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Direct Rollover

Direct Rollover Options

401(k) Direct Rollover

When we talk about a rollover, we are discussing the option of taking money from one retirement account and transferring it into another plan. The most common rollover scenario occurs when an individual accepts a new job, and wishes to rollover a 401k plan to a new company, or another financial institution.

You need to be careful with a rollover, or you’ll be subjected to tax penalties. This can happen because the IRS takes a cautious approach to any kind of retirement plan rollover. In fact, they consider a 401k rollover just like a Lump Sum Distribution until you prove them wrong.

In a direct 401k rollover scenario, your previous qualifying 401k plan administrator will usually require you to fill out several forms describing the amounts withdrawn, and the account information for the new 401k plan, qualifying plan, or the IRA into which the retirement funds will be deposited.

Direct 401k rollovers are the most convenient way to move money from your existing 401k plan into another retirement account. With a direct 401k rollover, the money is transferred from one financial institution to another, and you should never have to worry about withholding rules or tax penalties. Unless you need to take possession of the funds in your account for some reason, a direct 401k rollover is really the safest and easiest way to make a transfer.

401(k) Options

When you change jobs or retire, you’ll have several options for deciding what to do with the money in your employer-sponsored retirement plan. For tax purposes, the IRS rules are essentially the same. Let us design a plan that is best for you.

Advantages Drawbacks
Roll over to an IRA

You have investment flexibility— including mutual funds, stocks, and bonds, E.T.F.’s,.

You control your investments.

You can simplify all your accounts in one place.

You can move your assets to a future employer’s plan.

You can’t borrow from your assets. Some investment options in a 401(k), such as holding company stock, may not be available in an IRA.
Remain in employer-sponsored plan You may have investment options in the plan, not available to you outside the plan. You’re limited to theplan’s investments.Your future contributionsare restricted or simply not allowed. Your account generally can’t remain in the plan if it’s less than $5,000.

Transfer to another employer-sponsored plan or a Solo 401(k) plan for your own company

You can consolidate your assets in one plan.You’re allowed to borrow from the plan. You’re limited to the plan’s investments.You may have to wait before you can transfer your money.
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