How, When & Why to Roll Over Your 401(k) Plan

Matt Bushard, CFP®

VP/Senior Wealth Management Advisor

How and why to roll over 401K

Employer-sponsored with tax incentives, a 401(k) plan can be a great tool to help you save money for retirement.

When you change jobs, whether you’re laid off or leave voluntarily, it’s important to devise a strategy for your 401(k) plan. It’s not uncommon for people to have multiple 401(k) plans, but from an investment management standpoint, it can be easier to keep track of your plan and make sure your investment allocation is appropriate for your situation if you simplify and consolidate your 401(k) plans into one.

Most retirement plans allow you to roll over dollars from past employers. A 401(k) rollover is a great way to keep your plan simplified and uniform. It could also help cut down on possible fees, and it gives you one point of contact for any questions you may have.

To help streamline the process, we’ve answered 3 of the most commonly asked 401(k) questions:

How Do I Roll Over My 401(k) Plan?

When you start the onboarding process with a new employer, your human resources team or new retirement plan provider can walk you through the steps – including filling out the proper paperwork – to roll your old plan into your new one.

When Should I Roll Over My 401(k) Plan?

As soon as your start, your new employer generally allows you to roll your former plan into your new one.

How Do I Avoid Paying Taxes on a 401(k) Rollover?

There could be potential tax consequences if you try to move your 401(k) plan yourself. A plan provider can help ensure you don’t have to pay taxes or penalties on a rollover.

Keeping multiple 401(k) plans in too many locations can make it easy to forget about one – and it makes it harder to see whether you’re on the right track toward accomplishing your retirement goals.

Contact Bell Bank Wealth Management at 800.709.5781 for answers to your 401(k) questions or any other financial planning help you need!

 

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This article has been written for the general information of clients and friends of Bell Bank. It is not intended, nor may it be relied upon, as tax or legal advice with respect to any matter. This article also cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by the Internal Revenue Service or other taxing authority.