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401(k) Rollover

The 401(k) rollover is a feature of the 401(k) plan that allows you to move your retirement savings from one 401(k) account to another or an individual retirement account (IRA).

There are various reasons why you may want to move your 401(k). You may want to consolidate your retirement funds, you may be changing jobs, or you may want to explore different investment opportunities. Whatever the case, moving your 401(k) requires some planning and knowledge of IRS rules. And this is where our financial experts at 1st Strategic Wealth Advisors come in.

We'll help you along the way by helping you understand all of your 401(k) rollover options and making sure that your assets are transferred properly and timely.

401(k) Rollover Options

A 401(k) rollover is an important decision. If you change jobs or retire, you may have to decide what to do with the money in your employer-sponsored retirement plan.

Your options include:

  • Leave it in your former employer's plan.
  • Move it to your new employer's plan, if you're switching jobs and the new plan accepts rollovers.
  • Cash-out (but you'll owe income taxes on the distribution, plus a 10 percent penalty tax if you're younger than age 59½).
  • Roll over the money into an IRA. If you opt to roll over your 401(k), you can transfer the funds directly into an IRA or receive a check for the balance made payable to your IRA.

Steps To Take In a 401(k) Rollover

There are basic steps to take in a 401(k) rollover. However, a professional financial advisor can guide through this to make sure no mistakes are made during the process. Let's take a closer look at this.

  1. Gather your paperwork including beneficiary information and the statement showing how much money you have invested in the plan.
  2. Check with your plan administrator and ask what options are available if you terminate employment.
  3. If you are changing jobs, it is best to contact the new plan administrator to find out what forms need to be filled out and what documentation must be provided.
  4. Once you have decided where your funds will go, it's time to fill out the proper paperwork. You'll need to complete a rollover form and submit it directly to the financial institution that will hold the new account.

401(k) Rollover FAQs

Can I do a 401(k) rollover at any time?
You can roll over your 401(k) to an IRA or directly to another 401(k) at any time. You can even do it multiple times per year. The once-per-year restriction only applies to 60-day IRA rollovers.

Is there a benefit to rolling over 401(k)?
Whether it makes sense for you to roll over a 401(k) depends on your goals, time horizon, and risk tolerance. We work with you to determine whether a rollover is a right choice for you.
Here are some of the benefits involved in a rollover to an IRA:

  • Greater investment options — Investment options within an IRA are generally greater than those offered through your 401(k).
  • Flexibility — You can make changes to your account without having to notify your employer.
  • Accessibility — You have 24/7 access to your account information online.

How can I rollover my 401(k) without penalty?
Generally, if you receive a check from your old 401(k) plan, you have to deposit the funds into an IRA or new employer's retirement plan within 60 days to avoid tax and penalties. If you don't deposit the funds in time, the IRS considers it a cash distribution subject to tax, plus a 10% early withdrawal penalty if you're under the age 59½.

Sensible Strategies for a Secure Future

Sensible Strategies for a Secure Future

Thinking about rolling over your 401(k)? We can help with that. As a client of 1st Strategic Wealth Advisors, you'll get one-on-one financial guidance from our team of experts. Take advantage of the same affordable fees, transparency, and expertise that come with all our individualized services.

Let us help you get the most out of your hard-earned retirement savings. Contact us today for more information.