Leaving Money On The Table

I have 2 401Ks, one from my most recent full time employer and one from an employer before that I never bothered to roll over. The total of the two is almost 40K. I need to do something with them.

  • I believe that my current contract firm has a 401K but of course there is no match, however the dollars I put in would be pre-tax.
  • I could roll the whole amount over into an IRA but if I am not mistaken, any contributions I would put in there would be after-tax. That’s a bummer. If you know anything different, please clarify.
  • I could leave them both where they are for the time being until I end up an another perm employer that has a matching  plan.

I’m at a loss. What would you do? Any suggestions?

4 thoughts on “Leaving Money On The Table

  1. A traditional IRA takes deposits of pre-tax money, a Roth IRA takes deposits of after-tax money. As your old 401ks are also pre-tax money, you can roll them into a new traditional IRA with no problems. You need to go through a brokerage firm – Fidelity, TD Waterhouse, Schwab, etc – because the rolled over dollars need to go directly to the new account or the IRS will hit you hard with penalties.

    I would roll them into a traditional IRA. That will simplify your life by reducing the number of accounts you’re keeping up with and will allow you an unlimited number of investment choices. It also keeps you on the path of saving for retirement.

    I’d also sign up for the new employers 401k, even with no match. It’s never too early to build up retirement savings but it can be too late.

    • This is exactly what I did with my first 401K monies. I have a traditional before tax IRA and can’t want until the first of the year when I can start back up again with this job. Heck they put in 3% whether you contribute on not.

  2. I had four of them from various employees. Fidelity is the best at advising you how to roll them together and continue to grow them in the future.

  3. Well, the choice that I would choose – cash it in and to hell with the penalties and saving for retirement – is not up for discussion. LOL In that case, I’d go with option number 1. And I’d talk to a Fidelity Investment professional right now, today, before new tax laws go into effect in 2013. You may be able to do a trustee to trustee rollover into an IRA. I’d also ask about a Roth IRA.

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