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What To Do With Cash Balance Plan?

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  • What To Do With Cash Balance Plan?

    Hi all,

    My wife has just over $6,000 in an old job's Cash Balance Plan.

    What should I do with this money.....? We are in our early 30's, seems weird to just leave it there for the next 30+ years.

    Our income is >$400k/year if that limits some of the options on what we can convert it to/do with it/tax implications.

     

    Thanks!

  • #2
    Yes, if you leave the company before retirement age, you may take the contents of your cash-balance plan as a lump sum and roll it into an IRA.

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    • #3
      I would ask what the interest crediting rate is. This is the annual interest that gets added to the cash balance each year. So no more contributions are being made by your wife but the account will continue to grow. Some plans have very generous minimum crediting rates, but many can have quite low rates like 1 year treasury. That could influence your decision.

      If you're getting a good guaranteed minimum rate then you might choose to leave it there.

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      • #4
        You can roll it over directly (no tax/penalty hit) into an IRA at eg Vanguard etc. Keep it separate or not- think it can be rolled into her current nonwork IRA.

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