<p>This is the last thread I’ll start today :)</p>
<p>I’m graduating in just 16 days from Sonoma State…it’s been a great 4 years and I can’t believe it’s over!</p>
<p>As many of you know I work for the school as a Resident Advisor. Part of our compensation every month is a small (VERY small) stipend. </p>
<p>The school takes about $20 out of every paycheck and puts it into a retirement account for us, which we can have access to as soon as we no longer work for the school. I have about $400 in the account as of now.</p>
<p>What should I do with it after graduation? Obviously I will talk to my parents about it, but I’m interested to see what you all think.</p>
<p>I would like to keep it in a retirement savings account somehow, or some other type of savings account (since I never had that money, I figure I won’t miss it), but I’m not sure what that looks like. Should I put it in a CD first and let it gain some interest for a year or so?</p>
<p>I also have a Credit Union for my checking/small savings account, so I would imagine I could set up something with them as well…</p>
<p>I’d really prefer to avoid anything having to do with the stock market…that just scares me too much.</p>
<p>Find out what kind of account it is that it’s being held as. If it’s a 401K account and can be rolled over into a ROTH IRA for you, that would be ideal. There would be no tax consequences to you & would be able to have your investment grow tax-free.</p>
<p>If the amount is pre-tax dollars that were put into the account, you can probably roll it over into a standard IRA, where it would again grow taxfree until you withdraw it, following standard IRA rules. You can generally set up an IRA at pretty much any financial institution, including your credit union & then fund it by rolling your retirement from your job into it. You could also fund it with earnings you have from your jobs.</p>
<p>Do NOT have the funds disbursed to you–get a ROLLOVER so you won’t have to pay taxes or penalties on any funds distributed to you.</p>
<p>Son’s school did this too. It’s mandated by state law that they do this. Unfortunately the amount eaten up by fees will whittle the savings to nothing eventually as returns are tiny. So he will need to move it to a 401K.</p>
<p>You could look at rates on CDs or maybe TIPS or other interest-bearing instruments. I much prefer the stock market myself. The returns from fixed income are quite unattractive to me.</p>
<p>Check with your Credit Union (or elsewhere) about any fees associated with your IRA–set up, closing, rolling funds over to put them in, etc. I agree that the stock market is a good thing, but you need to see how much you need in funds for a minimum investment to not have it eaten up by fees. Schwab doesn’t seem to have minimums for IRAs, so you could check with them if they are attractive to you. They hand a lot of smaller investors and have a lot of info at their website & in their offices.</p>
<p>Talk with your bank or credit union about IRAs. You should be able to find a an IRA that can be opened for no fee or just $10 or so and where your money can quietly continue to grow in a CD until you need it one day. You also can find out whether it is worth leaving where it is. Sometimes that is also possible.</p>
<p>Happykid joined one of my old credit unions just so she could have a no-fee IRA. Shop around until you find one.</p>
<p>Just because you put this money into an IRA in CD form, doesn’t mean it has to stay in a CD forever. When you have more money to put into an IRA, you can have this “old” money eventually rolled into the new IRA account.</p>