How to Roll Over Your 401(k)

You know, we love offering great information to you in this show and hoping you always find it valuable and keep tuning in every week. We also have available at any time you can go to our YouTube channel and subscribe to that and we have uploaded all sorts of our old television shows and individual videos about very specific topics that you can find helpful. So as I dive into this topic, here is a great example of what would be available on a very shortened version of these topics, specific things. So this particular area here we’re going to discuss for the next few minutes, is rolling over your 401K. So you worked along for some period of time and you’ve accumulated assets in an employer 401K. And what options do you have for that? I’m going to talk about a few different things to look at. The one thing that I want to pause for a second and read is roll-overs can be a complex tool and there’s a lot of things to look at. So before you do any roll-over, make sure to consult a financial professional to determine your exact benefits to you, cost, fees, all that sort of stuff. Because you want to have a great look at that. Don’t go into this blind because there’s a lot of pieces that are very important to consider. So when you’re looking at this, first let’s consider our options that we have available. And let’s assume we’re leaving an employer to go to a different job. So I’ve worked somewhere for awhile and now I’m going to a different job. I can leave my money in the current employer plan, the one I’ve already worked for. Most of the time they allow us to leave it there. There’s been some instances that they kind of force you out. But usually you have the ability to leave it there. That’s one option. You could roll into your new company’s 401K plan, if they’re offering one there. That is an option there. You can take a distribution. You need to be careful that one as you can imagine, potential challenges depending upon your age and tax situation. But literally, you can get a check and have it in your bank account, if you will or you can roll it to your own IRA. So looking at taking it out completely and rolling it into your IRA account. Some of the other things to consider when doing this is how you go about doing this. So again, depending upon what you’re doing, but let’s assume you’re going to roll it to your own individual IRA. One, do it through a direct roll-over. You never take possession of the money that way and it goes directly from the 401K plan right into your individual IRA. The other thing is called a 60 day roll-over rule or provision. You may have heard this before, but again, if you happen to take possession of the money, either because they mailed you a check or you wanted to. There’s a very stringent rule that you have to get this money back into a qualifying plan in 60 days. Otherwise, it becomes taxable. It is a hard and fast 60 days. So keep that in mind if that rule comes into play for you. The other thing is, is every single company that we’ve ever helped folks with roll-overs in, tends to kind of have their own set of rules. Their own set of guidelines when you’re doing these roll-overs. Make sure you are aware of what those are and you’re following those. Some companies you’ll have a fair amount of paperwork you have to complete and forms that you have to do. Others are simply log on to your online account and you can have it done in a few seconds it feels like and it’s fairly simple. Others require phone calls and some will even require Notaries, signature guarantees, spousal sign-off and there’s different various things. So again, be aware of the rules are, requirements and the provisions are, so you can have an uninterrupted roll-over when that time comes. So items to consider when you’re looking at should I roll funds over? Should I leave them where I’m at and such. First cost, what is it costing you to have that plan there? What are the fees they are charging? Will the fees change if you leave it? Will the fees change if you roll it somewhere else? What does all that happen? Investment options or preferences? What investment options are available in each circumstance you’re considering? Where the plan is now? Where you’re going to and what are you trying to accomplish? Access to professional management and planning. Different plans have different access to stuff. Different IRAs have different access to stuff. What are you seeking and hoping to accomplish during that time? Accessing the funds, depending upon your age and when you may want to access funds may help determine where the best place is suitable for you. There are different withdrawal ages depending on the plans that you’re in. So be aware of that. Access to 401K loans. Some 401Ks’ employer plans allow you to take loans against that money or traditionally an IRA does not. So again, when you’re looking at a roll-over, there’s lot of things to consider. So make sure if you’re doing it by yourself, you’re well aware of all of the things. But when you’re speaking with a professional, again they’ll help you examine all of these sort of things so we can determine what is in the best case for you and what makes the most sense for your individual situation.