DEAR READER: You didn't indicate your age, but I'm guessing it's about 50, so you have some time before you reach 59-1/2. Can you leave the money in the 401(k) with your former employer? You can check with their Human Resources department. Assuming you don't, you need an outside person, broker or bank, etc., to move the product into a self-directed IRA. A very painless process, but the third-party is required. You can choose to hire a fee-based adviser, which means you'll pay them an agreed upon dollar amount and they will make their best recommendations. However, you still will have to have someone else execute these directions because the law does require this third party. There are numerous brokers who can assist you in this matter. They are entitled to a commission, and there's no reason why it shouldn't be paid, plus a small fee. The amounts involved are significant. If it is a very large amount in your 401(k), then a fee-based adviser may be desirable. If it's a relatively modest amount, the cost would be hard to justify.
DEAR BRUCE: I have seven key employees that I give a year-end bonus to. Is there any way to give the money without deducting income and Social Security taxes? -- T.K., via e-mail
DEAR T.K.: No. If you give them the money, then you are required to withhold the appropriate Social Security and income tax. I'm sure your employees appreciate your generosity. You could give the money out of your personal funds that taxes have been paid upon, not company funds, and then this would allow you to give $11,000 to each one of them with no taxes to either of you. This may not be company money, and you may not take any kind of a deduction.