What do you do with a 401k when you become self-employed?

Question

I'm planning to quit my day job to run my business full time. What do I becomes of my 401k? Can I basically do what I want with it (let it sit and grow, contribute)? It's always been tied to a corporation, so now I'm not sure what to do with it. I want to avoid any penalties.

Answer 1

IRA "rollover" is the best way to go. No taxes. No penalties.

Contact anyone of the following... they'd love to have your business;

Charles Schwab

Fidelity Brokerage

T. Rowe Price Mutual Funds

Vanguard Mutual Funds

Dodge and Cox  Mutual Funds

These companies will do all the paper work. DO NOT TAKE A CHECK FROM YOUR EMPLOYER..... there will be taxes if you do so.

You won't be able to directly contribute to these.... but you can (with the same company) open a new IRA (or ROTH IRA). You may also be eligable for a Keogh or SEP IRA.

Do not use a bank or insurance company for investment products. (very costly & usually mediocre to poor advice).........................

Answer 2

You can no longer contribute to your 401(k) after you leave the company. You should roll the 401(k) into an IRA. This is so that you can get the money away from your ex-employer, who isn't looking out for your best interests. You can easily find a broker who will open a rollover IRA for you with more choices than your ex-employer, better choices, and lower fees. I recommend Vanguard.

For the future, you can contribute to an IRA, or a Roth IRA as an individual. Or you can look into setting up a retirement plan for your new company. Your lawyer, account, or business consultant should be able to help you. Investigate SEP, Solo 401(k)s and Keoghs.

Answer 3

You can move it into an IRA

Here's a good (although 2 years old) article explaining the options:

http://www.fool.com/personal-finance/gen...