The first link I have provided will give you access to monthly compound interest calculator, that will show you potentially what time could do for your $930. (If you add just a little more $$ every week you will be amazed).
If your new employer offers matching funds for IRA investments... you might want to look into that.
Depending on your financial goals, there is no better way than learning the basics and opening a self directed IRA and transferring the money there. There should be no penalties and you implement your own investment strategies.
The second link is to a video explaining to concept of Dividend Capturing,It is one of the oldest and safest investment strategies for the beginner.
Yes, cashing out a 401k is dumb.
A 401k is a retirement account. Your husband lowered his taxes in the past by putting money there instead of including it in his income. Therefore the IRS charges a 10% penalty for taking out the money before he reaches retirement age. That's 10% in addition to paying the taxes he didn't pay earlier. So if you're in the 15% tax bracket you lose 25% of this money.
There's no 1k limit that I'm aware of.
It does make sense to remove the money from this employer's 401k plan, but you need to put it into another retirement plan to avoid the penalty. It's best to transfer the money directly from one account to the other. If you transfer to a Roth IRA then you do have to pay the taxes, but afterwards you can withdraw the money at any time.
He can roll it over into an IRA with no tax consequences or he can cash it out. If he does the latter, he will pay 10% penalty ($93) PLUS the entire gross withdrawal ($930) will be taxable income to him. The 401(k) custodian will send him an IRS Form 1099-R for that amount after the first of the year.
If your husband "cashes out" his 401(k), then I hope you weren't relying on him being smart enough to be the primary breadwinner in your marriage?
On $930 he will pay an off-the-top 10% ($93) penalty, leaving him with $837 that will be subject to his prevailing Income tax rate (which is probably 15%), so he'll end up with $711.45
If he just LEFT that $930 alone and forgot about it, it would grow at between 7% & 12% long-term average, and when you guys are 65 (so could take it out without penalty) it WOULD have been worth potentially as much as $14,846
I'd rather have almost $15,000 "down the road" that $700 right now....wouldn't you?
I would open an IRA account at merrill edge or scrottrade, etc. Then ask them how to roll that into the account, they will tell what to do. Then you have the IRA account for any future changes you do with jobs also, you can always roll it into that account. There is no tax hit rolling it over to an IRA.
roll it over to an IRA, within 60 days there is not tax on it but if he takes it now, it will definitely cost him $93 to do so plus what it might cost in income taxes
Leave it where it is if you can, otherwise do a rollover.
It's a start toward retirement, even if a small one.
My husband and i are both 24 and he held two jobs at one time. He is leaving a part time position that he had been contributing to a 401k at. The account only has 930 in it. Is it dumb to cash it out? I dont know much about this but it really isnt much money in my opinion at that amount does it matter? I thought if it was over 1k that it mattered. just looking for thoughts on this matter.
