401k

[Abla_h]

Hey guys, no one has answered my question of driving U-haul from US to Canada.
What can someone do with his/her 401K,403 (b) plans?
As for Credit cards, as long somebody keeps paying the minimum payment by due date, you won't have problems.I saw,on the news, guys who moved to Brazil and yet credit cards companies were going after them and offering them credit cards in some cases increasing their limits.

[Leon]

What was the question about driving a U-haul to Canada?  Since they have branches in Canada too, I think it should be fine but you have to check with U-haul.

You have to crunch the numbers and decide if it's a good idea to leave your 401 or cash it in and invest the money somewhere else.

You can default on your credit cards and for the most part they will just call you and try to make you pay.  If they think you have any money they might try to go after you but since most people who don't pay their credit cards don't have any money, there is not much point.  I have a coworker who defaulted on a Sears card and they told him he could never have a Sears card again.  He never paid the debt.  A few years later, he has a Sears card again.

[todiefor]

some companies won't allow to withdraw the employees 401K contribution until they resign from the company. the best way is to make a hardship loan out of your 401K if you really need to withdraw. any 401K withdrawal is always subject to tax and penalty specially if it's not reach the retirement age.

[NewYorker]

How to get a loan against it? Do I have to go to any bank, in my company you must quit to get the 401K and then face the penalties. I cannot quit right now because I have no PR card in my hands - so the best way is to take the loan against it which I don't know how.

Thanks,

[todiefor]

you will apply the loan from your company. do you know who manage your 401K investments?

[CV User]

Roll it over to the next company you work for that offers 401k.

[CV User]

401k should be your last resort to cash it, not only you get a 10% penalty, you also pay taxes on top of this which is pretty much destroy a large portion of your nest egg in that 401k.

You can live in any country and still earn money through 401K. You should have no problem withdrawing it anywhere in the world.

[Leon]

I have never heard of a Canadian company offering 401k, not even sure what it is except some kind of pension money.  Some companies offer some kind of pension plan though.  If the company is paying for a part of your pension, they might have some kind of criteria that you can't take it out while you still work there.

You have a certain amount of money here, I think it's 18%, maybe up to some limit, that you can put into RSP's (retirement savings plan) without paying taxes on it but if you choose to withdraw it, you will have to pay the taxes you would have paid if you hadn't put it in there.  It's up to you how much you put in or if you do at all.  Most banks offer some RSP accounts.

[olusolalekan]

You may be better off leaving the money there. Even credit card companies can not touch it. It's the law.

If you must take the money, then use it to buy a real estate. One of the exceptions to the 10% penalty is that they allow you to use it to buy a house (primary home). You can take the money money out in form of a real estate loan (exemoted from penalty). Then you can buy cheap properties right now that the housing market is really down. When you finally resign, you will only pay regular taxes on the 401K money. YOU CAN NEVER AVOID the regular tax but you can avoid the penalty. If you do it towards Nov/Dec, you will just account for it in your tax filing for the year.

Of course you can then sell the house or rent it out.

You are also allowed to roll the money into an IRA, Individual Retirement Account, which is the same thing as your 401K. No penalty if you do it as soon as you resign (45 days or something like that). That way you have your money out of your company plan and you can strategize how to get your money out of the IRA later.

olu

[NewYorker]

Thanks for your reply, IRA seems better, No One can touch that either right?? I mean any creditor??

[olusolalekan]

Yes. Unless you are retiring.

[CV User]

Let it grow till you turn 59 1/2. You do have the option to turn into a IRA. I like the Roth IRA (Grows Tax Free) and you can withdraw it after 5 years from opening the account without taxes or penalty.

[CV User]

Who is going to wait that long, I need the money in Canada if I ever migrate. I rather to pay tax and get my money instead it is confiscated.

Its meant for retirement. If you really need the money just to get the PR card then you just need to show the statement. I mean you are going to be working when you migrate right. Withdrawing froim 401k should be your last resort. You won't lose this money in any circumstances unless the value of the stocks go down.

[cchabert]

CV user if you move to Canada for good you still can have your 401K? if you can when you withdraw the money it may have a tax because is another country?

[todiefor]

if you are staying/working for good in Canada and have no more plan to return in the US, i would suggest to withdraw your money. you will get a 10% penalty for early withdrawal plus the amount you withdraw will be part of your taxable income.

anyway, you can reinvest your money in Canada when you settle. you lose for now, but will gain in the future when properly invested your money.