Opinions Please: Cashing out small amount in 403b/401k
 

Hi Folks,

I did a search for this but couldn't find anything relevant to my situation, so I'd appreciate some advice.

I'm moving back to the UK in a couple of weeks, after living in the USA for 4 years. I've had 3 jobs in that time and have 2 retirement accounts from those: a 403b with around $2,200 in it and a 401k with $250 in. I'm seriously considering closing the accounts and withdrawing it as they are small amounts and, since I'm no longer with either employer, I'm being charged a monthly fee to maintain each of them.

I'm aware that I'll be taxed on any withdrawal, as well as face a 10% penalty charge, but I guess since it's a relatively small amount I don't have as much to lose as someone who had more funds in the account. I could roll both accounts into a single IRA account but I'm not sure I want the hassle of maintaining it from abroad.

Opinions welcome. If it matters, I'm 26 and plan to train as a teacher once I get back.

Thanks!

Re: Opinions Please: Cashing out small amount in 403b/401k
 

I'd ask both providers how much you'd end up with, and then make your decision. From experience with financial institutions, the fees for withdrawing your $250 could well be $250 ...

Re: Opinions Please: Cashing out small amount in 403b/401k
 

Most 401K programs won't let you keep an amount less than $5k in it for any length of time, because of the administrative fees. You would have to cash it out.

You would lose 10% off the top as a penalty for early withdrawal, and you would pay normal income tax on the rest. If your company was paying a percentage in for you, you will lose the part where you were not vested. Since you have had 3 jobs, you probably weren't vested in any of them, so you would lose all the free part you were given.

Their take on this is, it is a retirement fund, not a piggybank.

Re: Opinions Please: Cashing out small amount in 403b/401k
 

I understand that. I guess I was always kind of flaky when it came to retirement accounts over here as I always planned to go back, lol. I'll certainly be setting up some more robust pension/saving plans once I'm resettled!

Re: Opinions Please: Cashing out small amount in 403b/401k
 

In hindsight, since you were planning to go back, it wasn't a good idea to pay into a 401k. You're young though, so plenty of time to catch up!

Re: Opinions Please: Cashing out small amount in 403b/401k
 

In your situation I'd just cash them in. The amounts are small and paying the 10% penalty is worth avoiding the hassle of having accounts in the US. Take the cash and use it to help with moving expenses etc.