Your Options for Rolling Over A 401(k)

It’s natural to be excited or nervous when changing jobs. You’re probably as thrilled as you are nervous! So while it’s top of mind, don’t forget to move the funds from the 401(k) or 403(b) to your new employer-sponsored plan.

Because your 401(k) may be a significant portion of your retirement funds, it’s crucial to consider the benefits and drawbacks of each rollover option before making a selection.

Options for an Old 401(k)

When deciding what to do with a 401(k) from a previous employer, there are four options to consider. You can:

  • Rollover your old 401(k) into your new employer’s plan
  • Rollover your old 401(k) into an individual retirement account (IRA)
  • Cash-out your 401(k)

Roll Over Your 401(k) into a New Employer’s Plan

You may want to move assets from your old 401(k) to your current employer’s 401(k) plan to keep them all in one place. This will simplify managing your assets by having them all in once place.

If you would like to roll over from one 401(k) to another, contact the plan administrator at your previous employer to initiate a direct rollover. A direct rollover means that the 401(k) plan makes a payment directly to your new 401(k) account rather than to you.

They will ask you to complete a rollover request or withdrawal form. Please include the information below on your rollover request to roll your money into your 401(k) account with Slavic401k:

  • Make the check payable to Depository Services
  • Include your 10-Digit Account Number
  • Include the name of your current employer
  • Please mail the check Attention To: Rollovers
  • Mail Check to Slavic Integrated Administration, 1075 Broken Sound Parkway NW, Suite 100, Boca Raton, Florida 33487-3540

Tax penalties do not generally apply to 401(k) rollovers, as long as the funds are transferred directly from the old account to the new one.

In most cases, rolling over your 401(k) into your new employer’s plan may help you stay organized in your financial life by eliminating duplicate accounts. Just be sure that it doesn’t result in higher account costs.

Roll Over the Money Into an IRA

A rollover IRA is an IRA that allows you to transfer funds from your former employer-sponsored retirement plan into the account. You may establish the IRA with us, or another financial institution.

The main advantage of converting your 401(k) into an IRA is that you may have increased investment alternatives and, in some instances, lower expenses. If you do a 401(k)-to-IRA transfer, the cash from your old 401(k) must be deposited into the new IRA account within 60 days.

If you are over age 72 when your traditional IRA reaches its minimum distribution age. Then, you will be required to take annual required minimum distributions (RMDs) from the account (but not a Roth IRA).

Cash Out Your 401(k)

Taking money out of retirement accounts in full should be avoided unless the need for cash is urgent and you have no other options. Depending on your age and tax status, the consequences can be severe. The funds will usually be taxed as ordinary income if you take them from a 401(k) before you reach 59½.

If you must withdraw money before you reach age 59½, consider withdrawing only what you need until other sources of cash can be found. Obviously, this is only feasible if your former employer permits partial withdrawals – or if the account is rolled into an IRA.

How You Roll Over Your Money Is Important Too

Consider a direct rollover if you’re choosing between an IRA for your rollover or taking your new employer’s plan—that’s when one financial institution sends a check to the other. The bank or brokerage firm would be instructed to roll the cash into your IRA or 401(k) using the name of the bank or broker.

Make the Best Decision Based on Your Needs

When it comes to deciding what to do with an old 401(k), there may be factors that could be unique to your situation. That means the best choice will be different for everyone. One thing to remember is that the rules among retirement plans vary, so it’s essential to find out the rules your former employer has and the rules at your new employer.

Do also compare the fees and expenses associated with the accounts you’re considering. If you find it confusing or overwhelming, contact us and we can help answer questions you may have about the rollover process.

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