401 k/ profit sharing plan withdraw under the cares act provisions?

[Les Young]

First off i'm not hurting for the money that's in this plan, but what"s the train of thought on this. The plan i'm talking about doesn't have contributions & hasn't really done much for quite some time. By the way i'll be 53 in a few days & have absolutely no clue if or when i'll be called back to work. What would be the best thing to do with this open an ira, put it in cds for around 12 years, Pay the tax & stick in savings with interest rates so low right now & wait for rates to rebound or just leave it alone? We're only talking arond $74,000 before taxes by the way. Thanks

[UWBASS]

If you don’t need the money, I’d leave it in the plan. The 401k is going to be the cheapest option for you and most plans have robust enough options available now that you can switch things up. Even if it has not performed well, you can always reallocate in some way to shake it up and 12 years is plenty long enough of a time frame to justify market exposure even if it is moreso of a balanced portfolio with a healthy contingent of bonds. If your plan options suck and are limited, then might be worth rolling to an IRA to be able to be flexible with the investment choices.

I’m not a big CD fan in our crazy low interest environment- all you’re doing is losing money safely to inflation. I think the worst thing to do would be to cash it out just to cash it out - why pay taxes if you don’t need it? The CAReS act provision does make it more intriguing combined with a low tax rate environment and that your bracket may be lower this year due to not working but this would be my least preference for most people.

[TexomaDan]

I definitely recommend rolling this to your own account that will allow you to control the investments. This will provide for a broader range of investments that should return 5-12% over the next 12 years. Roll over will require you to select a broker and fill out some paperwork, but not too tough. Just make sure that the $ go directly to the broker.

Simpler option might be to change the investments in your current 401 account.

[fishon396]

Good advice above get it out of the company 401k account and roll it over at Fidelity,Vanguard or something similar. With that time frame you should be able to double the money one more time.

[apenland01]

The problem with the withdrawal under CARES is that you have to pay it back within 3 years or pay the taxes on it. You don't have to pay the 10% penalty, but you pay the taxes. If you do a rollover to another IRA, that wouldn't cost anything and would give you more choices. You really should talk to an advisor about a Roth rollover or conversion, which you would pay the taxes now, but withdraw the money in the future tax free. I can only guess with the way congress/fed are spending money, our taxes will be skyrocketing in the future. Likely better to pay taxes now, which are generally low than take a chance on much higher taxes down the road....