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GoodbyeTobyseeya1 t1_jacg70m wrote

Open an IRA if you don't have one, call your 401k administrator once you've quit and tell them you want to roll it into the IRA. Once it's in there, make sure you invest it, otherwise it's just sitting as cash and getting no interest. Look at the prime directive as to how you may want to invest but typically index funds are safest.

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lucky_ducker t1_jacr5ke wrote

Don't use the phrase "roll it." That could trigger an indirect rollover where the sponsor cuts a check, withholds 20% for taxes, and starts a 60-day countdown for the ex-employee to deposit the check plus the missing 20% into an IRA, which is exactly what OP is trying to avoid.

OP doesn't need to talk to 401(k) sponsor at all. OP needs to open the appropriate type of IRA, and give the 401(k) account details to the IRA sponsor to initiate a direct transfer.

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throwaway18000081 t1_jacpsrp wrote

> Once it’s in there, make sure you invest it, otherwise it’s just sitting as cash and getting no interest.

The settlement account that your money just sits in earns interest. Right now, those accounts are earning ~2-4.5% interest.

Vanguard: https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx

Fidelity: https://www.fidelity.com/mutual-funds/fidelity-funds/money-market-funds-fcash

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GoodbyeTobyseeya1 t1_jacs991 wrote

That's more than I'd have thought. When I quit my job in 2013 I just let the money sit there for 5 years until I learned more about investing and realized I'd lost a ton of money by having it gain a couple dollars a month.

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throwaway18000081 t1_jacskth wrote

You are correct in your statement to invest the money, it is just that interest rates are quite high at the moment and expected to go higher.

Why invest into a risky market right now when the guaranteed account is giving 4.5%!?

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jongleurse t1_jad08uc wrote

Because nobody knows whether the market will actually go down or up. Staying out of the market right now because it's risky is saying that you believe you know what direction the market will go. On the contrary, the research indicates that time in the market beats timing the market.

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