The Financial Guys, western New York’s financial professionals can help you with your 401(k) rollover questions, help you with the process and help you decide which rollover option is the suitable for you.
It used to be that people worked at the same job for years on end but these days’ people switch jobs for various reasons and when that happens, it can create a messy 401(k) situation. What do you do with the money? Take it with you, put it in another type of account or cash it out? Cashing it out is the worst choice out of the three because as soon as you opt to cash out your 401(k), you’re responsible for paying taxes, fees and penalties. Why lose all of the hard earned money that you’ve accumulated in your 401(k)?
Since cashing out isn’t the best option, that leaves you with rolling your 401(k) over to your new employer if they offer a 401(k) plan or rolling it over into an IRA account. If you leave your employer or you’re starting a new job that doesn’t offer a 401(k), rolling over into an IRA is one of your best options.
Should I roll my 401(k) plan over to my new employer or open an IRA?
There are several things to consider when deciding whether you should roll your 401(k) to your new employer’s plan or whether you should roll it over into an IRA. One important factor that’ll play a role in your decision making is what your new employer’s plan is like. Your investment options may be more limited than they were with your past employer or your new employer may not provide a company match, to name a couple of differences that may arise.
With an IRA, there are often minimum balance requirements that have to be met in order to open the account. If you’ve only worked at your employer for a short term before leaving or you haven’t invested as much into the 401(k), then you may not have enough money saved up in the 401(k) to transfer the money into any type of IRA you want. There may be IRA options depending on your circumstance and this is something that we’ll discuss with you to see what choices you have available to you.
There are considerations to take into account for both rollover options. The Financial Guys will work with you and your individual circumstance to come up with a solution that’ll help you reach your goals.
If I roll my 401(k) over to an IRA will I have to pay taxes or penalties?
One big concern that people have any time they have to transfer money from one retirement account to another, the concern comes up of whether or not taxes and fees will have to be paid. If you choose to go the route of an IRA rollover, you will not have to pay taxes in most cases as long as the money is transferred directly from one account to another or you deposit the funds according to the rules set forth by the IRS. The Financial Guys can answer any questions or concerns that you have regarding penalties or interest.
Contact The Financial Guys today to discuss rolling over your 401(k) to stay on the road to retirement savings.
This material is not intended to replace the advice of a qualified tax or legal professional. Before making any financial commitment, consult with your tax adviser or attorney.