Comments on: What do I do with an old 401(k)? [Financial Fridays]

By: JAlpino

JAlpino — Fri, 25 Apr 2008 14:47:03 +0000

@J.J- yeah I was really surprised when I found that out… unfortunately however, I don’t have the luxury of contributing that much =) but its nice to know if I ever did, that I could ramp up.

By: J.J. Merrick

J.J. Merrick — Fri, 25 Apr 2008 14:42:22 +0000

@JALpino That is one aspect I didn’t think about. The Roth is up to $5000 for 2008 and will increase $500 a year for the foreseeable future.

Wow I didn’t know that you could put up to 45k in one… that is really good.

By: JAlpino

JAlpino — Fri, 25 Apr 2008 14:30:25 +0000

I set up a SEP-IRA a little over a year ago with Vanguard, and I have to say that it was super easy to do, and even easier to contribute to once set up.

One thing that I think is also worth mentioning about, is the contribution levels that a SEP-IRA, Trad IRA and Roth IRA have.

Roths and Traditional IRA’s limit you to about $4500 (I think) a year. Where as with a SEP-IRA, you can contribute up to 25% of your income or up to $45k, which ever is the lesser of the two.

By: J.J. Merrick

J.J. Merrick — Fri, 25 Apr 2008 13:26:51 +0000

@Andy Exactly. 401(k)’s are just too limiting but when my company offers match up to 4% of your salary and it is 100% vested immediately you can’t beat that! It’s like an automatic 4% raise.

By: Andy Matthews

Andy Matthews — Fri, 25 Apr 2008 13:23:06 +0000

My financial advisor recommended that I have two 401k accounts. One is the “active” one which has money contributed to from my current employer, and myself. The other is the “inactive” one which is technically my main 401k.

While I’m working at a company who offers 401k matching I (and they) will contribute to the active one. When I switch jobs, I’ll roll over “active” account over into the “inactive” one and start a new 401k at the new job.

The key here is matching funds from your employer. If they don’t offer matching funds then don’t even bother setting up an account with that company as there are better, more efficient, ways to invest.