I was recently let go from my job. My husband and I were planning to borrow from my 401k for our first home, now we can't. Can we rollover my 401k to his?
By Heath4111 from Hoboken, NJ
Depends on the amount, company, etc. You need to check with your HR dept that you left. If it is over a certain amount you can leave it alone, if it is with an outside company already ie Principal. Don't use it! You'll have to pay penalties and taxes that could use it all up anyway. It's hard not to be tempted but remember it's for retirement...not a short term investment. Best of luck!
If you have lost your job, can you afford to buy a house on one income? How stable is your husband's job? Think carefully before you take the jump to owing a home! Maybe you should wait? Best of luck to you and your hubby.
Check with an accountant. In my state, you cannot do any type of rollover if you are receiving unemployment, since you are still considered an employee of that company and they have the right to recall you. Once your unemployment benefits run out or you get another job, you can roll over the money to another IRA account that is under your name. You cannot roll money over to another person's account--it would be like taking the money out (you'll have to pay taxes on it), and then putting other money into that person's account. Besides, why would you do that? Down the road, if something happened and you split, that person would get your money!
Why don't you ask a professional person such as a person from a mutual fund, a bank or a CPA that deals with IRA's? A well meaning person would like to help but gives you the wrong information it will cost you big dollars in taxes if you get it wrong. I don't think the proferssional folks would charge for a question or two or three.
By kathleen williams01/21/2010
I suggest to talk to your banker or put it in a federal credit union, good luck.
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Unfortunately I will be losing my job on Sept 14th. I will be 7 months pregnant at that time and my severance pay will hopefully carry us through on bills until the end of the year. However, my company has a 401k plan that I have never contributed to but they apparently have been putting money in it for me for the six years I have been here. I am 100% vested and the acct has about $2900.00 in it. What should I do with it?
It doesn't seem to be enough money to roll over into anything and I have no accounts anywhere to roll it over into. If I cash it in do they automatically take out the 10% penalty and 20% for taxes or just the penalty? Even if I got $2,000.00 of it, it would go a long way to help us out financially until I recover from a third c-section, enough to look for another job. Any suggestions? Thanks.
Cindy from Lorain, Ohio
Most financial advisers would recommend that you roll the money into an IRA or other mutual fund. The company that is currently handling the money could advise you about that. But I understand the lure of windfall money, especially when you you are looking at a new baby and unemployment.
I would recommend using the money to pay off credit card debt so that you actually reduce the amount that you are paying out every month. That way, the interest you save will balance with the penalty.
Good luck and congratulations on the baby! Jess (07/18/2007)
I think Jess's idea of using the money to pay off debt and reduce your monthly expenses is a very good one. I also have one more alternative to suggest: most plans will allow you to leave your money in the plan when you leave your job. So how about doing nothing for a while until you've found a new job and you're financially stable again? Then you can roll the money over to an IRA or your new employer's 401(k) but still have the safety net of knowing it's there if you need it without being tempted to spend it frivolously.
Congratulations on the baby and good luck with your decision! Cathy (07/23/2007)
Still feeling like you need the money now? I can guarantee if you look at your expenditures, you can save that money within a year with little changes. Not sure how cool this is to recommend, but there's another e-budget newsletter I like - check out www.dollarstretcher.com - that often covers finance related (owner was/is fin. consultant). Can also search archives. (07/24/2007)
If you haven't saved anything for retirement besides this, you really need to start. (07/24/2007)
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