I got furloughed in July 2020 and found out that the investment co I had with my 401K had closed the acct and moved it to another invest co.?
Left me with a bunch of charges that cannot be explained since "I have no account with them". Now my questions are should I keep my 401K? Should I cash out my 401K? ($7900) Should I take out a loan against my 401K? Should I try reinvesting the funds? I will be running out of funds soon and not knowing what the elections will hold for the future. Any advice will be appreciated!!
- StephenWeinsteinLv 71 month ago
Do not cash out a 401K. The taxes and penalties are too high. If you don't like the fund company that has the money now, then pick a company you like and trust and put the money into an IRA there. (If you move money from a 401K to an IRA in the right way, then you avoid the tax and penalty.)
- A HunchLv 71 month ago
You need to find out exactly what is going on.
Based on your situation, I don't think what you are saying happened really did happen. The only way the account would be closed is if the entire 401K was cancelled (not for you, for everyone) or you were cashed out because your balance was not enough. I believe the latter is what happened.
I my assumption is right, then you don't have a 401K anymore, you have a money market or savings account. You will owe the 10% penalty for early withdraw. If it's been since July, you can't get out of this now.
If the money is already cashed out and you will have to pay the penalty, then just keep it as an emergency fund for now, since your funds are low.
- EvaLv 71 month ago
You can't take a loan from a 401k account if you are no longer employed by the company that sponsored it. The investment company wouldn't transfer it without directions from you or your employer. If you cash it out, you are subject to a 10% tax penalty plus the income tax EXCEPT if you can document and qualify for one of the COVID exemptions to the penalty. You still have to pay the income tax, but the 10% penalty doesn't apply. You should talk to your former employer about the change in custodians and the charges involved.