How To Rollover Your 401k

Video Transcript:

Hi Patrick here with Retirement Lifestyles advisory group where it’s all about having the health wealth and freedom to live your dream retirement. And today’s quick tip is all about… How to rollover your 401(k)

When you change jobs or retire, you’ve got some choices to make when it comes to your current 401k.  I always like to say, if you’re not at your last job, your retirement plan shouldn’t be either. Today, the average person changes jobs on average 12 times during his or her career. So it’s not uncommon at all to start a 401k at one job only to find yourself moving to a new job a few years later. So what do you do with your old 401k? You typically have four choices when it comes to rolling over your 401k.

1)      Leave it at your old employer

2)      Move it to your new employer

3)      Cash it in… or

4)      Move it to your own IRA.

Let’s talk about the advantages and disadvantages of each one.

1)      Leaving it at your old employer. This is an option, only if the current plan will allow it, so assuming they do, the advantage is, you don’t have to do anything, just leave it alone. Here are a few disadvantages though…

·         You can’t make any additional contributions to the plan anymore. If you have other retirement accounts it may become difficult to manage all of them together. And any future changes to the plan may affect your returns.

2)      You can move it to your new employers plan. The advantage is that your retirement account continues to grow tax deferred and you can now start making contributions again. The downside is that your new plan may have limited investment options available to it. Maybe even less choices than your last one, so you may not be able to get the returns that you want.

3)      You can cash it in…. Let me say that again, you can cash in your retirement account..! First, Lets talk about the advantages

Now… Lets talk about the disadvantages. You’re going to set off a tax bomb of epic proportions. Not only are you going to be taxed at normal income tax rates, to may be subject to an early withdrawal penalty if you’re under the age of 59 and a half. Sometimes I don’t know why I even mention this option… but you need to know them all.

4)      Roll your 401k to your own IRA. This is typically the best option because it gives you the most access to the world of investments. It’s also a lot easier to consolidate multiple accounts, you know, like the five other 401ks you left at other jobs? Well, you can now pull them all into one account. There’s no taxes due, if the rollovers done correctly, so you can still continue to defer the account and also contribute to it.

The disadvantages… loans are generally not available against your IRA and you won’t get any employer matches.

So there’s the four main options you typically have when it comes time to rollover your 401k. Now, if your getting ready to retire, you pretty much only need one option… number four, roll it into your own IRA account, and then it’s time to do some income planning.

Be sure to download your free copy of my 401k Rollover checklist. There’s a link in the email you received and also in the youtube video description below.

A lot of times when it comes to rolling over a 401k, people feel really intimidated, because they don’t want to accidentally trigger a tax problem, which unfortunately happens more often than not.

So, if you feel like you want some additional help or have some more questions, I’d like to invite you to schedule a free strategy session phone call with me. Simply click the link below or in the youtube description that says “I would like to schedule a call with Patrick” and it will magically bring up my personal calendar where you can reserve a phone call with me and we can discuss your situation and you can ask me any question you want.

There’s no charge for the call and you don’t need to worry about sending me any personal information or account statements.

Be sure to subscribe to my youtube channel Retirement Lifestyles Tv, you can click the subscribe button below.

You can also check us out on facebook, at retirement lifestyles advisory group, be sure to follow and like our page.

And if you’re lucky enough to live in the north state, be sure you tune in to my radio show Retirement Lifestyles every Saturday morning at 9am on news talk 1057 KQMS.

Don’t forget to download your free copy of my 401k Rollover checklist

Thanks for watching today’s quick tip, like it, share it and post any comments that you’d like.

And I wish you the best in retirement!

© 2017 McNally Patrick Daniel CRD #154642 is a Registered Investment Advisor in the State of CA, DBA Retirement Lifestyles Advisory Group. Advisory Services provided by Betterment LLC, an SEC Registered Investment Advisor, member FINRA/SIPC. Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance never guarantees future results.
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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

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