I had a question from a student who was leaving his current job and moving to a new job as to what he should (or could) do with his 401k.  The benefits of having your retirement money inside an IRA (or RSP for canadians) is amazing as opposed to 401k type plans.  An IRA will give you almost unlimited investment choices, allowing you to completely control your retirement investments.  A 401k will only offer a handful of choices that will be mostly made up of mutual funds and bond funds, prohibiting you from making any other investment choices.

So, for anyone who is in this situation, he are the 4 things you can do:

1. Move your old 401K to your new 401K- I don’t like this as you are simply moving from one crappy plan to another

2. Leave it where it is- again, no control of investments

3. Open a rollover IRA and transfer your 401K into the rollover IRA- Your new broker will help you facilitate this.

       a. You need to decide whether you want to move over all the positions to your new IRA or sell them and just move over cash.  If you intend to sell all the positions when you roll this over, sell inside your 401K where there are no commissions.

4. Rollover into a Roth IRA

       a. you will have to pay a tax bill this year on all the gains in the account.  This is best done when there are no gains to be taxed or in a year you have low income.

Hopefully this helps,

Robb

The market had a nasty day yesterday.  We have seen -4% down moves before; but, this one had some real negative underlying issues. 

1. the move came with some fairly decent volume.  

2. the advance/decline (stocks up/stocks down) was 1 to 9 (9 out of 10 stocks closed lower) and the $trin (volume of up stocks/down stocks) was very negative, showing the selling was heavy on the down stocks.  

3. commodities as a whole had terrible losses with oil down close to 9%. 

4. Gold had its first solid up day in about a month

5. Bank of America says more losses coming and JP Morgan states it will need more help from the government.

The measure of a bull market is the ability to recover after days like this.  If we can manage a positive close today, we may see a continuation of the rally.  If not, I think we have seen the top.