Best choice to put ex-job 401k in....

**choski** · 01-31-2012, 03:36 PM

Hey guys, new member here and am wanting some input.

My wife and I have been doing the Dave Ramsey system for roughly months now.

I recently switched jobs and now i have to decide what id like to do with my old 401k (with merrill lynch).
My new company has T Rowe Price so i have to do something.

I have 25k in my 401k (non roth) and thinking im going to want to put that 25k in a IRA. With a balance of over 5k, merrill lynch claims there will be no fee's having that account.

Is that going to be my best bet, investing all of it in a IRA?

Im just horrible when it comes to this kind of stuff so i dont what to look for or if i should do a roth IRA (then they'll tax the 25k, right?)

Advice is appreciated!

Thanks,
Chris

**mombottoo** · 01-31-2012, 05:58 PM

If you roll it into a Roth IRA it is taxable now. You should have the option of rolling it over into your new company's 401(k) program if you qualify.

When my dh no longer worked at his company he chose to roll his 401(k) over into a traditional IRA.

**Telephus44** · 02-01-2012, 10:40 AM

You have a few options.

You can roll it over into your new employer's 401K plan (most plans will let you do this, even if it's with a different investment house). You won't pay taxes on it, you'll be immediately vested in that portion. This is a good choice if you like the options avaialble in your new 401K plan and/or you want to keep your money all in one place.

You can open an IRA. If you open a traditional IRA, then you won't pay taxes on it. You can open it anywhere you want, so you can choose a place that you like best (like low or no fees, or wider selection of investing options). If you open a ROTH IRA, then you will pay taxes on the 25K. I am not sure, but I don't believe that you pay them when you open the account, but that it's calculated on your next tax return.

You also have the option to leave it where it is. If the balance is over $5K, and in your case it is, you don't have to move it. you can't add to it, but it will continue to grow where it is. If you like the investment options currently in the plan, this may be the best choice.

And lastly - the bad choice - you can cash it out and pay taxes and penalties.