401K Rollover Beethoven

Well I was going to start out by writing a quirky rewrite of "Rollover Beethoven" with awesome financial overtones and stock market harmony.  Unfortunately those things don't exist it just comes out really really dorky.  Trust me.  The 401k rollover is really just meant to be informative.  Perhaps some hot chick talking retirement planning could be hip, but I'm not sure Weird Al (much less Weird Bill) could pull it off.

What we're going to do today instead is just hit up some of the different options you have when you leave your company for another job when it comes to your 401k money.  (This generally includes 401k profit sharing plans also.)

One option you have is to take your previously company controlled money and move it into a Individual Retirement Account.  This is nice because you now have the freedom to invest in the funds you wish to, anything from individual stocks, mutual funds, bonds, or even real estate.  You can also convert from a traditional to a ROTH IRA, but there are some ROTH IRA Rules that apply.  Be careful that if your going to take investing into your own hands you take the time to learn, but you really should do that anyways as trusting other people fully with your money is a recipe for disaster also.

The next thing you can do is rollover your 401k into your new companies 401k.  Be careful to not pull the money out in cash and then add the cash into your new 401k, you will get taxed and penalized if you do this.  Make sure you talk with a broker at the new 401k firm, they will be more than happy to get the paperwork together for you.

Another option is to simply take the money and run.  Sure you will get penalized 10% plus taxes on the money, but if you are badly in debt or don't have a new job yet it's a good way to survive while you get your new career up and running.  I certainly wouldn't let my family starve so I can save some tax money now.

Please don't go to the Carribian on it though, I know it's tempting.