Can anyone help me with this 401k!? Please

[guy60618]

The story in a nutshell is this...my mom had a 401k at her company however the company was bought out and she was laid off. Originally her 401k was going to be rollover to the new owners 401k account however the plan didn't go through. She received a letter stating this and asking her what to do with her 401k.

I know if you cash it before time you get charge incomes taxes and 10% penalty. However the most she has on it is 5,000.

What can she do with it? I read she can avoid some penalties if she uses it to pay my college tuition, is this true? By the way my college tuition has been past due for a year now and I haven't been an active student in a year cuz of this......Does anyone have any information on this or any resources we can look to??

 

[quietman]

Rolling over 401k money into an IRA lets her invest in whatever she wants. Do it directly between trustees and you should avoid having taxes withheld.

 

[Animorph]

Have E*Trade or another place you already use roll it over directly into an IRA. No penalties, though it is still in a retirement account and you have to wait until 59.5 to withdraw. They should be able to take all your 401k information and do most of the work for you. Most of the funds available at E*Trade have a $1k minimum for retirement accounts, so you'll be able to get some diversification there if you want.

 

[W2R]

Vanguard can help you roll it over to an IRA there, too, if you prefer Vanguard. Remember that it must be rolled over from one institution directly to another, without ever going to you on the way. Vanguard will tell you all the details of how to do this (as will other companies if you choose them).

 

[Bestwifeever]

I read she can avoid some penalties if she uses it to pay my college tuition, is this true? By the way my college tuition has been past due for a year now and I haven't been an active student in a year cuz of this......Does anyone have any information on this or any resources we can look to??

You haven't been an active student in a year because she hasn't paid your tuition? Why don't you contact your school's student aid office about how to pay your tuition?

 

[Martha]

Are you filling out financial aid forms?

 

[easysurfer]

When I had my 401K dollars moved to my Vanguard IRA, the company (Fidelity) that managed the 401K didn't do a direct rollover, but instead cut a check made out to Vanguard. Since it wasn't in my name, that was counted as rollover without any penalty.