FAQ on 401(k)
Bankrate (bankrate.com) has some pretty good Frequently Asked Questions answered about a 401(k) account: basic but fundamental. Check it out if you are unsure what to do when you change your job; when you can take a loan on 401(k) -- yes, you can; how to allocate money in 401(k); how to diversify; and more.
FAQ about 401(k)s
By Bankrate.com
If you cash out, you lose out
Forty-two percent of workers cash out their 401(k) retirement savings when they leave their jobs and take their accounts with them, according to Time. Big mistake. When you cash out, you pay taxes in your tax-bracket and a penalty of 10% of the accounts value (if you're less than 60)! Also, your money no longer grows tax-deferred.
What you should do is roll the money into an IRA or your new employer's 401(k), or leave it in the old employer's plan -- if it's over $5K, your old employer is required, if you wish, to keep the account open.
