401k, Questions on transfer and withdrawal?

401k, Questions on transfer and withdrawal?
Situation: I have some money in a 401k from my previous employment. 1) How do I transfer that money to another investment? 2) Can I just withdrawal that amount? How? Penalties? It's been sitting there for several months. I think it's gradually losing money. It would be more useful to have it in AmeriTrade or just cashing it out. I plan to do Dental Hygiene, I'm not certain if that industry offers 401k for me to continue transferring it around - so cashing out wouldn't be bad. I could use it for school which is what I am working towards right now. Thanks! Any places, suggestions of places I can take it to, to do that rollover or withdrawal? I think I can do it online but I'm not sure. A few months back I read on it and I think there was a gang of paper work to deal with so I put it off and I'm just getting back into trying to deal with it again now. Any suggestions on where to deal with this would be great. Thanks.


Answers:

Kevin R:  Depending on how it's invested, your age, goals, etc., do a direct rollover penalty free into your own self directed traditional IRA. There will be no penalties, or taxes of any kind. All brokers can handle this with some pretty simple paperwork. Cashing out your 401(k) prior to 59 1/2, will generate a 10% early withdrawal penalty irregardless of how you spend the money. Plus your trustee will probably withhold 20% for backup withholding. Just roll it over, it is savings for retirement.
2008-12-15 19:32:57
src50:  http://www.401k.org
2008-12-15 19:36:47
Chosen Answer
Al in NC:  If you cash out your 401K you will owe taxes on the withdraw. Also, 10% early withdraw penalty if you are not 59 1/2 (there are exceptions to this rule). The best method is to open a self-directed Traditional IRA at a brokerage firm such as Scottrade. Let them know that you wish to do a DIRECT ROLLOVER from your 401K plan into your IRA. DIRECT ROLLOVER = NO taxes or penalty due because of transfer. If the firm that handled your 401K for your employer was Fidelity they will send you a check (they will only do an electronic transfer if the IRA is with Fidelity). With a direct rollover the check sent to you by a firm such as Fidelity will be payable to: Example: (Name of brokerage firm) FBO (your name). Example: Scottrade FBO John Doe. FBO = For Benefit Of If that is the case then take or send the check to your brokerage firm. They will deposit the funds into your IRA account. Some good websites that provide 401K information: www.401khelpcenter.com www.401k.org www.401k.com
2008-12-16 04:56:05