Keeping Found Money
What's the biggest mistake you can make when leaving your job for greener pastures? Posting a video of the last office party on YouTube? Using the boss' reserved parking place on your last day? Cashing in your 401(k)? Okay, they're all bad ideas. But the worst financial mistake you can make is closing out your 401(k). As reported by The Motley Fool recently, a whopping 45 percent of workers who leave their jobs do just that. Such workers have to pay a 10 percent penalty if they are younger than 59 and a half, plus income taxes. A much better option is to transfer the assets to an IRA.
Matt's View
Some plans allow you to keep your money in your former employer's 401(k) plan. However, you'll have more investment options by transferring to an IRA. Brokerage houses such as Fidelity , Vanguard , Charles Schwab , and others will walk you through the process.
This article filed in: Retirement , Saving
Managing Money by The Book
- "Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock." - Matthew 7:24-25
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