Comments on: What Should You Do With Your 401k When You Get Laid Off http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/ Personal Finance. Investing. Wealth Building. Mon, 22 Mar 2010 01:29:36 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: CanesFan http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-25109 CanesFan Sat, 19 Dec 2009 06:08:34 +0000 http://www.moolanomy.com/?p=1124#comment-25109 Hello- My wife has two (401k)s with two former employers both plans are just sitting there. She is now a stay at home mom and with our family growing we have decided to add 2 bedrooms to our home. My question is... Can we cash out one of the 401k's for the addition on our home without a penalty? or can I borrow against it even though she is no longer working there? Based on what I've read neither of these are an option which leads me to one more question. If I roll over both 401k plans into a traditional IRA, can I then borrow against that? or is there a time frame of how long you must have an IRA before you can do that? Hello- My wife has two (401k)s with two former employers both plans are just sitting there. She is now a stay at home mom and with our family growing we have decided to add 2 bedrooms to our home.
My question is… Can we cash out one of the 401k’s for the addition on our home without a penalty? or can I borrow against it even though she is no longer working there?

Based on what I’ve read neither of these are an option which leads me to one more question.
If I roll over both 401k plans into a traditional IRA, can I then borrow against that? or is there a time frame of how long you must have an IRA before you can do that?

]]> By: Bryon Severns http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-24873 Bryon Severns Fri, 04 Dec 2009 20:06:31 +0000 http://www.moolanomy.com/?p=1124#comment-24873 To Chelseamomof5: I am running for Congress and I would like to use your story to illustrate the pain felt by millions of Americans who have been laid off and need to spend their savings in 401k. Making you pay 10% penalty in your time of need really is kicking you when you are down. This is an unjust tax and I am trying to fight it, but I need real life stories to convince people to repeal this tax. If we succeed then maybe you can get a refund of that 10% penalty. Please reply to me at bryonss@yahoo.com, Bryon Severns, Arlington, Libertarian Party of Texas. To Chelseamomof5:
I am running for Congress and I would like to use your story to illustrate the pain felt by millions of Americans who have been laid off and need to spend their savings in 401k. Making you pay 10% penalty in your time of need really is kicking you when you are down. This is an unjust tax and I am trying to fight it, but I need real life stories to convince people to repeal this tax. If we succeed then maybe you can get a refund of that 10% penalty. Please reply to me at bryonss@yahoo.com, Bryon Severns, Arlington, Libertarian Party of Texas.

]]> By: Nathan http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-23318 Nathan Wed, 26 Aug 2009 05:59:30 +0000 http://www.moolanomy.com/?p=1124#comment-23318 Let's say I get laid off and rollover my 401k into IRA. After I find a new job, can I rollover my IRA into my new job's 401k? Thank You Let’s say I get laid off and rollover my 401k into IRA. After I find a new job, can I rollover my IRA into my new job’s 401k?

Thank You

]]> By: Trenton Dennis http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-23267 Trenton Dennis Mon, 24 Aug 2009 04:54:18 +0000 http://www.moolanomy.com/?p=1124#comment-23267 All this sounds good, but I was laid off in april 09. Haven't found a job yet and not even gotten an interview. I worked in HR in staffing (go figure). My money runs out in October. Unemployment is only 1900.00 a month. My mortgage is 1913.00 a month. No job in sight. My 401k has defaulted and I am going tomorrow to find a financial analyst. Fortunately I don't have any credit card debt but have a 590.00 car payment. I am trying to sell the car but the loan is 26k and I can only get 16k for the car. I need to come up with the difference to get rid of the monthly payment. I may be able to make it without the car payment. I worked for more than 15 years at my company and RPO is there motto now. Can I roll the 401k over into an IRA and get the difference to pay off the car? If not then the car is repossessed and my credit, which took me 7 years to get built back up is ruined and no loans can ever come my way. Now I am not an over spender. My last car had 235,000 miles on it and broke last Feb '08 so I had to get another car. I was making 90k yr so I was not one of those who was speculative. I also don't have a second mortgage. I just don't have a job and can't get a loan. ING is my 401k company. All this sounds good, but I was laid off in april 09. Haven’t found a job yet and not even gotten an interview. I worked in HR in staffing (go figure). My money runs out in October. Unemployment is only 1900.00 a month. My mortgage is 1913.00 a month. No job in sight. My 401k has defaulted and I am going tomorrow to find a financial analyst.

Fortunately I don’t have any credit card debt but have a 590.00 car payment. I am trying to sell the car but the loan is 26k and I can only get 16k for the car. I need to come up with the difference to get rid of the monthly payment. I may be able to make it without the car payment. I worked for more than 15 years at my company and RPO is there motto now.

Can I roll the 401k over into an IRA and get the difference to pay off the car? If not then the car is repossessed and my credit, which took me 7 years to get built back up is ruined and no loans can ever come my way. Now I am not an over spender. My last car had 235,000 miles on it and broke last Feb ‘08 so I had to get another car. I was making 90k yr so I was not one of those who was speculative. I also don’t have a second mortgage. I just don’t have a job and can’t get a loan. ING is my 401k company.

]]> By: Steve http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-21938 Steve Sun, 21 Jun 2009 17:03:47 +0000 http://www.moolanomy.com/?p=1124#comment-21938 Ok thanks Pinyo, I thought that might be the answer as just about everywhere there are comments about rolling into an IRA it talks as though its cash although no one specifically says that. I get your point about it not really being an issue cashing out and then repurchasing, it wouldn't make much difference. I know this is not a forum for mutual funds but I thought it ironic that the front end load fund has the highest fee ratio and has done the worst YTD of any.......................isn't that always the way! Steve. Ok thanks Pinyo,

I thought that might be the answer as just about everywhere there are comments about rolling into an IRA it talks as though its cash although no one specifically says that.

I get your point about it not really being an issue cashing out and then repurchasing, it wouldn’t make much difference.

I know this is not a forum for mutual funds but I thought it ironic that the front end load fund has the highest fee ratio and has done the worst YTD of any…………………..isn’t that always the way!

Steve.

]]> By: Pinyo http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-21935 Pinyo Sun, 21 Jun 2009 15:18:26 +0000 http://www.moolanomy.com/?p=1124#comment-21935 Steve, I'm not sure what the correct answer is, but I am leaning heavily toward a NO answer because 401k plan often has access to different funds than individuals do and you may not be able to own your current funds inside your IRA account. The best person to ask is probably your wife's 401k plan administrator. As for timing the market, it's not necessary. You are selling out of the stock market and into the market in relatively short time and would have not significant impact except for the trading expenses. If you want additional answers, you may want to try <a href="http://answers.moolanomy.com/" rel="nofollow">Moolanomy Answers</a>. Steve, I’m not sure what the correct answer is, but I am leaning heavily toward a NO answer because 401k plan often has access to different funds than individuals do and you may not be able to own your current funds inside your IRA account. The best person to ask is probably your wife’s 401k plan administrator.

As for timing the market, it’s not necessary. You are selling out of the stock market and into the market in relatively short time and would have not significant impact except for the trading expenses.

If you want additional answers, you may want to try Moolanomy Answers.

]]> By: Steve http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-21933 Steve Sat, 20 Jun 2009 21:21:03 +0000 http://www.moolanomy.com/?p=1124#comment-21933 Ok, I know you said there are no dumb questions but how about this one. My wife gets laid off and we asked about leaving the 401K with the former employers plan which she can do but now we are having second thoughts. The loot is fully invested in bonds and mutual funds and my question is. If she was to roll it over into an IRA does the plan company have to sell the funds and give her a cash check or can you just have a transfer of the funds? The reason I ask is because a couple of the funds had front load (5.75%) fees and I would assume that she had that amount lopped off her original contributions which over 15 years have been considerable. Of course the next question is if she does have to take the cash then I guess it would be best to wait until the market improves a bit? Thanks. Steve Ok, I know you said there are no dumb questions but how about this one.

My wife gets laid off and we asked about leaving the 401K with the former employers plan which she can do but now we are having second thoughts. The loot is fully invested in bonds and mutual funds and my question is. If she was to roll it over into an IRA does the plan company have to sell the funds and give her a cash check or can you just have a transfer of the funds?

The reason I ask is because a couple of the funds had front load (5.75%) fees and I would assume that she had that amount lopped off her original contributions which over 15 years have been considerable. Of course the next question is if she does have to take the cash then I guess it would be best to wait until the market improves a bit?

Thanks. Steve

]]> By: Pinyo http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-20272 Pinyo Mon, 09 Mar 2009 16:13:26 +0000 http://www.moolanomy.com/?p=1124#comment-20272 @ChelseaMomOf5 - I am sorry to hear that. I believe you can roll your 401k into a Roth IRA (you'll have to pay taxes on the amount). And Roth IRA has a provision that allows you to withdraw the principal without paying the <a href="http://www.moolanomy.com/tag/early-withdrawal-penalty/" rel="nofollow">10% early withdrawal penalty</a>. <strong>Please check with your financial planner to make sure this is correct.</strong> @ChelseaMomOf5 – I am sorry to hear that.

I believe you can roll your 401k into a Roth IRA (you’ll have to pay taxes on the amount). And Roth IRA has a provision that allows you to withdraw the principal without paying the 10% early withdrawal penalty.

Please check with your financial planner to make sure this is correct.

]]> By: Chelseamomof5 http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-20248 Chelseamomof5 Sun, 08 Mar 2009 01:57:41 +0000 http://www.moolanomy.com/?p=1124#comment-20248 My husband got laid off and his employer is also terminating the 401k plans. We have 5 children at home and a mortgage of $1500 a month. We only have about 40k left in the 401k. He is in construction, which has come to a screeching halt. I drive a school bus and carry the med. insurance, so I am afraid to leave that security for a job which I would be lowest on the totem pole. I think we should just pull it out and put it where we can get to it for immediate bills. We have a small savings, but only enough for 2 to 3 months and if the work doesn't pick up, we will be in trouble. We are getting the house ready for market, but since he's laid off, if we were to sell(not easy in this market) I don't know if we would be able to buy something else. If we had the 401K less taxes and penalties, I feel it would help us float til the construction pulls up. I think with my salary and him picking up side work, we could make the other bills and food and gas. What do you think? My husband got laid off and his employer is also terminating the 401k plans. We have 5 children at home and a mortgage of $1500 a month. We only have about 40k left in the 401k. He is in construction, which has come to a screeching halt. I drive a school bus and carry the med. insurance, so I am afraid to leave that security for a job which I would be lowest on the totem pole. I think we should just pull it out and put it where we can get to it for immediate bills. We have a small savings, but only enough for 2 to 3 months and if the work doesn’t pick up, we will be in trouble. We are getting the house ready for market, but since he’s laid off, if we were to sell(not easy in this market) I don’t know if we would be able to buy something else. If we had the 401K less taxes and penalties, I feel it would help us float til the construction pulls up. I think with my salary and him picking up side work, we could make the other bills and food and gas. What do you think?

]]> By: Pinyo http://www.moolanomy.com/1124/what-should-you-do-with-your-401k-when-you-get-laid-off/comment-page-1/#comment-19883 Pinyo Thu, 12 Feb 2009 02:56:14 +0000 http://www.moolanomy.com/?p=1124#comment-19883 @Pez - I am sorry to hear about your situation and your HR/401k plan administrator could have handled it much better. If you are still within the 60 days window, you could open a Traditional IRA and avoid the 10% penalty. However, you'll have to deposit the full original amount before taxes were taken out. If you are outside of the 60 days windows, you'll have to pay the 10% early withdrawal penalty...unfortunately. @Pez – I am sorry to hear about your situation and your HR/401k plan administrator could have handled it much better. If you are still within the 60 days window, you could open a Traditional IRA and avoid the 10% penalty. However, you’ll have to deposit the full original amount before taxes were taken out. If you are outside of the 60 days windows, you’ll have to pay the 10% early withdrawal penalty…unfortunately.

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