Yikes, it’s been such a while since I’ve posted. It’s been a little hectic, I was running back and forth between the old and new companies, training my replacement at the former, and training with the one I’m replacing at the latter. There was a limited amount of time I had with the one I am replacing, as he is leaving to manage the project from another country, so I had to pack it all in to a week. It definitely wasn’t enough time, but I’ll try to figure it out. It’s good that he will still be available by email though.
Now that I have a few days off, I wanted to look into 401k/ESOP transfer options. My previous employer offered both, so I went ahead and put money into them. I could do any of the either:
1) Leave the 401k with the previous employer. I don’t think I will do this, because their fund selections are terrible and returns have been been really depressing.
2) Cash out. Did you know this was the most popular option in the US? I didn’t know – it seems unwise for the long-term – if the balance is cashed out, approximately 20% will be withheld for tax purposes, and a 10-15% penalty is due for early withdrawl. So essentially, I would be out 30 – 35% immediately.
3) Roll over into the new company’s 401k. With this, there won’t be any taxes or penalties, and it would definitely be easier to manage if it’s all in one place. This is the option I will most likely be choosing. I just received the packet with the new fund options in the mail, so I’ll be spending some time reviewing them.
My question is though, what about the ESOP? I haven’t been able to find any info about this – can I roll over the entire amount into a Roth IRA or the new 401k? One of my colleagues told me that ESOP is a mandatory cashout, but I’m not sure if that’s correct. The previous company requires it to be in for 5 years before considered fully vested. I was only there for 3 years, so am not – how does this work?