Broker Check

401(k) Rollover

As corporate pensions continue to disappear in the American workforce, the 401(k) model is taking root. Many organizations use 401(k) plans as the major sponsored retirement plan for employees. These accounts are vital for millions of Americans, and it makes sense to understand them and how you can increase your returns. Read this quick guide for more insights.

Understanding 401(k) Rollover

A 401(k) involves moving your money from your 401(k) to a different retirement account. This can be another 401(k) or an IRA. Typically, it occurs when you leave your current employer to take a new job or retire. Here are your options with your old 401(k):

  • Rolling the cash into an Individual Retirement Account (IRA)
  • Keeping the 401(k) with your previous employer
  • Consolidating the 401(k) into your current job's plan
  • Cashing out your 401(k)

What's the Best Solution for Your 401(k) Rollover?

After changing jobs, you have several options for your 401(k) plan. Most people consider moving the money into an Individual Retirement Account (IRA). Here are reasons why this is one of the best options to consider:

  • Better Communication: If you leave the 401(k) account with your former employer, chances are you could face second-class citizen treatment. While this may not be deliberate, it could be challenging to get proper communications.
  • Lower Costs and Fees: Moving your money into an IRA account comes with reduced administrative and management fees.
  • Cash or Other Incentives: Many financial institutions will be looking to do business with you. They may offer some cash to entice you.
  • Fewer Rules: It can be difficult to understand your 401(k) rules because the employer has leeway for the plan setup. The Internal Revenue Service (IRS) standardizes IRA regulations.

What Investment Vehicles are Available to You in an IRA Rollover?

An IRA rollover can offer a broad range of investment choices. All you need is to choose options that match your risk tolerance and objectives. This is where speaking with a knowledgeable advisor comes in. Your advisor from Moy Wealth Management LLC will advise you on the benefits and risks of each option. Some investment vehicles include:

  • Mutual
  • Funds
  • ETFs
  • CDs
  • Bonds, and
  • Stocks

How to Prevent Taxes by Doing a Rollover?

If you want to be smart with taxes, an IRA rollover is the best option. For example, you can defer taxes on your rollover amount. Wondering how you can avoid tax pitfalls? Here are helpful tips:

  • Consider a direct transfer from your 401(k) into your IRA
  • Avoid unnecessary penalties by planning ahead
  • Transfer inherited retirement accounts to your IRA without delay


What is a 401(k) Rollover?

A rollover involves moving funds from a qualified retirement plan to another. For example, it can be an old 401(k) to an IRA. You should report the rollover to the IRS, and it can be subject to income tax withholding by the federal.

What Happens if I Don't Rollover My 401(k)?

Due to many commitments and day-to-day activities, it's not uncommon to find some people forgetting to rollover their 401(k). However, this can be a costly mistake, and you want to avoid it. For example, you'll face:

  • Early withdrawal penalty of up to 10%
  • 5% state tax and
  • 25 % federal tax

How Long Do You Have to Rollover a 401k after Leaving a Job?

Typically, you have up to 60 days to complete your rollover. During this period, you won't face tax distribution. Also, the early withdrawal penalty of 10% won't apply.

Can I Move My 401(k) to an IRA Without Penalty?

If you rollover your 401(k) to an IRA within 60 days, you won't face a penalty. However, tax consequences apply if you move the assets from a traditional 401(k) to a Roth IRA.

Work with a Qualified 401 (k) Advisor

Navigating your 401(k) options can be challenging but shouldn't be if you work with an expert. Do you need assistance? You need to talk to a professional today for a seamless transaction.

For more information about our firm and the services we offer, send us a quick email or call the office. We would welcome the opportunity to speak with you. |  561-420-9557

Reach Out Today!

Thank you!