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Quick Facts About 401k Plans
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Do you have multiple 401k plans from a few employers? We
can help you roll them together.
get more info...
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Getting a new job? We can easily help you transfer your
401k to your new employer.
get more info... |
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401k Rollover :: Basics rules and
options of 401k Rollovers
(Transferring your 401k from
your previous employer into a Rollover IRA or
Transferring your Rollover 401k to another IRA.)
What is a 401k Rollover?
A 401k rollover occurs when you change jobs or retire
and then elect to transfer or "rollover" your 401k into
a new IRA. This process of transferring a 401k with a
previous employer into an IRA is referred to as a 401k
rollover to IRA. This can be a traditional 401k
rollover into IRA or we can help you in any situation.
The assets in your 401k can be transferred from your
401k directly to an IRA via a trustee-to-trustee
transfer. A direct rollover from a 401k to an IRA is
made tax-free and there is no tax liability. There is no
limitation on the dollar amount you can rollover from
your previous employer's retirement plan.
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401k Rollover Retirement Planning Tips
and Tools
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When I change jobs or retire, what are my options for
my 401k?
When you leave your employer, you will need to decide
what do to with the money you have accumulated in your
employer's 401k. For some investors this may represent a
sizeable investment. As a result, it is crucial to make
an informed decision. Cross Financial Management
will show you your options and offer you practical
advice tailored to your needs.
There are several options available to you:
Take the money out in Cash
For most investors this is the worst option. Taking
a distribution in cash has very serious tax
consequences. Your previous employer is required to
withhold 20% for federal taxes. The cash that you
receive will be taxed as ordinary income. The 20% that
is withheld will be used to pay the taxes you owe for
your federal taxes. However, depending on your tax
bracket you may owe more than the 20% that was withheld
when you do your taxes for that year. In addition, you
are likely to be penalized 10% if you are younger than
age 59 1/2. As you can see, this can be a major setback
towards saving for your retirement.
Leave the money with your old employer's retirement
plan
For many investors who are saving for their retirement,
this may be a better decision than Option 1 since you
will not be penalized or taxed, however there are some
disadvantages. Many investors find it difficult to
manage and organize their retirement accounts when they
have several retirement plans at previous employers. As
a result, investment performance can suffer if
retirement accounts are not diversified properly. An
even more important issue is most employer's retirement
plans have a fairly limited number of mutual funds
choices (usually only 10-15).
Transfer the money into your new employer's
retirement plan
Most employers allow you to do a transfer into their
retirement plan. Compared to Option 2 this avoids the
potential problem of multiple retirement accounts at
different employers and the difficulties of managing
your investments and organizing them properly. As in
Option 2 the same important issue still applies, as most
employer sponsored retirement plans have a fairly
limited number of mutual fund choices (usually 10-15).
Transfer the money into an IRA Rollover
For many investors a 401k rollover into an IRA is the
best option for the money they have saved in their
previous employer's retirement plan. Compared to Options
1-3 you have several advantages: increased control,
greater organization, improved investment flexibility
and investment advice.
For more information on how we can best assist your
401k rollover and IRA rollover needs, please fill out
the short contact form above or call us at
1-888-333-4641.
* The information on this
page is for informational purposes only and does not
constitute, and should not be construed as,
professional, legal or tax advice. To determine your
individual tax situation and specific needs, please
consult a professional tax advisor.
* Information contained in these sections merely
highlight some benefits. There are risks involved with
all investments that could include tax penalties and
risk/loss of principal.
State Disclosure - The LPL Financial representative
associated with this website may discuss and/or transact
securities business only with residents of the following
states: AK, AR, AZ, CA, CT, FL, HI, ID, IN, MN, MT, NC,
NH, NJ, OH, OR, TX, VA, WA
Advisors will become registered in the respective state,
prior to any direct communication with perspective
customers, who are located in states in which the
advisor is not registered.
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A 401k rollover occurs when you retire or change
employers and then choose to move or "rollover" your 401k into a
new IRA. This process of relocating a 401k at your previous job
into an IRA is referred to as a 401k Rollover.
