Exactly one year ago Girl Ninja quit her teaching job in San Diego to come move up north and join me in Seattle. It didn’t dawn on me until last week, that Girl Ninja didn’t just leave her former employer behind, but she may have also left behind some retirement savings in her old 403b. Having no clue how much she may or may not have in this 403b, I had her call the school district and get some information.
Turns out, homegirl had nearly $4,000 in her 403b. The school district told us we had three options for that money:
1. Keep the money in her SDUSD account.
2. Withdraw the money and put it in our savings account.
3. Transfer the funds to a personal IRA Girl Ninja hasn’t yet created.
We ruled out option one in the blink of an eye. There is no way we were going to leave the funds in a School District account that she can’t access. Option two, although appealing (who wouldn’t want a couple extra grand in their bank account?) also was a bad deal since we would have to pay federal and state income tax on the funds…plus an additional 10% penalty for taking an early withdrawal. That would have ended up as a net $3,000 payment to us, but nearly $400 in fees being paid to the IRS. Who the frick wants to give the IRS $400 of money they don’t deserve? We sure as heck don’t, so we did the responsible thing and created a personal IRA for Girl Ninja so we can have all $4,000 rolled in to her new account. What’s more, I’ll get to include that $4,000 in our next Net Worth update which, if you couldn’t guess, makes me a happy camper. This story had a happy ending…
Now let me share with you a story that makes my heart hurt.
Someone I know recently passed away. He left behind a pregnant wife (lets call her Jane) and three children. I also know, when he filled out his life insurance forms six years ago (before he had any kids), he put his wife as a 60% beneficiary, and his parents as 40% beneficiaries of his $175,000 policy.
The tragedy in this story, aside from the untimely death of this young man, is that I can say with reasonable confidence had he actually thought about the life insurance paperwork he filled out (pre-family) in 2006, he would have made sure his wife/kids were the sole beneficiaries on the policy in 2012.
Instead, I’m literally watching the money his parents received be squandered away. They even had the nerve to approach Jane at their son’s funeral and ask her when they could expect their cut of the life insurance policy… so they could buy a new car. Ugh 🙁
Jane is forced to watch her ex-in laws blow $70,000 on things like cars and washer and dryers (they posted a picture of their new W/D on Facebook last week), instead of having that money go towards a house, groceries/diapers, or college tuition for her kids. And to think, this whole ordeal could have been avoided if that old life insurance form was simply updated.
If this doesn’t serve as a kick in the butt to get your unfinished business taken care of I don’t know what will.
What unfinished business (financial or otherwise) have you been putting off? Creating a will? Changing your name? Opening an IRA? Finishing up those last few classes to get your degree?
p.s. I just realized I still need to make Girl Ninja the sole beneficiary on a few of my pre-marriage accounts.