IRA and 401(k) Rollovers

Participants/account owners have four choices when they are entitled to a distribution and/or transfer of assets. Those are:

  • Leave the money in the current retirement plan/account (unless the account has a small balance, and the plan “forces” distributions of small balances).
  • Transfer the account balance to the plan of a successor employer. (This assumes that the participant is not retiring and will go to work for another employer who sponsors a plan that permits those transfers.)
  • Roll the account balance into a new or existing individual retirement account (IRA).
  • Take a taxable distribution (which could reduce a participant’s retirement money by the income taxes and penalties charged on taxabledistributions).

The first three options avoid the immediate taxation of the benefits; the fourth does not.

The decision should be based on the individual needs and circumstances of each participant or account owner. None of these alternatives is right for every person in every situation.

It’s not an easy decision, because of the long-term financial consequences.  To help people with this decision, we have a Retirement Account Education Brochure.  This educational guide is designed to help retirement plan participants understand and evaluate their distribution alternatives when they retire or otherwise become entitled to a distribution from their plans, or decide to transfer retirement accounts to other providers. It is designed to be used in conjunction with educational explanations by an adviser, so that participants/account owners can make informed decisions about one of the most important financial decisions in their lives—how to best manage their retirement money.

This educational guide discusses many of the considerations that would be important to the typical participant or account owner. You need to decide which are the most important to you and whether other factors should be considered as well.

To get your free copy of this brochure, just send us an email or use our contact us form to request your copy, we are happy to send it to you.  Just click here.