My company split at the first of the year. All employees were told that 401k accounts would be closed and we would have the option to roll our money into a new 401k or personal retirement account. Do they have to set up new 401k accounts?
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Anonymous
ANSWERS: 3
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I think they mean the 401K account at your new job, assuming you get one. Otherwise, you have to create your own personal IRA.
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No. You are responsible for opening a Rollover IRA in which the 401k money will move to or if you have a new job that offers a 401k you can roll it to the new plan with the new company. But if you do roll it to a Rollover IRA you cannot add any additional money to it. if you roll it to a new company sponsored 401k you can add money to it. 401k' are employer sponsored retirement vehicles whereas an IRA is something you can do yourself.
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You can roll it over to an investment company. I did this with my government retirement plan because I didn't trust the managers. It becomes an IRA then. If you start with a new company you can start a new 401k with them. Don't draw it out!! It will cost you penalities and you will have to pay taxes on the interest.
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