Do not use your IRA to pay off this debt! If the penalties are indeed as high as you state, it's like paying almost 50% interest on your debt!
Your $3500 balance is real money. You can consolidate your rollover accounts if you don't like having small amounts in several places. It's not just some "random account". If you had $3500 in cash right now, would ...
The biggest reason why one might want to leave 401k money invested in an ex-employer's plan is that the plan offers some superior
investment opportunities that are not available elsewhere,
e.g. some mutual funds that are not open to individual investors such as S&P index funds for institutional investors (these have expense ratios even
smaller than the ...
IRA is not necessarily superior. You have to consider all the things together. Here are some potential benefits of not rolling over from 401k to IRA:
Investment options. IRA is generally allowed for more variety, but in 401k you may have negotiated rates and the funds you do have there - are cheaper than they could have been if purchased through IRA. You ...
Do not use this money to pay off debt.
As others have stated, this would be a huge waste of money.
Further, how do you have that money invested inside your IRA? The stock market is up roughly 50% over the last two years. If your investment has not grown at all during that time, you have it invested very poorly. Do you just have it sitting in cash inside ...
You will need to move it to a Traditional IRA if you want to avoid incurring any taxes in the current year. A Roth IRA is for after tax money.
Also, you need to be very careful about how you do the transfer, there are very specific rules about how to transfer the money so it doesn't count as an early distribution and incur taxes and penalties. It is best ...
I would create a "Rollover IRA". These IRAs are designed to take funds from a 401k and allow you to invest them without incurring a cash out penalty nor a tax due. You will have more choices than if you leave it at your old 401k.
If you cash out the 401k, you'll have much less to invest ($1500 - penalty - taxes) vs. doing a rollover 401k where you'll ...
Probably not. You've left your employer, so you aren't eligible to contribute to the 401(k) anymore. After you've left, they are required to keep your account open as long as you like, but after you've rolled it over to something else and closed your account, they are not going to let you open your 401(k) account up again.
However, you need to ask ...
Direct roll-overs / trustee to trustee transfers are typically initiated by the receiving institution. Therefore you need to work with Vanguard. They will have a form in which you provide them with your fidelity account info and they will then contact Fidelity and initiate the transfer.
Do not take the option of being sent a check made out to you by ...
Is there any requirement that I take any action? Or can I just leave
the investments as they are?
You'll have to check with the plan manager. There's no requirement in general, but there might be all kinds of things happening with that specific plan that may create such a requirement (for example, IIRC some companies do not allow ex-employees to keep ...
I've changed jobs several times and I chose to rollover my 401k from the previous employer into an IRA instead of the new employer's 401k plan. The biggest reason not to rollover the 401k into the new employer's 401k plan was due to the limited investments offered by 401k plans. I found it better to roll the 401k into an IRA where I can invest in any stock ...
You are not looking at this correctly.
The entire premise of a tax privileged retirement account is for long term growth. The "rule of 72" says that at 10% return your retirement funds will double every 7 years. If you withdraw that money 28 years from now, then that is 4 doublings.
$3,500 * 2^4 = $3,500 * 16 = $56,000.
So you are not really spending "$...
You obviously have a legal right to control over the IRA. However, in deciding how to get to a position whereby you can reassert that control, it will help to consider things from their point of view:
They have a "several years" old, dormant account. It will have certain details associated with it, including the name of the (now defunct) ...
No. Not likely.
You usually cannot transfer your 401(k) out of a company plan while you are still working there. Some companies do permit such transactions for those 55 and older, but only for your own deposits, not for the matching portion, if any.
Either way, best to ask the admin for your company plan.
If you were no longer with the company, you'd be ...
From your first link: IRS.gov: IRA One-Rollover-Per-Year-Rule
IRA One-Rollover-Per-Year Rule
Beginning in 2015, you can make only one rollover from an IRA to
another (or the same) IRA in any 12-month period, regardless of the
number of IRAs you own (Announcement 2014-15 and Announcement
2014-32). The limit will apply by aggregating all of an ...
For #1, I see no advantage in putting money from your non-retirement savings into a Roth just for the purpose of using it as a down payment on your house. Why not just put the $5.5K directly toward the down payment?
For #2, dollars converted from a traditional 401K or IRA to a Roth are considered income, and will be taxed at your marginal rate. So if your ...
The proper answer is "no". The form is asking if the reason for the payment is that the (former) employer terminated the entire benefit plan (i.e., for everyone). This is not the case, you are simply changing jobs and making a rollover.
("Plan Termination" has a very specific meaning at the IRS.)
As far as I know (and I have looked into this due to my own IRA woes) the only ways to transfer ownership of a 401(k) are:
cash it out and pay any applicable tax and penalties;
to the named beneficiary by dying; or
to ones spouse as part of a divorce settlement.
The answer depends on the IRA custodian.
Once upon a time, Rollover IRAs were kept distinct from Traditional IRAs because the money in the Rollover IRA was eligible to be rolled over once again into a current employer-sponsored plan (such as a 401(k) or 403(b) account) as long as one did not make IRA contributions to the Rollover account - if one tried to ...
Retirement plans and other benefits are the responsibility of the US Department of Labor (DOL). They published a list of Ten Warnings Signs That Your 401(k) Contributions Are Being Misused two of which may apply to your situation:
#3 Your employer failed to transmit your contribution to the plan on a timely basis
#7 Former employees are having trouble ...
Yes, your plan makes sense for the reasons you cite. The 529 has limited investment choices, along with fees that are often higher than an exact ETF equivalent. A .5% annual expense, even just .4% higher than the ETF, still will cost you an average 4% over the 2 decades of savings.
You currently seems to be saving enough, but once your wife's income starts ...
The premise of the question is wrong, because employer matching contributions are not part of the Roth 401k. They are part of the Traditional 401k. So if you are just rolling over the Roth 401k, it won't touch these contributions.
Will I have to pay taxes on my pre-tax contributions, employer match,
and employer profit sharing?
Can they put the whole check in the Roth IRA and then I pay the taxes
out of pocket during tax time?
Yes. That's what you told them to do when you asked for rollover. You might get hit with an underpayment penalty though, be careful.
Will just ...
No, you cannot roll over any money or assets in your IRA (of any kind)
into an IRA of any kind in the name of your spouse. That I in IRA stands
for Individual. As mhoran_psprep's comment asks, if by
"...my current Roth IRA in my name and my spouse's name..."
you are thinking that you and your spouse jointly have an IRA,
you are sadly mistaken; your ...
You're thinking that by rolling over your Roth 401(k) to Roth IRA the whole amount becomes "contribution". That is not so, you're not losing the characteristics of the amounts within the account. The grouping rules of Sec. 408A still apply, and you still need to separate contributions from earnings.
See specifically this text in the statute:
Did I do anything wrong by cashing a check made out to "trustee of
<401k plan> FBO ", and if so how can I fix it? I thought I was just
getting a termination payout of the balance.
Yes, you did. It was not made to you, and you were not supposed to even be able to cash it. Both you and your bank made a mistake - you made a mistake by depositing a check ...
It is unlikely that you can undo the rollover and put money back into the 401(k) plan sponsored by your ex-employer, and even more so if your departure was acrimonious. You could, of course, always ask your
ex-employer for permission to put the money back, but I suspect that a
rollover from an IRA into a 401(k) is not permitted
unless you resume employment ...
According to this site:
If you think the plan trustees or others responsible for investing your pension money have been violating the rules, you should call or write the nearest field office of the U.S. Department of Labor's Employee Benefits Security Administration (EBSA (formerly PWBA)).
Looking at EBSA's FAQ for abandoned plans finds:
EBSA has ...