Hi everyone,

I could use some advice as far as my retirement plan is concerned. I recently changed jobs, and my new job has no retirement plan (ugh). My old job (which I will call Job A) is making me remove my 401(k) balance before the end of July, or they'll have a check written out to me and I'll have to pay taxes on it. I also have approximately $29,000 resting in a 401(k) account from a previous job (Job B), which I never rolled into the 401(k) at Job A. To recap:

I have roughly $2,000 in Job A account.
I have roughly $29,000 in Job B account.

I don't know what to do.

If I set up a Roth IRA, I'm going to have to pay taxes on that $31k as income, right? I don't think I could afford to do that.
If I set up a regular IRA, I'm going to lose the tax benefits of a 401(k).
I could just leave the $29,000 from Job B in that account and roll the $2,000 from Job B into a Roth IRA, too. I could handle the taxes on $2,000 much easier than I can handle $31,000 in additional income.
Can I roll both accounts into an IRA and then, whenever I have a job with a 401(k) again, roll the IRA funds into the 401(k)? I doubt it but I thought I would ask.

I feel so overwhelmed, and angry because my new job doesn't have a retirement plan (but it was a $20k raise which I badly needed, so...). I am completely lost. I'm 29, so I'm somewhat early in the game of retirement planning, but I don't want to make a huge mistake with this much money. Any advice? I am embarrassingly anxious about this whole mess.

Correct. Though, you could stagger your conversion over a few years to take the bite out of it.



Not sure what you mean by this. A traditional IRA has virtually the same tax benefits as a 401k and has some bennies the 401k doesn't have.



This is an option, though realistically it's almost always better to get your money out of a 401k and into an IRA ASAP so I wouldn't recommend it.



Yes, you can do that but again, probably not the best idea.



My suggestion would be to roll both of your old 401ks into a rollover IRA at Vanguard or another low-fee/no-load brokerage like Fidelity or T. Rowe Price. The advantage of this instead of keeping it in a 401k is that you get full control over your money and where you can invest it. When you are investing in a 401k you are limited to the company fund selection which can be less than stellar. For this same reason I would not roll this IRA to a 401k if/when in the future that becomes an option.

In the mean time, since you are lacking a 401k it is important that you continue saving for retirement. I would open a Roth IRA ASAP and get on track with contributions to get it maxed out. Also, if you can afford it, I'd start investing in a taxable account. You don't want to get behind just because you don't have a 401k. Especially since you have a nice fat raise to invest with now.

I would also recommend reading the following books so you can learn some basics: The Automatic Millionaire and Investing for Dummies. They're both easy reads and will give you a good base of knowledge. And, of course, keep asking questions.

Good luck!

Yes, for the vast majority of people this is the best option. If Company A cuts you a check for your 401k balance, you still have 60 days to deposit it into a qualified account before being penalized and taxed. Setting up an IRA will take less than an hour and funding it by rolling-over 401k funds will likely take less than a week. Do both 401k accounts.

Yes, just keep in mind that if they cut you a check it will be minus about 20% and if you don't deposit the entire original amount you'll have to pay taxes and penalties on that amount at the end of the year. It's always best to do a direct rollover if you can. Much less chance of a mistake happening.