer it to another 401K. Please correct me if I’m wrong.

What institution(s) should we be looking at and any specifics we should look for.

Thank you

[Jane]

You can transfer to a new employer’s retirement plan or roll it over into an IRA. But if his balance is that high, you may also have the option to leave it in the plan, or even start taking distributions if needed since he is over 55.

Get a copy of the Summary Plan Description from HR to find out the exact rules of the plan.

[Derek]

Google Rollover IRA. Very simple process but need to be sure to reinvest accordingly

[Cari]

You roll it into an IRA. Schwab, Fidelity, Vanguard can help you do this. You do not have to roll it into a new job’s 401k (think about that…what if a new employer lacks a 401k?

Would you lose the money in your old 401k? Never).

But I don’t love putting it at a new employers – fewer investment options etc. Just call Schwab…or fidelity.

They’ll assist you in the whole process.

[Teresa]

He can transfer it to an IRA, or an old 401k, but either move means he will not be able to use the Rule of 55 for 401k. This is assuming he no longer works.

If he works a new job with a 401k, then he would be able to utilize Rule of 55 for 401k if he leaves that job before 59 1/2.

*If he has been deemed permanently and totally disabled by the IRS definition (not all disability retirement/separation situations apply), then the early withdrawal fee can be waived for that.

[Arun]

You can listen to Choose FI podcast episode 475 that Brad did with Sean Mullaney (it’s on YouTube).

They discuss the rule of 55 as one of the many ways to access retirement money before turning 59.5 (without paying the penalty).

[Deborah]

He can either do a direct rollover of his Traditional 401(k) assets into a Traditional IRA account or he can possibly do a trustee-to-trustee transfer of the 401(k) assets into a 401(k) administered by his new employer.

However, the new employer does not have to accept the 401(k) from the old employer, so he’d need to check before signing any distribution paperwork.

[John]

Rollover to a traditional IRA, but if you’re in a lower tax bracket, make periodic changes to a Roth IRA so all future gains are tax-free and you get out of the RMD rules.

[Tia]

Roll it into an IRA. If you don’t already have one, you can open one for free at Vanguard or Fidelity (or a number of other places, but those are two of the most common/biggest).

[Geoff]

If he needs the money, the Rule of 55 should allow him to withdraw some of it penalty-free (but yes, roll the rest over!)

[J.C.]

For me, the deciding factor is how good is the current 401K (costs and choices) and how good will the new employer’s 401K be?

When I quit work and retired I moved all my 401K holdings to a rollover IRA with Vanguard.

Lower costs, better choices.

[Author]

Posts