It’s natural to be excited or nervous, or both, when changing jobs. You’re probably as thrilled as you are wary. And if you’re retiring, it’s the same feeling. So while saying goodbye to your old job, don’t forget to move your retirement funds from the 401(k) or 403(b).
Because your 401(k) may be a significant portion of your retirement funds, it’s crucial to consider the benefits and drawbacks of each of your 401(k) rollover options before making a decision.
Rollover Options and More for an Old 401(k) Plan
When deciding what to do with a 401(k) plan from a previous employer, there are a few investment options to consider. You can:
- Rollover your old 401(k) into your new employer’s 401(k) plan
- Rollover your old 401(k) into an individual retirement account (IRA)
- Cash-out your 401(k) for various uses
Roll Over Your 401(k) into a New Employer’s 401(k) 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 make viewing and monitoring your retirement savings progress much simpler.
If you would like to roll over from one 401(k) to another, contact the plan administrator at your previous employer and inquire if they can perform a direct rollover. A direct rollover means that your old 401(k) plan provider makes a payment directly into your new 401(k) account rather than to you personally. You don’t touch the money and it joins your new retirement account to grow and increase.
Your former plan administrator will direct you to complete a 401(k) rollover request or withdrawal form. Please include the information below on your rollover request to roll your money into your new 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 include on the envelope with your check this address addition: Attention To: Rollovers
- Mail the check to Slavic Integrated Administration, 1075 Broken Sound Parkway NW, Suite 100, Boca Raton, Florida 33487-3540
Once we receive the funds you’ve mailed to us, please allow 7-10 business days to process your 401(k) rollover.
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.
Roll Over the Money into an IRA
A rollover IRA is an IRA account that allows you to transfer funds from your former employer-sponsored retirement plan into the IRA account. You may establish the IRA with us, or with another financial institution of your choosing.
The main advantage of converting your 401(k) into an IRA rollover is that you may have increased investment options and alternatives and, in some instances, lower expenses. If you do a 401(k)-to-IRS 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 from a Roth IRA).
Cash Out Your 401(k) Retirement Savings
Taking money out of retirement accounts 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 401(k) funds will usually be taxed as ordinary income if you take them from a 401(k) before you reach 59½, plus they’ll incur an early withdrawal penalty.
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.
Make the Best Decision Based on Your Needs
When it comes to deciding what to do with an old 401(k) retirement plan savings, 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.
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 and investment options. Slavic401k’s Support Center is here for you and we’ve built quite a history in the retirement savings arena. We look forward to helping you prepare for your exciting golden years!
