Money in retirement funds

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My husband has a sizeable (to us) retirement which we cannot touch unless he's retired (of course) or he quits and then waits one year. It has all those rules of conversion and tax penalty common to a retirement fund. With the ruling I read from the FDIC that paper records are not legal proof of money in your account, I am naturally concerned about this fund. Are there any existing protections for the consumer in this type of problem. The company my husband works for cannot take the money if they go bankrupt, but what about the the institution that holds it? Is this the type of company that is suspected to have the real problem come Y2K? Is there anything we can do now? When we started to really think about this whole thing the year deadline had passed to get it done by Y2K and we also were reluctant to have my husband quit his job so late in the game. Any suggesstions? Thanks Jan phytorx@lanset.com

-- Jan (phytorx@lanset.com), July 29, 1999

Answers

No idea about your particular situation. I have a 401k from a company which I left some years ago. When I called the administrators about cashing out half of it they said my only option was to close the entire acct and pay the IRS penalty. I said, "ok, send me the forms." He cleared his throat and told me I did have the option of rolling it over into an IRA and withdrawing the half from there. I don't know whether this will apply in your case or not. He only told me about the rollover option *after* I said, "ok, I'll close it out, send the forms."

-- mommacares (spamproblems@earthlink.net), July 29, 1999.

Jan,

First, don't do anything rash, which I define as something that will cause you more problems than y2k itself might. Second, get _all_ of whatever documentation there is on your husband's retirement program from the company ASAP- the details should be in the paperwork if you have any options. Check with the payroll office, or personnel, or whoever handles those things for copies and don't take "I dunno" for an answer (be polite but insistent). Some programs allow loans against the retirement account, for example- maybe his does? You won't know until you check, and the rules are different for different programs (is his an IRA, by any chance? If so you may have more 'wiggle room.'). Start digging! And if his retirement is well and truly 'fenced' away from the company's clutches, consider yourselves lucky. A lot of them aren't, and I have a feeling that the next year or so may bring some unpleasant surprises for a lot of unsuspecting folks when their retirement accounts disappear into y2k-caused business bankruptcies.

Good luck,

-- Lee (lplapin@hotmail.com), July 29, 1999.


Take your money and run, regardless of any penalties. It is better to have something, than nothing at all! DO NOT PROCRASTINATE!

The Stock Market is going to crash this fall for sure! If you don't pull your money out, you will ride the market all the way down and end up with NOTHING!!!!

-- freddie (freddie@thefreeloader.com), July 30, 1999.


Jan,

I agree totally. Take it out. My wife and I cashed in all our IRA's, etc. and took the penalty. Based on our research, there is absolutely no guarantee that your money will be safe in any organization.

Merril Lynch just sent out legal notices to this fact telling clients that they had no responsibility with any kind of Y2K problem. This expanding economic bubble is about to burst even before the magic day appears.

Do not let greed or a false sense of security lull you into believing nothing is going to happen.

Anyone who keeps large amounts of money in digital form is playing Russian rulette with three bullets in the chamber.

The money you'll lose in penalty payments is like a premium you pay for "Y2K Insurance". Also you'll be able to sleep at nights knowing your money is safe (what you do with all that cash is worthy of a thread all its own) and that you had the guts to make a very tough decision. In a country (world) full of sheep, the few who make these kinds of decisions based on exhaustive research of Y2K are the ones who have taken their destiny in their own hands.

Y2K is an event that will (No offense at the tense) separate the "men from the boys". It's time to "fish or cut bait".

There is more than enough evidence available to convince any intelligent person to realize "things aren't always what they seem". All you have to do is "connect the dots" and common sense says we are headed for major worldwide problems in the years ahead.

Good luck with your decision.

PS-

Don't be like a friend of mine who says "well, if we all take our money out of bank- we'll create the problem".

The last time I looked we weren't all holding hands singing "we are the world". "Let's all keep our money in..."

The problem is going to happen no matter what anyone does.

If you think you'll feel stupid NOW, in front of your family, friends, and colleagues, taking all your money and putting it in safe place... just think of how stupid you'll feel when you realize you didn't do it when you had the chance.

And remember, most previously trusted advisors, such as bankers and stockbrokers, have to hide the real truth from you. (Although most are in such deep denial they can't see over the top of it) You will never find one of these people advising you that your money is unsafe in their institution.

That's why many companies are spending more money on Public Relations programs rather than contingincy planning.

I think historians will look back on this time and wonder how people could be so stupid.

All the "signs" were there. "Couldn't they see it coming?"

Take the money and buy some real security for your family.

Good luck,

Keith.

-- Keith Nealy (keithn@aloha.net), July 31, 1999.


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