Having a 401K can be a real lifesaver when it comes time to retire, but managing those funds isn’t always easy. Whether you’re facing one of life’s unexpected hardships or you’re choosing to make a change of your own volition, you may be considering rolling over your retirement fund into a new account. If it’s your first time, you might have a lot of questions. The financial experts at Maggi Tax will fill you in on everything you need to know about rolling over your 401K!
Why Would You Want To Roll Over Your 401K?
Oftentimes, people need to manage their retirement funds when they change professions or become unemployed. While keeping your old 401K with your previous employer is one of the many options you can choose when leaving a job, you might want to look into rolling it over instead just because of the potential benefits that can come from it. In fact, these benefits are why people choose to roll over their 401K even if their job status doesn’t change. Some of these perks relate to taxes or increased contributions. Whatever your reason may be, it’s important to know all of your options.
An Overview Of Your Rollover Choices
Your two options for rolling over your 401K include transferring it over to your newer 401K with your current employer or placing it into an IRA account. Each has its pros and cons, it’s all up to what your plans are and what’s easier for you!
Transferring Between 401Ks
One of the main reasons why you may want to simply transfer your old 401K to the one provided by your current employer is for convenience. After everything’s been processed, all you would need to do is carry on per usual as you did with your previous job. This is especially recommended if your current employer happens to offer a better contribution plan than what you had before. The only downside is that you don’t have direct control over the funds and there’s a penalty for pulling out your money early, but most people don’t mind these conditions.
Utilizing An IRA Account
Some people might find IRAs more attractive just based on the idea of having full control over your contributions. And if you look into Roth IRAs, your contributions may even be tax-free. Either way, managing an IRA account takes a lot of discipline since you would need to keep track of the investments yourself and stay consistent with your deposits. This can take up a lot of anyone’s time which is why it’s not the most popular choice.
Some Things To Keep In Mind
When rolling over your 401K, there are a few things you should be aware of to make sure things go smoothly. The most important, time-sensitive piece of advice is that you typically only have 60 days to redistribute your funds once you receive them. Also, it’s worth it to pay close attention to the specific requirements of each institution that you’re connecting with as one minor slip-up can cause a major setback. And lastly, you should inform yourself of the current IRS limits for retirement fund contributions.
Need Help With 401K Rollover Management? Call Maggi Tax!
Keeping track of your 401K can be overwhelming especially if you’re not quite sure of what to do. If you want everything to go smoothly to ensure a relaxing and easygoing retirement, call Maggi Tax today at (727) 799-1701 to schedule a complimentary consultation for our 401K rollover management services!
