Switching jobs is exciting and often fruitful, but it does require adjustments. One of the many decisions you'll face during the process is what to do with your old retirement account. For many individuals, the most logical step is a 401(k) rollover. If you're chasing opportunities at a new company, here's what you need to know about your rollover options.

What You Need to Know About 401(k) & IRA Rollovers

What are rollovers? 

When you no longer want to utilize an old 401(k) or other retirement savings plan, the government allows you to roll over the funds to a new account. This process avoids the high tax rate of cashing out the original account while ensuring you're able to continue to grow the investment you've built.

What are the options?

When you roll over, you can choose your account type: an employer-sponsored 401(k), an individual traditional IRA, or an individual Roth IRA. In each case, you simply move the money into the designated account. As long as you follow certain rules, it won’t be treated as a distribution and you’ll avoid taxation. Keep in mind that if your existing IRA is a Roth, you can only roll it over into another Roth account. 

Are there rules about what I can roll over?

The IRS places restrictions on what you can roll over. For example, while Roth IRAs don’t require distributions until your death, other options generally mandate that you must begin making withdrawals at age 70 ½. These required minimum distributions can’t be rolled over. If you have a 401(k), your employer may also set certain policies. Talk to a financial adviser about whether your account qualifies. 

How does it work?

Once you decide a 401(k) rollover is right for you, the process is usually simple. With a traditional rollover, you’ll make your request from the administrator of your 401(k) and they’ll write a check payable to you, which you must then deposit in your account within 60 days. You can also opt for what’s known as a trustee-to-trustee transfer, in which your financial institution takes the funds from your old account and moves them to your new provider for you. 
 

Need more information regarding IRA or 401(k) rollovers? Turn to Nicole Gumm Groseclose Insurance Solutions for valuable assistance in Alleghany County, VA. Boasting more than 15 years of experience, this expert provides valuable life insurance and financial planning services to residents across the Alleghany Highlands. Learn more out about Nicole's retirement planning services online, or request a personalized consultation today by calling (540) 968-1569.