Expert: Allen - 12/10/2008

Question
Good morning,

I have a question's about 401k. I had a 401k with my last company which as of September of this year I don't work there anymore. First question should I keep that money in that 401k plan even though I don't work there anymore or should I roll-it over. Secondly I started working with another company who does not offer 401k, if I rollover my old one to an IRA or something else can I continue to add to that on my own. What are my options.

Thanks in advance for your response.

Answer
Regarding your first question - The answer depends on where you will get a better investment return. If you like the options offered by the 401k, you should keep the money in the 401k plan. On the other hand, if you feel you can do better investing through an IRA offered by a financial institution, you should roll the money over to the IRA.

Regarding your second question - Since you participated in a 401k plan in 2008, under most circumstances you can not make a tax deductible contribution to an IRA. You may be able to contribute to a non deductible IRA.
If you do not enter a new 401k in 2009, you will be able to make a tax deductible contribution to an IRA for 2009. The ability to contribute to a tax deductible IRA depends on whether or not you participate in a plan offered by your employer. It is not affected by what you do with the money in your old 401k.