Choosing the best rollover option for you

You left your job or retired and it is time to figure out what to do with your old 401(k), TSP, 403(b), 457, profit sharing plan, pension, or other retirement plan you have. Navigating the rules, regulations, and various options available to you can be exhausting. Our extensive experience in evaluating rollover options and processing rollover transactions can help guide you in the right direction.

Generally, your options will look something like this:

Option #1 – Full withdrawal – typically, this is the worst option with the highest immediate tax consequences. A full withdrawal will usually be subject to state and federal taxes as well as the possibility of a 10% early withdrawal penalty. Choosing this option could result in a significant loss in savings.

Option #2 – Leaving your money in the existing plan or moving it to your new employer’s plan. If allowed, these options can keep your savings sheltered from taxes and allow you to continue managing the money in your employer’s retirement plan just as you had done before. However, many participants find themselves frustrated with the limited investment options, the difficulty of working with a call center, and they don’t want their employer so closely tied to their retirement accounts.

Option #3 – Rolling the retirement plan funds into an IRA generally offers the widest selection of investments and provides you with the option to consolidate all of your retirement accounts under one roof. Beware, performing a rollover is not always as easy as it seems. One of the most common mistakes is selecting the indirect rollover option which usually results in mandatory tax withholding and a requirement that you deposit the funds (including what was withheld for taxes) into another qualified retirement account within 60 days in order to avoid taxes and penalties. Investors who own company stock within their 401(k) or retire between age 55 and age 59.5 should also be aware of certain tax benefits that disappear once a rollover has been performed. 

Need help? We’ve got this!

Send us a message and we will help you understand your options and guide you through the process of rolling over your account. 

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