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401k Rollover
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<blockquote data-quote="mountaingoat" data-source="post: 488108" data-attributes="member: 1250"><p>Basically, the government rules are that you can take the money out of your 401K but then you have to roll it into and IRA within 60 days. If that doesn't happen, you must pay the taxes on the amount that you withdrew in addition to a 10% penalty.</p><p></p><p>That being said, what are you going to roll it into? If you are like most other people, you have watched the value in your 401K decrease over the last year. If you're rolling over your 401K to purchase another fund outside your 401k, you are selling low (and hopefully you are buying that other fund low as well). And if the plan is to move it into a safe fund (or a .5% savings account), you have just sold your 401K at a loss an put it into something that will not give you the higher returns that you need when the economy comes back.</p><p></p><p>Rod is right - noone is sure what is going to happen in this economy. Wall Street hates uncertainty, and that is exactly what this economy is right now. As a country, we could pull out of this later next year, or we could pull out of this in a decade (remember Japan's "lost decade?"). Noone knows. </p><p></p><p>My suggestion at this point is to keep your cash flow positive. If that means ceasing your contributions to your 401K, so be it. My personal opinion is that you should continue to put money into the 401K at this point when the funds are low. Depending on your time horizon, this could be a golden opportunity to purchase funds at prices not seen in 12 years!</p></blockquote><p></p>
[QUOTE="mountaingoat, post: 488108, member: 1250"] Basically, the government rules are that you can take the money out of your 401K but then you have to roll it into and IRA within 60 days. If that doesn't happen, you must pay the taxes on the amount that you withdrew in addition to a 10% penalty. That being said, what are you going to roll it into? If you are like most other people, you have watched the value in your 401K decrease over the last year. If you're rolling over your 401K to purchase another fund outside your 401k, you are selling low (and hopefully you are buying that other fund low as well). And if the plan is to move it into a safe fund (or a .5% savings account), you have just sold your 401K at a loss an put it into something that will not give you the higher returns that you need when the economy comes back. Rod is right - noone is sure what is going to happen in this economy. Wall Street hates uncertainty, and that is exactly what this economy is right now. As a country, we could pull out of this later next year, or we could pull out of this in a decade (remember Japan's "lost decade?"). Noone knows. My suggestion at this point is to keep your cash flow positive. If that means ceasing your contributions to your 401K, so be it. My personal opinion is that you should continue to put money into the 401K at this point when the funds are low. Depending on your time horizon, this could be a golden opportunity to purchase funds at prices not seen in 12 years! [/QUOTE]
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