Accounting, Payroll & Pension Issues/401b

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Expert: - 8/3/2010


Question
My wife is a school teacher and couple years ago the school system stop contributing to 401b. She has about 5000 +/- in an account. Should we roll that over into an IRA or should we withdrawl and invest in something else? If we withdrawl will we be penalized?

Answer
You will not be penalized for rolling it over into an IRA but if you draw it out you will be charged taxes and an early withdrawal penalty. I would not draw it out at all but if you wish to roll it over into an IRA that is easy to do as long as your wife is fully vested in the system. You also have the option to keep it where it is. Just because the school no longer contributes the matching does not mean that your wife can still not contribute. Also they may contribute again once the economy turns around a bit.

Shirley

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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