Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

April 10, 2013
Can I put my current savings in a 401(k) plan from a former employer?

Q: I have about $50,000 just sitting in a regular savings account, not gaining much interest. Recently, I was sent a 401(k) account statement from a job I had over 12 years ago. It only has $100 in there now. Would I be able to use that account and incorporate some of my savings into it and manage my investments? My hope is to place some money in the account where I can gain some interest. I would be open to stock account or an IRA as well, but I am not too familiar with these. I could use some help.

Roseville, CA

A: Unfortunately, you cannot "add" money to your old 401(k) if you are not currently working at the firm. You can maximize your contributions to your existing 401(k)-- $17,500/year for those 50 years and under and $23,000/year for 50 years and above, and/or contribute to a traditional or Roth IRA-- up to $5,500 for those 50 years and under and $6,500 for 50 years and above* (see limits below).

A strategy I recommend for those who qualify* and have available funds is to diversify by using both a traditional IRA and Roth IRA. Traditional and Roth IRAs are taxed differently; by using both, an investor can strategically time the draw down from each account to minimize tax impacts. Individual accounts at a brokerage firm (like Schwab or Fidelity) offer a diverse platform of short-term investments that may offer better returns with only slightly increased risk.

Also, alternatives to traditional investment accounts are sites like and These are social platforms where you can invest in loans made to businesses and individuals. Borrowers and investors tend to have a better rate than at a traditional bank. Lending Club claims that you can invest as little as $25 and there are no maintenance or start-up fees. You can choose the rate of return depending on how aggressive you want to be. Be forewarned that this option is not insured by FDIC, but they also give you one of the best rates going (from 11 - 20 percent).

*Income limits: Traditional IRAs are available to individuals who do not have the option of investing in a 401(k) or other plan offered by an employer. If the option to invest in a 401(k) or other plan is offered by an employer, the tax deduction for investing in traditional IRAs phases out at certain levels of income.

Roth IRAs have income limits on eligibility as well. A single filer with modified adjusted gross income up to $101,000 can make a full contribution. If the single filer's adjusted gross income is more than $116,000 he/she cannot contribute to a Roth IRA. Joint filers with a modified adjusted gross income up to $159,000 can make a full contribution.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.

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