Financial expert Suze Orman
I often see people dealing with their 401(k) assets incorrectly. Whether you're leaving a job or, like the woman in the last question, receiving a payment from an ex's 401(k), you are given the option of taking your retirement money in a lump-sum payment (known as a cash-out), leaving it where it is, or transferring it (rolling it over) into another retirement account.

I have two crucial words of advice for you: direct rollover. Clearly, the best move you can make with your 401(k) money is to transfer the funds into an IRA account at a discount broker like Muriel Siebert or a no-load mutual fund company like Vanguard. Since this ensures that your money won't be taxed until you begin to make withdrawals, it can grow freely.

Yet so many of you opt for the cash-out when you leave a job, or are getting a 401(k) payout as part of a divorce. The prospect of getting your paws on some money is too enticing to pass up. But for those of you who may encounter this choice down the line, I want you to focus on how short-term gratification can be a huge long-term mistake. Let's say you have $10,000 in a 401(k) that you can either cash out or roll over. Sure, that $10,000 could pay some bills or finance a nice vacation for the family today. But think about what you're passing up down the line: Let that $10,000 continue to grow for 30 more years in an IRA earning an average of 8 percent annually, and you'll have more than $100,000 saved up.

A rollover may scare you because you don't know what to invest in. Just keep it simple: If you have at least ten years until retirement, the low-cost Vanguard Total Stock Market Index fund and the Vanguard Total Stock Market VIPERs exchange-traded fund give you great exposure to a broad mix of American stocks. They're a perfect one-stop-shopping solution for your IRA.

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