We Explain 401K Eligibility, Timeframe Requirements, And Investment Opportunities
A 40l(k) is a “qualified” retirement plan offered by your employer, eligible for special tax benefits under IRS guidelines. You can invest a portion of your salary, up to an annual limit. Your employer may or may not match some part of your contribution. The money is invested for your retirement, usually in your choice of a variety of mutual funds. Money typically cannot be withdrawn without a tax penalty until age 59 1/2.
If you leave a job for reasons other than retirement, you will need to decide whether to transfer your 401(k) into another account. Neglecting this can leave you owning several retirement accounts with a variety of past employers—or tax penalties if your employer simply sends a check and you do not correctly reinvest it in time.
When evaluating your best course of action, there are four options to consider for your 401(k) plan. They include:
- Rolling over the assets into a traditional or Roth IRA
- Keeping your 401(k) with your prior employer
- Consolidating your 401(k) into your future employer’s plan
- Cashing out
Deciding whether to keep the account with your prior employer or move it will be influenced by many factors. There is a separate set of rules for each rollover that must be followed to ensure that you are complying with and benefitting from that can guide you on the best solutions for your specific financial situation. Our experienced advisors can help guide you to make the best decision for your specific financial circumstance.
It can be difficult to keep track of various retirement accounts. Typically, it’s much easier to consolidate them all into one account. If a rollover is in your future, consider opening a retirement account with Riverplace Capital or a qualified broker.
If you have a 40l(k)plan and are interested in determining the best course of action for your financial future, Talk With Us.