You should be able to arrange to roll over your previous retirement balance into either an
individual IRA (almost certainly) or your new retirement account (possibly depending on rules).
Doing a rollover is a much cleaner way to avoid taxes and penalties, it can become convoluted
if you take possession of the money. If the balance was bigger, I would recommend going
to a Schwab branch or online and setting up a rollover IRA account and letting their rollover
specialists handle the whole thing. They do a great job, from personal experience 3 different
times. I think that with a balance below $25k there may be fees for Schwab to do it though. I
really like my Schwab IRA account though, they are good to do business with. Check out what it
might cost if you would like someone to just handle the whole thing. Once the money was at
Schwab, the investment choices would be on you. Schwab is a discount brokerage with very
good investing tools and resources but they don't activily manage unless you hire them to.
With $5k you'll want to manage it yourself.
For your new retirement account choice (a 403b ?), I would go with Fidelity if that choice was
mine. I have a Fidelity 401K account and have done business with Vanguard. - either of those
are top tier. I have no experience with TIAA Creft.
As far as investment choices, a target date fund is a good choice if you lack investing experience.
You can adjust a target date fund's stock exposure by adding in a percentage of an Index fund.
Something like 70% in a target date fund for your anticipated retirement date and 30% in a
S&P 500 index fund would be a great, but maybe slightly aggressive starter investment mix. I
like slightly aggressive.
An important and interesting part of having a "defined contribution" retirement plan (like a 403B or IRA),
is to do a little study and research on person investing. The rewards over time can be substantial, but
you have to do a little homework and maintenance for the best chances.
Google "personal investing" and "retirement investing" for more reading than you'll ever want to do.
+
850 FICO8 since 2015, Thanks MyFICO - 5+ years since last HP
@bada_bing wrote:You should be able to arrange to roll over your previous retirement balance into either an
individual IRA (almost certainly) or your new retirement account (possibly depending on rules).
Doing a rollover is a much cleaner way to avoid taxes and penalties, it can become convoluted
if you take possession of the money. If the balance was bigger, I would recommend going
to a Schwab branch or online and setting up a rollover IRA account and letting their rollover
specialists handle the whole thing. They do a great job, from personal experience 3 different
times. I think that with a balance below $25k there may be fees for Schwab to do it though. I
really like my Schwab IRA account though, they are good to do business with. Check out what it
might cost if you would like someone to just handle the whole thing. Once the money was at
Schwab, the investment choices would be on you. Schwab is a discount brokerage with very
good investing tools and resources but they don't activily manage unless you hire them to.
With $5k you'll want to manage it yourself.
For your new retirement account choice (a 403b ?), I would go with Fidelity if that choice was
mine. I have a Fidelity 401K account and have done business with Vanguard. - either of those
are top tier. I have no experience with TIAA Creft.
As far as investment choices, a target date fund is a good choice if you lack investing experience.
You can adjust a target date fund's stock exposure by adding in a percentage of an Index fund.
Something like 70% in a target date fund for your anticipated retirement date and 30% in a
S&P 500 index fund would be a great, but maybe slightly aggressive starter investment mix. I
like slightly aggressive.
An important and interesting part of having a "defined contribution" retirement plan (like a 403B or IRA),
is to do a little study and research on person investing. The rewards over time can be substantial, but
you have to do a little homework and maintenance for the best chances.
Google "personal investing" and "retirement investing" for more reading than you'll ever want to do.
I think starting off with an TR fund in your IRA is an good way to get started , it will give you an very diversified portfolio. Once you have enough money in your IRA then you can decide what you want to do buy individual mutual funds that may require higher initial balances or stocks or whatever. If you are really hesitant i would just stick it into an money market account in whatever company you decide to open IRA with. Take an few weeks and do some research and decide what to do with how you want to allocate the money.
There are different ways to intrepret the OP's statement. Without knowing the full details, I guessed
that the OP had a cash value in a pension plan that was less than $5K. In a lot of pension plans, they
will allow a lump sum distribution if the amount is less than "X". Often there is no requirement to take
the distriburtion, the money can be left in the plan. For small sums that allow a lump sum, it's almost
always better to take the lump as an untaxed rollover into a qualified retirement plan.
But maybe the OP's situation is different than I guessed. If they are automatically forwarding a check to
the OP, then the clock is ticking on the time the money can be deposited tax free into a retirement account.
I'm pretty sure the limit is 60 days. There also will be additional reporting requirements come tax time to
document the deposit. All in all, it is much simplier to arrange a rollover where the OP never takes possession
of the money, if that is an option.