Q.  Robert, last year my job of 21 years was phased out.  I still have my 401K from that employer, which I am not contributing to anymore.  I have a new job now and my current employer does not offer a 401K.  Should I leave my 401K as it is?  Should I change the allocations inside of it?  Can I just take the money or do I need to change it to an IRA?  I am 50 years old and a friend told me I cannot do anything until I am 59 and a half.  Is that correct?  –  William in Winston-Salem

A.  William, first let me start with this, I cannot advise you on what to do with your 401K with such limited information.  Any Financial Planner would have to sit down with you personally and get much more detailed information on your overall financial situation.  However, I can go over some basic information regarding your 401K investment.

Obviously, you can leave the 401K just as it is.  This is not always the best option.    Even though you are no longer working there you should still be able to reallocate funds inside of the 401K.  However, most 401K plans have limited options on how your money can be allocated.  There might not be an option inside your present plan that really suits what you are looking for in your personal financial planning strategy.

Working with a Financial Planner is the best way for you to determine if a good option is to rollover the 401K into an IRA.  Also, as long as you are no longer employed by the company sponsoring the 401K, you can move your money without being age 59 and a half.  The 59 and a half rule normally refers to current employees enrolled in the plan, but there are even variations on this from company to company.

One of your questions is about just taking the money out, which I assume you to mean withdrawing the money without reinvesting into another qualified account (IRA).  This could bring a heavy tax burden into play for most people with 401K’s.  It should not be done unless under extreme hardship situations.

As a general rule, most of the people in your situation opt to rollover the money into an IRA.  There are so many more options available that we can use to make sure that your investments are the right fit for you.

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Robert Cooper, CRPC, RFC 

Investment Advisor Representative

Providing Financial Planning Services in the Triad for Over 20 Years

336-993-2012  •  www.coopercares.com  

935-E Mountain St., Kernersville, NC 27284

Investment Advisory Services Offered Through Global Financial  Private Capital, LLC, an SEC Registered Investment Advisor.

If you would like a complimentary consultation with Robert, call the office at 993-2012.

Robert Cooper and Global Financial Private Capital, LLC do not provide tax or legal advice.  Individuals should seek advice from their own tax or legal counsel for their particular situation.

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