My husband started a new job. The old comopany asked him to transfer 401K immediately to the new company or withdraw the money. The question is he can't have 401K account with the new company until 6 months later. If he withdraws the money, it is going to be subject to tax. Does anyone know any better way to deal with this issue? Is there any thing in US like RRSP which is not tied with the company?
Thanks for your help
401K transfer
Moderator: Mark T Serbinski CA CPA
He should roll it over into a <u>rollover IRA </u> (any financial institution can do this).
Once he has established the new 401(K), he can then transfer that money into the new 401(k) if he wishes, or simply leave it in the rollover IRA.
This is not a big problem, and is done all the time by those who leave one job, whether or not they have a new job.
make sure you do a TRANSFER and not take the money out, or you will have to make up the tax that is withheld to top off the rollover IRA.
<i>nelsona non grata... and non pro</i>
Once he has established the new 401(K), he can then transfer that money into the new 401(k) if he wishes, or simply leave it in the rollover IRA.
This is not a big problem, and is done all the time by those who leave one job, whether or not they have a new job.
make sure you do a TRANSFER and not take the money out, or you will have to make up the tax that is withheld to top off the rollover IRA.
<i>nelsona non grata... and non pro</i>