Dave Ramsey recommends rolling your 401(k) into an IRA
Article Date: Jul 13, 2014
Roll your 401(k) into an IRA
How should I handle my 401(k) when moving from one job to another?
I would roll it to an IRA. Your new company, if you move it there, will have limited choices for your 401(k). You’d also probably have a lengthy waiting period for verification and the potential add-on fees and taxes.
Plus, with an IRA you can cash it out if something really bad happens. But I rarely ever advise people to cash out their IRAs. The only exceptions are extreme cases, like to avoid bankruptcy or foreclosure. Even then, hardship withdrawals are very difficult to get. And again, this kind of thing should never be done except in an absolute, worst-case scenario.
Just roll your money into a traditional IRA, Tracy. It’s called a direct transfer IRA, and that way there will be no taxes on it. You want the money to go directly from the 401(k) to the IRA. Then, you’ll have the freedom to choose from about 8,000 mutual funds and move the money around, if you like.
In other words, you’re in control. That’s the way it should be when it comes to your money!
Spending money on children all evens out
We have three children, ages 15, 10 and 9. With our oldest starting high school and just being a teenager, we’re spending lots more money on her than the others. It’s almost like she’s the favorite child. Should we spend more on the other kids to make things seem a little more fair?
I don’t think so. In five or six years, it’ll be their turn and you guys will be spending that kind of money on them, too. That’s the way it is with teens.
Here’s a question for you. When the 15 year old is 23, and you’re buying prom dresses and all the other teenage stuff for the younger kids, are you going to turn around and give the older child extra money just to “even things up”? Of course not—that would be silly. She had her moment in the sun, and now it’s their turn.
Just make sure you hug on all of them equally, and let them know you love them!
Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. His newest best-seller, Smart Money Smart Kids, was written with his daughter Rachel Cruze, and recently debuted at No. 1. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
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