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07-02-2009 at 8:15 AM
Stephiehun
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Joined on 03-19-2004
Wilmington, DE
85,227 Points
Stephiehun is online. Last active: 11-22-2009, 4:40 PMSilver

401k Distribution Question

My company was recently "sold" for lack of a better term to another.  I just got a notice about what to do with my 401k - it's only about $3500.  (Yes, I'm bulking up the new one.) 

I can either roll that into an IRA with my old company or take it in a lump sum distribution.  Any input?  It looks like I'd take a 20% and 10% deduction for the distribution.  I was thinking about doing that and paying off a credit card, which would be a huge help to us.  $3500 isn't that much in the grand scheme of things for retirement (I'm only 29), and I can increase my contributions with my new company.

I will probably talk to a CPA friend as well, but I always appreciate this board's input.





"Angry men don't write the rules, and guns don't right the wrongs." ~ Assassins 
07-02-2009 at 8:16 AM
rdcrlyhr
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Joined on 12-11-2004
My House
17,068 Points
rdcrlyhr is online. Last active: 11-22-2009, 4:41 PMBronze
Don't take the lump sum distribution - it's never a good idea.  Roll the money over into an IRA.
07-02-2009 at 8:17 AM
kris216
Top 500 Contributor
Joined on 08-13-2000
Cleveland, Ohio
186,401 Points
kris216 is online. Last active: 11-22-2009, 4:44 PMGold
Paying a withdrawal penalty is never a good idea.  Roll it into an IRA and cut your spending to help pay off the CC debt.  If the CC is only a couple thousand, it shouldn't take long. 
 
07-02-2009 at 8:18 AM
cittycat
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Joined on 01-16-2007
27,386 Points
cittycat is not online. Last active: 11-21-2009, 12:37 AMBronze
I don't really know all that much, but I would just roll it over.  I wouldn't want to take the tax hit. Plus it'd be nice to have some money in your new IRA, esp if this is your only retirement savings so far. 
 
07-02-2009 at 8:19 AM
SCM1011
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Joined on 06-21-2007
Somerville, MA
25,324 Points
SCM1011 is not online. Last active: 11-22-2009, 1:03 PMBronze
definitely roll it over

 
07-02-2009 at 8:25 AM
augs06
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Joined on 06-06-2007
Huntington
11,225 Points
augs06 is not online. Last active: 11-20-2009, 6:27 PMBronze

kris216:
Paying a withdrawal penalty is never a good idea.  Roll it into an IRA and cut your spending to help pay off the CC debt.  If the CC is only a couple thousand, it shouldn't take long. 

This.


 
07-02-2009 at 8:31 AM
Stephiehun
Not Ranked
Joined on 03-19-2004
Wilmington, DE
85,227 Points
Stephiehun is online. Last active: 11-22-2009, 4:40 PMSilver
Thanks!  I'll look closely at the paperwork and see what I need to do to roll it over.




"Angry men don't write the rules, and guns don't right the wrongs." ~ Assassins 

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