401(k) Transition Assistance

401(k)s are an alternative to traditional pension plans and offer more control for the employee. One of the features of a 401(k) is that you can roll it over from one employer to another. A plan participant leaving an employer typically has four options (and may engage in a combination of these options), each choice offering advantages and disadvantages.

Leave the money in his/her former employers plan, if permitted
Roll over the assets to his/her new employer's plan, if one is available and rollovers are permitted
Roll over to an IRA
Cash out the account value

There are a few important factors to consider before you take a cash withdrawal from tax-saving retirement plans. For example, did you know the IRS counts a 401(k) as income and charges penalties and fees on early withdrawals? If you're leaving your job, you might consider other options instead of taking a cash withdrawal.

401(k) Rollovers: This involves transferring funds from a 401(k) to an individual retirement account (IRA).
Roth IRA Conversions: This involves transferring funds from a tax-deferred IRA to a tax-exempt Roth account.
Retirement Spending Needs: We help you estimate and save the amount of money needed to live comfortably in retirement.
Retirement Medical Costs: We help prepare for any medical expenses that may arise during retirement.
Risk Management in Retirement: We review the risks you may encounter in retirement, such as unforeseen medical expenses or tax increases.

401(k) Plan Basics

401(k)s are an alternative to traditional pension plans and offer more control for the employee. One of the features of a 401(k) is that you can roll it over from one employer to another. The new plan may have lower fees or investment options that better support your financial goals. Rolling over your old 401(k) into your new company’s plan can also make it easier to track your retirement savings, since you’ll have everything in one place.

There are a few important factors to consider before you take a cash withdrawal from tax-saving retirement plans. For example, did you know the IRS counts a 401(k) as income and charges penalties and fees on early withdrawals? If you're leaving your job, you might consider other options instead of taking a cash withdrawal.

Traditional 401(k) vs. Roth 401(k) Plans

Many people set up their 401(k) plans to make withdrawals for major life purchases, and to use the funds as income after retirement.
There are two kinds of 401(k) plans offered by employers. The Traditional 401(k) is a pre-tax retirement savings plan where no income tax is applied until withdrawals are made. Taxes are deducted directly from an employee's paycheck in regular increments.
A Roth 401(k) is a post-tax retirement plan with no additional taxes imposed upon qualified withdrawal. This means that people who contribute to Roth 401(k) plans can make withdrawals tax-free.
A financial advisor can help employees choose investments like stocks, bonds, certificates of deposits, ETFs, and mutual funds.
With traditional IRA plans, no income tax is applied to employee deductions or investments until it is time to withdraw.

The Benefits of 401(k) Rollovers

One benefit of a 401(k) rollover to IRA is that the account maintains its pre-tax contribution status.

Employees who roll over 401(k) funds to IRAs may have more investment options with a brokerage than with an employer. They can invest in other options to seek to increase their likelihood of achieving their financial savings goal at retirement.

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Frequently Asked Questions

Can I roll over my retirement from another employer?
There are a few options available for managing your 401(k) when you leave your job or get a new employer. When you choose 401(k) rollover options, rolling over your 401(k) to a new employer's plan is an option as long as the new employer offers retirement savings options. Depending on the plan, you may be able to borrow money from your account
Do I lose money when I roll over my 401(k)?
In most cases, you won't lose money when you roll over an IRA. A rollover of funds will move your 401(k) balance from your original account to a new account.
Should I roll over from my 401(k) to an IRA?
If you're wondering whether to roll your 401(k) into an IRA, there are a few factors to consider. 401(k) plans offer protection from creditors under federal law. Traditional IRAs require you to take minimum distributions beginning at age 72.

Have more questions about IRAs?

Don't navigate this difficult process alone. Let us help you to better understand all of your options, to find out more about the Roth IRA conversion process and if it is the right fit for your financial needs.

Want to go over your 401(k) distribution optins?

A financial advisor can help you understand your choices.

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