What You Need to Know about a 401(k) Rollover
Changing jobs or retiring? You have 4 options to consider for your 401(k) plan:
- Roll your 401(k) into an IRA
- Roll over your 401(k) into a new employer’s 401(k) plan
- Keep your 401(k) with your former employer
- Cash out and pay taxes and penalties
An IRA Rollover offers the ability to consolidate accounts and the convenience of help from a CERTIFIED FINANCIAL PLANNER™ certificate. I can help you weigh the pros and cons of each option to find the one that makes the most sense for you and your family.
How a Financial Advisor Can Help
It’s a good idea to talk to a CERTIFIED FINANCIAL PLANNER™ certificate before you make any decisions about your 401(k) retirement plan. You don’t want to leave any money on the table, and you don’t want to punish yourself later by cashing out early now. It may be tempting to get a check, but think about how long it took you to build up your retirement fund. With compound interest and the right investments, your regular contributions have been the best step you’ve taken toward your retirement goals.
A CERTIFIED FINANCIAL PLANNER™ certificant can explain the options available to you. Whether you want to invest in an IRA or another 401(k), you don’t have to analyze the available products alone. Selecting the right mix of mutual funds, stocks, bonds, and other investment vehicles requires someone with knowledge and experience. There are other things to consider as well, including fees, risk level and historic performance for the investments you’re considering. I’ll wade through the information for you, so you can make the best decision.
Frequently Asked Questions
If you are over age 59½ and/or separated from a former employer you’re generally eligible for a 401(k) rollover. There’s no limit to the rollover amount. It’s also not included in your regular contribution limit for the current tax year.
It may not be in your best interest to leave your old 401(k) as is. Research has shown that people who don’t rollover their 401(k) forget about it entirely. This means your retirement nest egg stays unmanaged and unchanged for years. Of course, leaving the 401(k) with your employer is better than cashing out with taxes and early withdrawal penalties, but the ideal solution is to take advantage of the rollover period.
In a best-case scenario, you will still manage your 401(k) by checking your asset allocations annually. But a more likely scenario would be that you forget about your 401(k) entirely and remember years later that you had some type of retirement plan with a previous employer. Whatever you decide to do, keep all documentation for your nest egg. In a worst-case scenario, you’d cash out and end up paying taxes and penalties for depleting your retirement fund early.
Let’s Discuss Your 401(k) Rollover Options
Now that you have an idea what a 401(k) rollover is and how it works, it’s time to discuss your options. Every situation is unique. Your age, retirement goals, risk tolerance, the availability of another 401(k) or 403(b) and your current allocation of assets will help me determine the best solution for your existing 401(k). I can even help you set up a distribution strategy to maximize the funds you have available for your retirement.
I’m happy to discuss your 401(k) rollover and find the right investment options for you. Schedule a consultation, and we’ll discuss how I can help you get the most out of your existing 401(k), as well as any future retirement investments you might make.
Contact me today to discuss your retirement account investment options 716-837-3335
CONTACT ME1. Distributions from a traditional retirement account are subject to ordinary income taxes in the year distributed. Distributions prior to age 59½ may incur an additional 10% penalty.
2. In order for the Roth §403(b) account to be distributed tax-free, it must be funded for a minimum of five years and the account holder must have attained age 59½. A participant would also qualify for tax-free distributions if the account was held for five years and the account owner became disabled (under the strict definition of disability of §72(p) of the IRS code). Furthermore, in the event of the account holder’s death, beneficiaries would receive tax-free distributions if the account was held for at least five years. Otherwise, the distribution would be treated as part return of principal and part taxable earnings. A 10% premature withdrawal penalty may apply to the earnings.
Diversification does not assure a profit or protect against market loss.
All investment options are subject to employer approval.