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Home > Well, that was scary!

Well, that was scary!

February 23rd, 2022 at 05:02 pm

In my first post, I shared that I just started with a new company, making 35K more (base salary only) a year. With my sign-on bonus, I am paying off our 2017 Toyota Tundra, which only has 45,000 miles on it, and we owe $10,541. Waiting for that money to be desposited any day now. That monthly payment will free up some cash, to the tune of $625. Just in time for student loan payments to start back up - interest only right now is $620 a month (that's for another post, on another day).

When I took this job, I swore I would use the extra money to pay down debt and to save. Being my usual self, I got scared and only selected 5% contribution to my 401K. Even though the company matches up to 6%. Dumb. I don't know what it is - I just like more cash in my checking account, I guess?

So, yesterday, I got real brave and changed my contribution to 10%. Mind you, I've received two paychecks so far, and neither of them had benefits or pretax items deducted yet. I won't know what my real paycheck is until March 4. I think (don't quote me) that means I'll have $654 a paycheck now going into my retirement account. After taxes, my husband and I both put $200 a paycheck into our credit union savings. I'll have to delve into savings more another time.

Since I did such a good thing, I called my husband up and told him he needs to change his contriibution to 10% asap. He told me it is already at 10%. LOL. 

Finally, when I logged into my accounts this morning, I saw that my old bank (job), made a deposit into my 401K. So, I am up about another 6K. Now... I need to make some decisions about what to do with it -- do I roll it into my new 401k? Can you have two 401Ks? Or do I leave it as is? Or do I put it into an IRA. So many questions!

Posted in Investing, Personal Finance, Retirement, Saving Money | 5 Comments »

5 Responses to “Well, that was scary!”

  1. LivingAlmostLarge Says:
    February 23rd, 2022 at 07:15 pm 1645643705
    1645643705

    Roll it into your new 401k. Do not cash it out. You might be tempted to do something else and you will pay penalties and taxes otherwise.

  2. crazyliblady Says:
    February 23rd, 2022 at 08:18 pm 1645647513
    1645647513

    Definitely don't cash it out. I would start by contacting someone at the retirement company and ask for a session with a financial planner. These sessions are free with my company, but I don't know about all of them. Ask if it is possible to roll over your old account into the new one, or a different kind of account. Find out what the options are and go from there. Congrats on the new job, nice sign on bonus, and paying off the car!

  3. Lots of ideas Says:
    February 24th, 2022 at 12:24 am 1645662285
    1645662285

    You do not need to move your 401k. You will not be charged fees for leaving it.

    I would leave it in place until you have a chance to evaluate both plans. What funds are you invested in
    Are those the best options? Which funds have the best options? All 401k plans are not equal and you need time to make a good decision.

    You also have the option of converting your old 401k to an IRA, and that might involve fees. However, you would be able to invest in whatever you want to, or to choose an investment advisor to do that for you.

  4. Dido Says:
    February 24th, 2022 at 01:39 am 1645666791
    1645666791

    There are not usually fees to convert an old 401k to an IRA. And there are typically some fees that are involved in leaving it in the 401k. But it's a case-by-case question. If the old 401k has a lot of good investment choices and low fees, you might be better off leaving it there for the moment, but it is more typical to find that 401ks have very limited investment choices and you might be better off doing a tax-free direct rollover to an IRA. Just make sure that if you do that, you do it directly so that the money goes from your 401k custodian directly to the IRA custodian. If there is any check involved, it should NOT be a check in *your* name but a check made out to the custodian FOR YOUR BENEFIT (typically, FBO John Doe, meaning For Benefit Of John Doe). If you get a check that is made out in YOUR name then you have 60 days to deposit it and you should not get another such check (i.s., do another rollover) for 365 days (not one year but 365 calendar days) otherwise you could make tax-deferred money taxable. Not likely but I've known people who have gotten caught by these booby traps in the tax code and paid a lot more tax a lot earlier than need be.

  5. rob62521 Says:
    February 25th, 2022 at 08:28 pm 1645820920
    1645820920

    Glad you increased your take out...you'll be so pleased come retirement time!

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