401(k) Rollover Services - Simplicity Retirement & Investment Services

1. MIND THE DEADLINES
When you leave an employer, their 401(k) plan will usually send you information on your rollover options and the deadline for indicating what you want to do with your money. If you miss that deadline, a decision will be made for you. In addition, if your old 401(k) balance is paid directly to you, the IRS requires that you roll it over to an IRA (Individual Retirement Account) or a new 401(k) plan within 60 days to avoid a penalty.

2. CHOOSE BETWEEN TRADITIONAL AND ROTH OPTIONS
The key difference is when your retirement savings are taxed. With a traditional IRA or 401(k),

• Plan contributions, including rollovers, are exempt from taxes and grow tax-free until withdrawal.
• Upon withdrawal, contributions and earnings are taxed as regular income.

WITH A ROTH IRA OR 401(K),

• Plan contributions are made from after-tax income — so a rollover from a non-Roth 401(k) to a Roth plan would be taxed when you roll it over.
• Withdrawals in retirement, including all earnings, are tax-free, subject to plan rules.

3. REQUEST A DIRECT ROLLOVER
In a direct rollover, your money moves straight from your old 401(k) provider to your new IRA or 401(k) account, without you ever taking possession of the funds. This avoids the mandatory 20% tax withholding that applies if your rollover check is made payable to you.

4. SETUP THE ACCOUNT TRANSFER
Your old and new retirement plan providers will have their own specific rollover procedures, such as how a rollover check should be made out. Follow these procedures exactly to avoid complications and consult your financial professional located at your credit union if you’d like help.

5. SELECT YOUR INVESTMENTS
Once you’ve setup your new account, you’ll need to select your investments. Your financial professional located at your credit union can help you better understand your options and select investments that match your goals and risk tolerance.

NOTE ALSO THAT SOME EMPLOYER 401(K)S DO NOT OFFER A ROTH OPTION, WHILE OTHERS MAY ALLOW YOU TO COMBINE TRADITIONAL AND ROTH ACCOUNTS. THE FINANCIAL PROFESSIONAL LOCATED AT YOUR CREDIT UNION CAN EXPLAIN ADDITIONAL DIFFERENCES BETWEEN ROTH AND TRADITIONAL ACCOUNTS AND HELP YOU MAKE AN INFORMED CHOICE.

Have recent events resulted in job loss? In addition to making decisions about new career opportunities and making ends meet, you might also be faced with a decision about what to do with your retirement account from a previous employer. Should you rollover your 401(k), leave it where it’s at or do something else with the money? Consider these factors first, and talk with a financial professional who can help you address others that may apply to your situation:

1. INVESTMENT SELECTION
With an employer-sponsored retirement account, there’s typically a similar portfolio offered to everyone. When you choose to rollover that 401(k), you might gain access to a wider range of investment options including stocks, bonds, mutual funds, index funds, annuities and others that allow you to tailor your investments to your personal risk tolerance. A financial professional can help you sort through your options.

2. ACCESS TO ACCOUNT INFORMATION AND ADVICE
Gaining access to information about your plan by going through a previous employer may be a challenge down the road, especially if they end up shutting their doors due to an economic downturn. If that happens, you may not be able to get the advice you want. Working with a financial professional might be easier and he/she can give you advice specific to your situation.

3. TAXES
Some investors are concerned that they’ll be hit with more taxes if they transfer funds to a new account. If a rollover makes sense for you, you likely don’t need to worry about this since a direct rollover won’t be hit with taxes. Your investments will continue to grow on a tax-deferred basis, and taxes will only be assessed when distributions are made from your account.

4. EARLY ACCESS TO FUNDS
While accessing funds prior to age 59 ½ can be accomplished for both employer-sponsored funds and IRAs, there are advantages and disadvantages to each. For instance, there may be penalties for early withdrawals.1 A financial professional who understands your particular situation can help you determine whether you’re better off leaving your retirement savings in the employer plan or rolling it over to an IRA, along with any associated implications for early withdrawals.

5. FEES, EXPENSES AND GUARANTEES
The fees associated with employer-provided retirement accounts can vary greatly and you may be able to have lower fees and expenses in a rollover IRA. In addition, there may be investment options available for your rollover that can provide protection against downturns in the financial markets that may or may not be available in your employer provided plan. Ask your financial professional about potential fees, asset protection, minimum balance requirements and other factors.

What makes most sense for you — leaving your retirement account in your previous employer’s plan or rolling it over to an IRA? The best way to know is to talk with a financial professional who can help you understand your financial situation, give you personalized advice, and leverage the use of our Rollover Analysis Tool. Make your appointment to start the conversation now!

Take the money now: While you might put this windfall to good use, bear in mind that you’ll pay taxes on the proceeds in addition to a 10% early distribution penalty if you are under the age of 59 1 /2.

Keep the money in your current plan if your employer allows it: This preserves your money’s tax-deferred status but spreads your retirement savings across multiple accounts and limits you to the investment options and withdrawal rules set by the plan—which means you may not have immediate access to your funds.

Rollover your account to an IRA (Individual Retirement Account) or your new employer’s 401(k): This option avoids an early distribution penalty and keeps all your 401(k) retirement savings in one account.

A rollover is a transfer of your money from one retirement account to another, preserving your retirement savings’ tax-deferred status. This allows your savings to keep growing and avoids paying taxes on the money until you retire.

Rolling over to an IRA offers several benefits. This option is available no matter what your employment status; you can choose a provider that has the investment options you want; and you have more withdrawal flexibility than most 401(k)s.

Your new employer’s 401(k) plan will usually accept rollover contributions as well. Choosing this option offers simplicity, as all of your retirement savings may be in one account. In addition, 401(k)s offer higher annual contribution limits than an IRA, and many allow you to borrow from your account — a feature not offered by IRAs.

No — if your rollover goes directly to an IRA or another 401(k). Before you initiate a transfer, talk with your financial professional located at your credit union to ensure your rollover preserves the tax-deferred status of your account.

Please be sure to consider the following:

• If you don’t take action by a specified deadline and your account balance is between $1,000 and $5,000, your former employer may automatically rollover your money into an IRA.
• If your account holds less than $1,000 and you don’t make a distribution choice, you could receive a check for the balance, with 20% withheld for taxes. Once you receive your money, however, you usually have 60 days to perform a rollover and avoid taxes and penalties.
• Nearly one-third of employers have a 6-12 month waiting period before you can start making contributions to your new 401(k). Your financial professional located at your credit union can help you explore alternatives that will keep your retirement savings growing during that waiting period.