Expert: Allen - 3/30/2005

Question
Hello. I'm new to this site, but it seems extremely informative!
My husband will be leaving a company that he has worked for for 20 years. We will be moving out of state and finding new jobs. He has a 401K/Profit sharing account with this company. What do we do with it when he leaves? Do we roll it over into an IRA or something? Will we be taxed or penalized when he leaves? Any info or opinion would be greatly appreciated.
Thank you in advance,
Joan

Answer
You have several options:
1. You can leave the money in the plan and it will be invested based on your husband's elections.
2. You can move it into an IRA. You can set up the IRA at most financial institutions - mutual fund company, stock broker, etc.
3. If his new employer has a 401k plan, you can roll the money into the new plan.
4. You can take it in cash. Generally this is not a good idea since you will pay income tax plus a 10% penalty tax on the distribution You will also lose the advantage of tax deferred saving.