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    MNHowell00's Avatar
    MNHowell00 Posts: 1, Reputation: 1
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    #1

    Oct 26, 2008, 05:32 PM
    Going to B School.Do I close 401K?
    Hey there, I am a 29yr old corporate guy.

    I am going to Business School in the Fall of 09... I currently have about 10K in my company 401K... what are my options?
    Should I just close it? And if so apart from the 10% penalty what else do I lose?
    Thanks.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Oct 27, 2008, 06:51 AM

    Your options are:

    A. Do nothing. Most plans allow former employeees to stay in the plan as long as your investment is greater than $5K. This would make sense if you like the investment choices available, or just don't want to have to think about making a change. Be sure to keep your mailing address current.

    B. Roll your account to a rollover IRA. Advantage - more choices in investment options, reduced paperwork if you already have an investment or IRA account. It is advisable to do a direct rollover so as to not incur any penalties or taxes.

    C. Take some or all of the money in an early withdrawal. Major disadvantages: you pay 10% penalty plus income tax on the withdrawal, and lose your retirement investment. You'd be better off figuring out how to get through B school without tapping this fund.
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