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Question

Asked 12/31/2006

if i become self employed can i still contribute to my currrent employers 401k plan?

I have a 401k with my current employer and i'm thinking of retiring and become self employed

 
 
 
 
 
 
Answers

Answer 1/5 - Submitted 12/31/2006

I do not believe so. In fact it will not be doing anything once you leave your employer. You will have to "rollover" the money into a IRA. This keeps you from paying taxes and the money continues to make money.

Whatever you do. DO NOT CASH OUT YOUR 401(k)!

You will be penalties plus taxes.

 
 

Answer 2/5 - Submitted 12/31/2006

Yes, that is YOUR 401k not theirs, but they will obviously not match your contribution.

 
 

Answer 3/5 - Submitted 12/31/2006

Generally speaking, once you leave the employ of the company who sponsors your 401(k) plan, you are no longer entitled to contribute to it, or to borrow against it.

There are a ton of self retirement savings plans that you can contribute to. Take some time, do some cost/benefit comparisons and roll your current 401 into a new plan, and then contribute to it.

 
 

Answer 4/5 - Submitted 12/31/2006

No you can't, but what you can do is go to a local brokerage and open an account in "street name" (eg. Billy-Bob's Big Brokerage'n'Bank FBO Mr.Sensitive) and do a direct rollover into that account from the 401(k). That way you never have the money in your direct possession and you won't have to pay taxes & penalties. If you start a business, you may be permitted to make additional "tax-deferred" contributions, though there are some restrictions on "intermingling funds"...

Your other option is to leave it where it is, though you won't be able to make any more contributions to that specific account.

 
 

Answer 5/5 - Submitted 12/31/2006

You can roll it into an IRA and make contributions. However, if you own a business there are even better options for retirement savings. You can shelter a lot more money. If you do start a business I'd open such an account. Talk to an accountant or CFP about it.

 
 
 
 

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