401k Rollover

Choosing what to do with your 401(k) and retirement savings is an important decision.  Fortunately for you, it can be a fairly simple one if you have the right information.  Carefully consider the following options:

ROLL

If you want to keep your before-tax savings growing without paying taxes on it now, you can rollover the money into a Traditional IRA.  The benefits include:

  • Continued potential growth of your savings
  • An opportunity to consolidate your reinvestment savings in one place
  • A wider range of investment choices
  • Greater control over your investments since you're no longer bound by plan rules

If you have after-tax Roth savings in the plan, you can roll that money into a Roth IRA.

MOVE

If your new employer's plan allows, you can transfer your account balance from your former employer's plan to your new one.  Your money has the potential to keep growing tax-deferred, and it gives you an opportunity to consolidate your retirement savings all in one place.  If your new employer's plan accepts after-tax Roth contributions, you can also transfer your Roth account balance.

STAY

If you're not sure of what which direction to take, you can leave the money where it is.  By staying put, you will defer paying taxes on your before-tax savings.  If your account balance is $5000 or less, however, your employer can automatically cash you out or roll your savings into an IRA.  If you've made after-tax Roth contributions, you might consider rolling them into a Roth IRA in order to continue the tax-free benefits after you reach age 70 1/2.  Rules may apply.

PAY

When leaving your plan, you may have the option of cashing out.  While financial circumstances may require you to take this path, it can send you back to the starting point of saving for retirement.  Furthermore, when you cash out your retirement account balance, you could lose almost half of your savings to income taxes and possible penalties.

Unsure of what is right for you?  Let us here at Professional Finincial Servicies,Inc. help you decide what is best for your situation.  Detailed information is available at our Learning Center to help further explain.