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I would roll it over NOW the clock is ticking. More sure to use the gross not net if they took out any taxes
@tacpoly wrote:
You can roll over the money to an IRA to avoid paying taxes and penalties. If you move it to a Roth IRA (which I would recommend), you just have to pay income tax on it.
I would be very careful recommending either a Roth,Traditional IRA, or anyother Investment/Retirement account as the best choice for anyone.
Everyones financial situation is different and a Roth might be right for you, and a Traditoinal IRA right for me. There might even be a possibility of rolling it into a current 401K which could be another good option depending upon the situation.
@MakingProgress wrote:
@tacpoly wrote:
You can roll over the money to an IRA to avoid paying taxes and penalties. If you move it to a Roth IRA (which I would recommend), you just have to pay income tax on it.I would be very careful recommending either a Roth,Traditional IRA, or anyother Investment/Retirement account as the best choice for anyone.
Everyones financial situation is different and a Roth might be right for you, and a Traditoinal IRA right for me. There might even be a possibility of rolling it into a current 401K which could be another good option depending upon the situation.
First of all, having a traditional IRA or a Roth or a 401k does not preclude having the others. You can have all 3 if you want.
Second, I do not see the harm of recommending having a retirement account. It’s like telling someone they should have a savings account. I frankly do not know how it could be a bad thing. I did not tell the OP how they should invest the money.
Third, I actually read what the OP posted: the 401k balance was low, OP wanted to put it in an IRA and was willing to pay tax on the money, and seemed to be at the beginning of their career/not a high earner. So it was the direction the OP was going and I endorsed the idea as a good one specifically for the OP.
Now if you you disagree with something specific that I’ve written, I’d love to hear it. But if you are are just slagging me for posting advice because someone else might get the wrong idea, then you should be lecturing most everyone here. Because I don’t always see disclaimers on posts.
@Anonymous wrote:
I agree, that is a good point for anyone else that comes across this. In my situation I stated a Roth because that is my best option. My employer does not match on 401k and I am just starting to work out of college so all my retirement savings goes to Roth at the moment. I wasn't as financially literate when I started working in college but still knew starting to save early was good, which is why I opened the 401k when it became available to me.
Do your own research on your personal circumstances everyone! Thanks for pointing that out for others!
Any reason you aren't doing both?
Diversification between pre-tax and post-tax retirement plans isn't a bad idea and just because there's no match doesn't mean there's no value on a 401k, far from it actually. I honestly view a match as just a bonus, defraying my top-line gross income is huge.
Had I been smarter about some things my own 401k balance would be non-trivially higher than it is today, and that's nothing but goodness.