Today’s Prep:
When and how is the best way to do a 401(k) rollover? Eric discusses the benefits and details of doing a rollover.
(Click the featured times below to jump forward in the episode)
Equipping Points:
Do you have a few old 401(k)s stuck at former jobs? Have you done a rollover yet? On today’s episode of the show, Eric explains the reasons why you may want to move that over and how it benefits your financial plan.
To begin with, rolling over an old 401(k) into an IRA gives you more flexibility. Most anything can be an investment within an IRA, instead of the employer-offered investment options with the 401(k). Having it rolled over to an IRA means you can also work with an advisor to pick the account that’s best for you. This provides efficiency in your retirement planning process.
Are there tax implications to doing a rollover? This event is tax-free as long as you do it correctly. It needs to go from institution to institution to avoid the taxes. If you have a loan against the 401(k) and do a rollover though, that will be treated as a taxable distribution.
If you still work for the company, can you roll over your 401(k)? You likely do have this option after you turn 59 and a half. This helps you do some planning prior to retirement instead of doing it all after you retire. Some plans do not allow this option, but it’s worth checking to see what you can do.
Where should the money go when you do a rollover? This is where a financial advisor steps in to help you plan according to your wants and needs. Based on your risk tolerance, an advisor can set up your asset allocation. Are you ready to do a rollover?
Listen to the entire episode or skip ahead using the timestamps below.
[0:47] – What are the main benefits of rolling an old 401(k) into an IRA?
[5:41] – What are the tax implications of doing rollovers?
[7:09] – Can you do a rollover while still working at that company?
[9:06] – How do you know where to transfer it?
Today’s Takeaway:
“That’s really the key to the planning we do here–showing you these safe, smart places to take your income from.“
-Eric Peterson
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