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AARP Live: Questions About Annuities

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[On the phone, Paula calling from Texas] First of all, I wanted to make a comment, something that I learned way back from my grandparents. They always told me to pay yourself first, so they said if you can save as much as you tithe at church, like 10% of your earnings, that's a great start. So, I've always tried to follow my grandparents' advice and pay myself first— [female onscreen] That's great! —>>[Paula] and the question I had actually was I have a 401K and a couple years ago I had to take out a financial hardship, so I borrowed off my 401K, and I am now paying it back at 34 dollars a month for 5 years, and in the meantime, I'm not earning anything. Until I pay back that loan, they're not matching. —>>[female onscreen] Right. So, my thing is: Is there any way I can roll that over to something else?— because as everybody has been saying, I have a goal. My goal is to retire by 65. I'd be better off working until 70 to get full social security benefits, but my goal is 65, and I'm already going to be 55. So, is there any way—'cause I've already lost 2 years of matching— is there any way I can roll over my 401K in a sounder form of investment and still pay back the loan? —>>[female onscreen] Okay. Lee, what do you say to that situation? [Lee] Well, two things—one, depending on the structure of your 401K plan, they said they're not matching anymore, and if you're making contributions to the plan, they actually should be matching if you're still actively employed and you're making contributions to the plan. Now, as far as whether or not you can roll it over while you've still got a loan balance outstanding, that one is not a pretty picture—I'd like to give you a better answer, but when you leave the company, you're looking at a taxable situation. That loan is due at that point in time, so you couldn't roll it over and then pay it back. You can roll over after you've left the company to an IRA, but you can't roll it over to an IRA or something like that and repay the loan.

Video Details

Duration: 2 minutes and 10 seconds
Country: United States
Language: English
Genre: None
Views: 21
Posted by: aarp on Apr 28, 2014

On our recent episode of AARP Live, our guest expert and Certified Financial Planner took a call from Jim in Alabama, who asking about annuities. Watch the video clip for the answer.

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