If your employment situation is about to change, you’re probably wondering what will happen to your retirement contributions. Fortunately, you have several options, and a knowledgeable insurance agent can explain the pros and cons of each so that you can make an informed decision. While the most practical approach will depend on a variety of factors, it will likely be one of the following. 

What Are Some 401(k) Rollover Options?

1. Leave the Funds Alone 

Keeping the contributions in your old employer’s plan is the easiest way to proceed because there’s nothing that needs to be done. This is generally a viable option if you have at least $5,000 in the account. However, the account will need to be monitored to track performance and ensure there are no major modifications to the plan. 

2. Transfer the Funds 

If the new employer allows rollovers, you can transfer the savings from the old plan to the new one. This will allow the new employer’s match program to take effect as soon as the allotted waiting period has passed. It will also ensure the savings are conveniently stored in one place. 

3. Roll the Funds to a Traditional IRA

If you’re not leaving a job by choice and have between $1,000 and $5,000 in the account, the old employer must help you set up a traditional individual retirement account (IRA). Rolling the funds to an IRA is still an option if you have more than $5,000 saved, but you’ll have to prompt the transfer yourself with the help of an insurance agent because the employer isn’t obligated to do so. Compared to a 401(k), an IRA will offer considerably more flexibility in regard to investment options, including individual stocks and bonds. 

4. Withdraw the Funds

If you’re nearing retirement anyway, cashing out the balance may be the most practical way to take your savings with you. If you’re under 59½, however, withdrawing the funds will come with tax obligations. In addition to the income tax for standard distributions, there’s typically a 10% penalty for early withdrawals. 

 

If you need 401(k) rollover assistance, contact Gwen King Insurance in Nibley, UT. Gwen is a seasoned insurance agent who treats clients like family. Serving the Tri-State area, she has more than two decades of experience in the field. In addition to retirement contributions, she’s well-versed in employee group benefits, health insurance, and life insurance. To learn more about her professional expertise, visit her website. To discuss your needs with this insurance agent, call (385) 347-2172.