Roll Over 401K to IRA
Many laid off employees are looking for ways to move their 401k (employee sponsored retirement plan) in an IRA(individual retirement account). Here are some great tips for what to look for before you rollover your 401k
A 401k roll over is simply a move from one retirement account to another. You could stay with the same type of 401k retirement plan or move to an IRA, Roth IRA or other form of qualified retirement account. What is important is to get the process right to help you to avoid any type of costs associated with the transition. If you have changed employers or your employers have changed companies, you will need to use the 401k rollover options to move your funds.
The process is not too difficult, but there are ways that you can save money and minimize any risk that you might have for paying taxes. The following five tips will help you.
- • If you are staying with the same employer, the employer is likely to do all of the transition work for you at no cost to you. Generally, you will just need to sign documentation stating that the company is making the switch.
- • Learn the intricacies of the new 401k or other retirement account you are planning to get before you actually make the move. The reason for this is simple. You need to ensure that you know of any changes in the plans such as costs to you, loan options and the terms for withdrawal.
- • Consider giving yourself more control by moving to an IRA, but be warned, the IRA often has strict guidelines on how much you can deposit per year. In other words, an employer sponsored plan allows you to put away more each year.
- • Avoid getting a withdrawal or check from your employer’s custodian of your account. Rather, have them handle the transaction for you. Your new 401k account may handle the move for you, in fact. However, if you do take a withdrawal, you have just 60 days to get those funds back into a new account before you will be taxed heavily and face a 10 percent penalty.
- • Shop around. If you are making the move, it pays to spend some time considering all of your options and revisiting your retirement plan from time to time. Are you getting the most out of your retirement planning?
It is always advisable to have a trusted tax accountant or financial planner by your side before making this type of move. That way, you know what the best scenario for your needs is. It can also simply the process of the 401k roll over.
Article Source: EZINE Article