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Question for the Money Doctors

Question submitted on Sep 4, 2012.

Question

I have a 401K plan of approx. 16,000 from an old employer. I do not want to use this now but what do I need to do with it if I do not plan on going back to work there and so I do not loose most of it in fees. I am almost 40 yrs. old and currently a student graduating at the end of the year. Ive just never delt with this issue and need to take care of it. Is it safe to leave it there?

Answer

Depending on your former employer''s plan, you may be able to leave it there. If you choose that option, speak to the plan advisor to make sure it is allocated according to your risk tolerance, objectives and time horizon. The new disclosure laws just went into effect so the fees affiliated with your account should be disclosed.

Another option would be to roll the plan to a personal IRA. This should give you additional choices and flexibility over the employer 401(k). When you roll out of the 401(k), it is a tax-free transfer to the personal IRA, and you can continue with the tax deferral until retirement. A CPA/PFS (www.findapfs.org) in your area can assist you with this.
 


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