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Question about my 401k
I mentioned in a previous post that I got a new job. They have a 401k plan that I can contribute to immediately. The plan is to contribute 3% of my before tax pay and the company will start to match after a year. Gradually I plan to be able to increase contributions as debt is paid off and my efund and other savings are adequately funded (with plans to continue to grow them of course).
My question is about the 401k I have my ex employer. It has about $1100 in it since I was only with the company for a year and a half and was not able to contribute much due to the lower pay. Should I roll this over or would it be a good idea to get a lump sum and put it toward my credit card, which would then be paid off after another month? I know they will tax it heavily and slap it with some fees so I would get the full $1100. If it helps the company automatically gives you a lump sum if the balance is less than $1000. I know it's not generally a good idea to screw with retirement accounts but it was something I was curious about since its not a huge amount.
Re: Question about my 401k
I would roll the old 401(k) into an IRA.
Don't take it out to pay the debt. The taxes and fees aren't worth it. While $1,100 isn't much, the penalties for using it for a non-retirement issue would decimate what you do have saved already and then you'd lose that base amount for future interest to compound on top of.
Find a rollover IRA at a financial institution you like. Many MMers here like Vanguard - a company known for having little to no fees and many of their accounts only require $1k to open.
If you contact the customer service they can easily set you up with a rollover IRA.