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Posted by Taps on March 8, 2007, 12:54 pm
Hi,
Had a question if I can 2 401k accounts. This is the scenario :
Had a 401k account in my previous company. Left that company and
joined a new company. The 401 k money is with the previous company.
Can I leave it there and open a new 401k account in the present
company. I know you can roll it over, but I was wondering if its
possible to do the above.
Thanks.
Tapan.
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Posted by Rich Carreiro on March 8, 2007, 1:51 pm
> Had a 401k account in my previous company. Left that company and
> joined a new company. The 401 k money is with the previous company.
> Can I leave it there and open a new 401k account in the present
> company.
Yes.
--
Rich Carreiro rlcarr@animato.arlington.ma.us
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Posted by on March 23, 2007, 10:04 am
>
> > Had a 401k account in my previous company. Left that company and
> > joined a new company. The 401 k money is with the previous company.
> > Can I leave it there and open a new 401k account in the present
> > company.
>
> Yes.
However, bear in mind that there are several potential downsides
to doing so. First - at some point you'll want to do *something*
with that money in the old 401k - whether it's roll it over to
an IRA, start taking distributions, whatever - and when that time
comes, you'll have to deal with the old company and their agents.
If it's a large, well established company, that'll probably not
be a big deal, but if it's not, it can be a pain.
I've had both types of situations and when I wanted to do a
rollover from an employer who'd mostly shut down, it was a
bit of a trick to track down the right folks for dealing with
it.
On top of that, unless the investment options in the old
company are fantastic, you can probably do better - and
have an easier time of it - in a self-directed IRA. You
don't have to roll the old 401k into a new employer's 401k -
you can roll it into an IRA at any brokerage company or
mutual fund company and in all likelihood have both better
investment options (with lower fees) but much better access
for managing it via web pages, etc.
But you can generally just leave it with the old employer
for as long as you like, so there's probably no rush and
no worry. Whether you leave it where it is, roll it into
the new employer's 401k or roll it into an IRA, the only
thing you really want to avoid if at all possible is
liquidating it - ie. taking the money out and into a
taxable account and/or spending it. If you do that, you'll
pay a 10% penalty, and taxes, and have wasted a huge
opportunity to get yourself some tax-deferred growth.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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Posted by Sandra Loosemore on March 8, 2007, 1:54 pm
> Had a question if I can 2 401k accounts. This is the scenario :
>
> Had a 401k account in my previous company. Left that company and
> joined a new company. The 401 k money is with the previous company.
> Can I leave it there and open a new 401k account in the present
> company. I know you can roll it over, but I was wondering if its
> possible to do the above.
Absolutely. I still have 2 401K accounts from previous employers as
well as the one with my current employer that I'm actively contributing
to.
As well as leaving the old 401K money where it is, and rolling it over
into your new 401K plan, you can also roll your old 401K money over
into an IRA. This can make sense if you want to do a Roth conversion
on the money, or if neither the old nor new 401K plan offers a good
selection of investment choices and you want more control. If you do
decide to move the money, be very careful to do what is called a
"direct rollover" so that you don't end up being liable for unexpected
taxes and early withdrawal penalties.
-Sandra
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Posted by jIM on March 8, 2007, 2:16 pm
> Had a question if I can 2 401k accounts. This is the scenario :
>
> Had a 401k account in my previous company. Left that company and
> joined a new company. The 401 k money is with the previous company.
> Can I leave it there and open a new 401k account in the present
> company. I know you can roll it over, but I was wondering if its
> possible to do the above.
>
Each plan will be different. if you don't have much invested in the
old 401k, your employer may cash you out... you would then have to pay
taxes and penalties on withdraw.
The best answer is to check with your old company. Check the 401k
plan rules, in particular.
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