Originally Posted by
TalkTurkey
This is an excellent question and I have an answer for you. First of all, you should always check with a CPA or fee-based financial planner. But here’s my layman’s answer. When going to delta, if you don’t have a large amount of 401k cash (which if not fully vested, you probably don’t), you SHOULD roll it over indeed. Provided it’s not a large amount, and if you’re younger than mid-thirties, I’d roll it over into a Roth IRA not affiliated with an employer. Remember, only the portion that is not vested will go to 9E. All your contributions stay yours. Finally, you could leave that money in the 9E plan until it’s vested and then roll it over.
I generally agree with you TalkTurkey, in this case I have some additional clarifications...
If you roll your 401K to a Roth IRA, you will generate a tax bill at your current marginal rate. If you've got 10k and in a 25% bracket, it's a $2,500 tax bill. If you've got 50k and a 25% bracket it's a $12,500 tax bill, certainly something to consider before you make that conversion. As well, you need to have that money outside of your 401k, if you pay the conversion tax bill out of the 401k itself you would also pay a 10% early withdraw penalty.
Lastly, at the point you terminate your employment with Endeavor your vesting schedule is frozen where it is regardless of whether you roll your plan at that point. I.e. if you're 50% vested and roll immediately, that's the same as if you left it for 3 more years and then rolled. You don't continue to vest.