Retirement Savings?
My mom has about $30K sitting in a retirement account with an old job. What are her options in regards to pulling that money (with penalities) out and making the most out of it within the next 15 years or so?
Public Comments
- If she pulls it out with penalties, she won't be making the most of it. She can leave it where it is, or she can roll it into an IRA. If she rolls it into an IRA (with a company like Vanguard or Fidelity) she can then invest in a mix of stock and bond mutual funds that match her risk/reward tolerance. If she wants the money to grow and help provide for her in her retirement, she definitely needs to leave it in a retirement account. Pulling it out means paying penalties and not allowing it to grow tax free, which would be a big mistake.
- Taking it out will induce a 10% penalty, plus the taxes she'll have to pay. There's a way to avoid that, though -- the IRS rule 72(t) (I advise you research it at www.irs.gov). Basically, she can take a Substantially Equal Periodic Payment over at least a five year period (or until she's 59.5 -- whichever is *longer*) from the retirement account. She still has to pay taxes, of course, but there's no penalty. And she won't be able to empty the account -- it just draws it down some; if she's 50 and wants to take payments for 10 years, it'd probably only amount less than $1000 per year over those ten years. Good luck, Doug
