I've recently had to leave my job of 15 years and apply for LTD.

I have been contributing to my 401K for years and need to roll it over into an IRA. If I just close out my 401K I will take a huge hit on penalties for early withdrawl. I was told by Fidelity that an IRA was my best bet because I can put the money into a money market account and have access to it while still keeping it safe in a conservative account. And no penalties for withdrawl - I will have to pay taxes on anything I take out, though.

My question is - can I qualify for LTD and subsequently SSDI if I have this money? Should I just withdraw all of it and put it in my regular checking account? I just plan on leaving it there for emergency use if I need it.

I've never been good at making financial decisions by myself - and this time is no different. Since I now need every penny I can get my hands on I don't want to do something stupid and lose any of it.

There's a lot of smart people on this board - I need your help!

I do not know the rules about SSDI and present income, but I do know with certainty that if you access you 401k before the age limit has been surpassed, you will be nailed heavily.

For example, if you wanted $20,000 after the penalty and taxes, you would only be able to realize $13,000. That is an instant loss of $7,000.

Financial advisors are usually not as smart as they act, and so there are very few of them that can help you without making a huge mistake.

Before you do anything with your 401k, read Ed Slott's books as they are the best I have ever read about the subject:

The author will show you how to CYA.

-Vic

You'll be okay if it is Social Security Disability income and it is, right? Your assets are only considered if you are eligible for Supplemental Security Income (SSI).

You can have a gazillion dollars in the bank, three mansions, and 4 jaguars in your driveway.

If you have paid into Social Security all these years, and you file for Social Security Disability, the only thing the social security people care about is
"are you disabled?"

If they find you disabled, you get a fixed income every month and after 2 years, you are eligible for medicare.

That's how it works.

Usually, when people file for Social Security Disability, they are turned down the first two times. They they have to go for reconsideration, hearings, in front of a judge, blah blah blah.

It does happen that you get approved on the first time. It happened to Alan. But usually, you have to do the waiting game.

Then, when you are approved, the money is retroactive from when you applied for it.

So don't worry about your money. It's safe.

Thanks for the reassuring words. It's not a lot of money but it's mine and it's all I have to fall back on. Never thought I'd be in this situation but it'll all work out OK. I just have to be smart and careful with what I have.

Thanks, ya'll.

You might go to a couple of the larger banks and talk with the financial people- to make sure you are getting the best placement for your money.

take notes, brochures , etc and compare before choosing.

plus after you get some input /ideas you can research the suggestions online...

Morning Kelly,
I forget your age Kelly, but when you reach retirement age, you should be able to start taking money from the IRA (If you roll it) at that time with no penalty.

The penalties are pretty bad when you take it out early. I think its something like 15% tax with a 10% penalty. HOWEVER, I did this last year when I was not working and because I had lots of deductions to take, the hit was not that bad. (I ended up getting $500 back this year, but took out $7500 from my account)

Another thought for you is this. Do you own your home? If you rolled your IRA and forgot about it, then your home would be the way to go to get extra cash should you need it. They (Mortgage Co) litterally give you access to thousands of dollars should you need it. Yes you have to make payments, but it is an option.

Keeping an IRA until you retire could prove to be a very good thing. That said, it could also be detrimental if you do not get into safe stocks. Just the past year many have seen their IRA's destroyed by the market. It's a fine line to walk when you invest.

You may want to read the book by "Suze Orem" (SOMETHING LIKE THAT) I think what she would tell you to do is to take that money and pay off your house, or close to it.....so you no longer have to make those payments. Then, you have ALL the equity for the home and can do what I described above.

It's a hard decision to make. Don't be in any hurry. Let the 401(k) sit there until you are SURE what you want to do. Look at all your options!!!

Hope I helped a little bit...
J

Thanks, GJ. I'm 47 so not real close to retirement age. I don't own my home - I actually lost it last year when I wasn't able to keep up with the new adjustable rate payment. I lease now and like it much better - I know I don't have the benefits of being able to borrow against it but just being out from under that ton a debt is a great stress reducer.

Fidelity advised me to roll over the 401K into an IRA Money Market account. That way I will have access to the money should I need it and not have to pay a penalty. I will have to pay taxes on anything I take out, though.

Thanks for the helpful advice! Hey, how's your new job going?

I like the money market idea...its safe, accessable and it grows at a reasonable rate. I wonder sometimes if getting out from a home loan would make life less stressful

Job is going well...real slow right now, but as soon as the season starts (construction) it will be crazy, so they tell me. I'm pretty jazzed about getting insurance for a seasonal job (to Oct), and I like the idea of knowing the job ends so I can go full-time in school next winter. The con to it though is that I'll be working 6 days a week, 11 hours a day soon. I'll miss most of summer But I do have to bank some cash. Once I finish school things will be so much better. I figure I have at least a year before I can finish the program.

Have you heard from Joelle? If you talk to her tell her she's always in my thoughts.

One option is to just leave it where it is - you are allowed to do that since you've been contributing for awhile. The law says you may leave it there. In addition, now is probably not the best time to pull anything out. I just looked at my quarterly 401k statement and I lost over 10K in just 3 months. If you can let it sit awhile, it will recover.

Please don't make any sudden moves with this money - it can really cost you in the end. The penalties are huge if you withdraw before retirement age. Your best bet is not to touch this at all until you reach retirement. Forget you have it and leave it alone. You will lose an automatic 30% if you have to use it before you reach retirement (penalty plus taxes). I had to do it once and I was very sorry to have lost so much.

Short term might say that you want to have this money available - but long term....you don't want to be eating cat food when you're 60 years old.

This money has no effect whatsoever on disability. Disability is only based on if you can work or not - not how much money you have in the bank. Whatever you do, please don't withdraw it and put it in your checking account. If you do roll it into a fidelity account, and you want it to make any money, don't use a money market. A money market is fairly safe, but it won't even keep up with inflation. If you are prepared for some volatility then a mutual fund is a good bet. I like Vanguard - their fees are always low which is very important to me in the long run.

I may be preaching, but investing is very important to me. I've done it since my very first job and DH and I intend to retire at around age 50. Whatever you can do to let that money sit and grow for the next 30 years will really pay off in the end.