I’m 23 years old and have accrued just under $5k in just under 2 years of work. I have received my termination documents and they state that “401k balances less than $5,000 will be automatically distributed from the plan.” What does this mean? Where is this distributed to? And what are the consequences for this happening? Do I even have a choice to rollover my savings?
I have just under $5k in my 401k, but I am leaving soon to attend grad school. What should I do with the money?
If you do not rollover these monies into an IRA account, you will pay an early withdrawal penalty since you’re under 59 1/2 plus income taxes. This could total $1,500 or more. Therefore, you should roll it over! It can’t be rolled over into a regular savings account but here’s an article that you will find helpful: https://www.nerdwallet.com/blog/investing/the-best-ira-account-providers/?utm_source=goog&utm_medium=cpc&utm_campaign=in_mktg_paid_032816_alpha&utm_term=best%20ira%20accounts&utm_content=ta&mktg_hline=445&mktg_body=206&mktg_place=5&gclid=CjwKEAjw1Iq6BRDY_tK-9OjdmBESJABlzoY7ZGFXK2iQyhAxOB8KP-U_mEtiYs266KvaxjJ0KCUGGxoChYfw_wcB It also includes a brief snapshot of the various IRA companies. I hope that this helps!
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