5 Steps to A 401(k) Rollover

Retirement Planning

5 Steps to A 401(k) Rollover

Posted by COTO Insurance & Financial Services
5 years ago | April 22, 2019

Whether you’re leaving your job, or on the verge of retirement, you might be wondering whether a 401(k) rollover is your next step. Due to fees, options, taxes, and other considerations, this choice can impact your overall retirement savings by thousands of dollars. So naturally, you want to research carefully and make the right choice.

To get started, take these five steps.

Ask yourself where you want the money to go. Deciding to roll over your funds is only the first half of the equation. Where are you moving your money? You’re probably considering an IRA, but they are not all the same! Investigate requirements such as minimum funds, along with a particular account’s investment options, fees, customer service, and consumer ratings.

Consider types of IRAs. Aside from Traditional or Roth, you also have the option to direct investment choices yourself, or allow a financial advisor to manage those options. You might also be interested in a certain mix of stocks, mutual funds, exchange-traded funds, or other investment options.

Learn about the procedure. Rollovers can be complicated procedures, and one misstep can cost you a considerable amount of money and grief. For example, you want to ensure that you pursue a direct rollover to the new account. If the check is made out to you personally, you will trigger a 20 percent income tax withholding. Learn not only your old 401(k) account’s rollover policies, but also the requirements of your new IRA, to be sure funds are transferred correctly.

Finish within 60 days. You need to get your funds into the new account within 60 days, or else the “withdrawal” will be counted as a taxable event. A wired funds transfer can usually accomplish this goal without complications.

Work closely with your financial professional. Your financial professional can help you with all of these steps, so that you avoid any accidental (and costly) mistakes. If you’re considering a 401(k) rollover, please contact us and we’ll be happy to guide you through the process.

949-858-7200 | info@cotoinsurance.com