Should I rollover my 401(k)?

When you leave a job for reasons other than retirement, an important and time-sensitive task is deciding 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

Keeping this in mind, you should know that with each type of rollover there is a separate set of rules. It’s important to follow them, ensuring that you are complying with and benefitting from the tax advantages while not paying unnecessary penalties.  Riverplace Capital is well versed on these matters and you can rely on us for guidance.

Given the transient nature of society, it can be difficult to keep track of various retirement accounts. Typically, it’s much easier to consolidate into one 401(k) or into an IRA.  If a rollover is in your plans, consider opening a retirement account with Riverplace Capital or a qualified broker.

Deciding whether to keep the account with your prior employer, or to move it to your new employer, may be an option to explore. Your decision will be guided by many factors including the 401(k) terms of your prior and new employer, your age, employment status, financial picture and the performance of the 401(k) portfolio to date.  Riverplace Capital has experience with these matters and can walk you through this decision-making process.

Cashing out is rarely a good idea, except in extreme emergencies, because you will be taxed at your current tax rate and need to be 55 to avoid paying an additional 10% penalty. If you’re still working, you must wait to access the money without penalty until age 59½. To the best of your ability, you should only withdraw what you absolutely need. 

If you have a 40l(k)plan and are interested in determining the best course of action for your financial future, Talk With Us.

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