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401k Money Transferring the money in your 401(k) is probably the last thing on your mind when you get a new job. Here are some tips worth remembering: In some cases, you may consider leaving your 401(k) money with a previous employer. Why? Some investments may be closed to new investors or be unavailable with your new employers plan. Note: If your 401(k) balance is less than $5000 your previous employer may require you to take the money with you. If you cash out early, the IRS will tax your withdrawal as regular income, and if you're under age 59 1/2, you'll also pay a 10% penalty. There are some exceptions such as disability or when medical expenses exceed 7.5% of your gross income. Many employers won't allow new
employees to begin contributing to a plan right away. Many
employers have a waiting period before new employees can participate. |
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