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Guide to 401(k) Rollovers - Direct & Indirect Rollovers, 401(k)
to IRA Rollover, Roth IRA Rollover
Rolling
your 401(k) – Trustee to Trustee Direct Rollover, Modified
Adjusted Gross Income (MAGI) Income Limits for Deductible Contributions
to a Traditional IRA
(July 29th, 2009)
When you leave your current job, you will
have to most likely fill out the 401(k) distribution election form.
The most logical thing to do with your 401(k) from a taxation perspective
is to do a direct rollover (also known as a trustee-to-trustee transfer)
of your money. With this type of rollover, the money goes directly
from your 401k plan into another tax-deferred account, either an
Individual Retirement Account (IRA) or your new employer’s
401(k) plan, 403(b) plan or 457 plan. 403(b) plans are generally
for teachers, educators and non-profit employees while 457 plans
are offered by local state governments. With a direct 401k rollover,
you do not have to pay any taxes on the money when it comes out
of your old employer’s 401(k)... (View
Full)
Indirect
401(k) Rollovers – Short Term Cash Source, IRS Penalties,
Important Notes to Consider
(August 14th, 2009)
Indirect rollovers work in reverse of direct rollovers where
the check is made out to the financial institution that holds
and maintains your 401(k) retirement account (this is also known
as a direct trustee to trustee transfer). In cases of indirect
rollovers, a check will be made out to your name, instead of
your financial institution and 20% of it will be withheld for
payment to the Internal Revenue Service. Once you receive the
check in your hand, you will have 60 days to deposit the face
value of the check to an Individual Retirement Account at wherever
your financial institution is, examples include Fidelity, Morningstar
or your local bank. If you complete the rollover within the
60 day limit, you will not be taxed and will be able to continue
investing salary deferrals in to your IRA... (View
Full)
401k
Rollovers to an Individual Retirement Account (IRA) –
Things to Consider Before You Rollover, Avoid Transfer Penalties,
Move Employer Stock, etc.
(June 28th, 2009)
When you quit your current job and move
to a new employer, and if you have maintained a 401(k) retirement
plan with your past employer, the above questions posed in the
title will attack you; so knowing what to do in such cases is
the best way to go. Conventional investors will tell us that
when you leave your job, you should rollover your 401(k) to
an Individual Retirement Account (IRA). IRA rollovers allow
you to continue deferring taxes and avoid early-withdrawal penalties
which can be up to 240! However, if you have a really good 401k
plan with your old employer, maybe you would prefer to leave
your money there, or rollover the funds to your new company’s
401k plan? Here is how you can decide if a 401k rollover to
an IRA is the right choice for you... (View
Full)
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