401K, IRA, Roth IRA

How to deal with 401k when leaving a job?
Some options:
1) Take it out, with 10% penalty, and potential income tax later on. This is usually not recommended.

2) Rollover to an Rollover IRA; or Rollover to the new employer’s 401k.
I did this once: not because of change of job, but because of change of company ownership, I have opportunity to rollover some of the 401k money into Vanguard Rollover IRA in year 2007. That money didn’t recover to the initial value so far.

3) Leave it alone (until 59 1/2 years old).
I did this when I left my former employer in Oct. 2008 (the middle of financial crisis), it turns out to be a good move (or no-op), as the value recovered from the crisis.

Should I open a traditional IRA or Roth IRA?
Tax deduction: IRS publication here.


Scottrade IRA calculator:
Vanguard IRAs:

But I think the more important of IRA is the “Saving” part: it forces a person to save on a regular basis. “Dollar cost average” or not (it seems more difficult to practice DCA in IRA compared to 401k), we know we are putting money away for retirement if we do that every month.

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