Don't Be a Pushover, Just Roll It Overhttp://www.fool.com/personal-finance/retirement/2008/12/17/dont-be-a-pushover-just-roll-it-over.aspx Alyce Lomax
December 17, 2008
Social Security's not working. Pensions are practically extinct. Now 401(k)s are in jeopardy -- and it's up to us to save our retirement. Our special report shows you how.
One of the biggest blunders workers can make is to cash out their 401(k) stashes when they leave a job. But a recent survey by Hewitt Associates found that a whopping 45% of people do just that. Even worse, nearly 66% of 20-something workers choose to keep the cash when they ditch a gig!
Small sums of money can become large ones over time due to the magic of compounding, so if you cash out now, you're not only paying fees and taxes -- you're seriously endangering your future nest egg, too.
Of course, even beyond the lure of quick cash in hand, "Just cut me a check" might simply sound like the easiest alternative in what can be a difficult and stressful transition between jobs. So let's demystify the process and go over exactly how to roll a 401(k) into an IRA, so you can be ready if the need arises.
A rollover IRA is a pretty nifty option, because not only can you select mutual funds for your holdings, but you can also choose stocks. Imagine buying blue chips like McDonald's (NYSE: MCD ) or Coca-Cola (NYSE: KO )