401k money

[sargam]

.....

[Murali]

401 is a Retirement plan, you can take money only after age 59.5 yrs of your age. If you early withdraw you will be paying an early withdraw penalty(around 3%) + tax.
read more here
http://www.path2usa.com/money/tax_related/401_primer.htm

[cncd1]

When you leave your employer, you may roll it over into an IRA at a financial institution of your choice. As Murali says, you cannot take it out before 59.5 without paying a penalty which is 10% plus the income taxes at the time it is withdrawn. The money placed into the 401K was tax defered for the reason of retirement thus the tax is collected later.

I suspect you can find a financial institution with offices in both the US and India that offers rollover IRAs.

I did this (rollover 401K into IRA) even though I was not leaving the US. Often the maintenence charges on your account once you leave the employer are extremely high. Be sure you keep beneficiaries and addresses current with whomever holds your account.

[cncd1]

The way I proceeded was to determine the institution that I wanted to receive the funds for my rollover IRA and use their forms - generally available on their website - and submit it to the receiving institution. They arrange the transfer. This has several advantages; one is that with a direct institutional transfer, the sending institution does not have to withhold the penalty and taxes. You would then need to prove the rollover to recover the funds.

Remember that your companies contribution may not be totally "vested" if you have not worked they a specific length of time. This should be noted on your quarterly statements. All of the money you contributed (or the resulting gains or losses) is yours 100%.

Your best source of information is the receiving institution - not your employer. Search their website for the term "rollover IRA". If you have other investments in the US that you plan to keep, that is a logical choice because you have established that relationship already.

If you don't have other investments, some institutions that can manage your IRA investment are banks, credit unions, brokerage houses. Your choice should be governed by how involved you want to be in managing your IRA and how much risk you are willing to tolerate. Any of these will have advisors on their staff to assist you. They want your $$$! Each institution has its benefits; I use both a mutual fund/brokerage house and a credit union for my IRAs. If you have funds from different employers or an individual IRA, it is wise not to comingle them. Ask the advisor the reasons for not doing so if this applies to you.

Don't be alarmed by large buy in values for some mutual funds; IRAs generally allow smaller minimums so you need to tell the advisor specifically that it would be an IRA account.

Choose wisely as moving the account - especially with you being outside the US - will be a problem since sometimes documents need to be notorized, etc.

Now that I have written IRA 101, do you have any questions?

[cncd1]

Since you posted no questions, I assume you are off to your financial institution to speak to one of their representatives who can assist you with your task.