401(k) Rollovers

Your Guide to 401(k) Rollovers & Roth IRA Conversions

When you switch jobs, your best option might be to rollover your 401(k). You could also leave the retirement plan with your employer, cash out and pay applicable taxes and fees, or convert the funds to a Roth account. Our financial advisors can help you sort through your rollover options and weigh the pros and cons of your choices. 

Combining or consolidating your retirement funds is often a good idea. We will actively manage your investment portfolios, managing and balancing your assets to keep you on track to pursue your financial goals. You might also consider full or partial Roth IRA conversions to receive some tax-free income during your retirement years. 

<span style="font-weight: 400;" data-mce-style="font-weight: 400;">Your Rollover Options</span>

Your Rollover Options


With 401(k) rollovers, you can use a direct or indirect rollover. With a direct rollover, the retirement funds never touch your bank account. Instead, the assets in your 401(k) are transferred directly to the new retirement account. You can also use a trustee to facilitate the transfer.

With an indirect transfer, you receive the money from your retirement account. Taxes will be deducted, and to avoid declaring it as income and paying taxes on it, you must pay the entire amount into the new retirement account. An indirect transfer may not be the best option. It can be tempting to have that kind of money sitting in your account, but if at all possible, you want to rollover your entire retirement fund.


<h2><span style="font-weight: 400;" data-mce-style="font-weight: 400;">Roth IRA Conversions</span></h2>

Roth IRA Conversions


Instead of rolling over your 401(k), you also have the option to convert it to a Roth IRA. When you convert your traditional retirement account to a Roth account, you have to pay taxes on that income and possibly an early withdrawal penalty, depending on your age. The benefit of a Roth IRA conversion is that you will now have the option to receive tax free income during retirement. 

With Roth IRA rollovers, you don’t have to rollover the entire amount at once. You can do it in stages, especially if you’re dealing with a large nest egg. It’s important to think this through because it will affect your taxes for the current year. We can help you manage the Roth conversion and create a tax planning strategy, too.

Frequently Asked Questions

While it’s sometimes possible to rollover your 401(k) while you’re still employed, you’ll definitely have the option to do so if you leave your current employer. Once you receive the funds from your 401(k), you have 60 days to do the rollover and avoid taxes and penalties.

No, there is no limit to how much you can rollover in your 401(k). However, you can only perform one rollover in a calendar year, and you must also meet the timeline requirements and use a qualified retirement plan to avoid the penalties and taxes.

A transfer occurs when you move money from one type of retirement account to another retirement account. It could be transferring your 401(k) to an IRA or the funds of one IRA to another IRA. With a transfer, the money never touches your bank account, ensuring you’ll meet the rollover rules and avoid taxes and penalties.e

A traditional IRA allows you to deduct contributions from your taxes. When you withdraw money during retirement, you have to pay income taxes on those earnings. A Roth IRA account uses after-tax contributions, but your withdrawals in retirement will be tax free.

If your 401(k) allows it or you are leaving your current employer, then you are eligible for a rollover of your funds into an IRA. We can help you with the process and make sure you can rollover your funds without being subject to early withdrawal penalties.

FAQs about 401(k) Rollovers & Conversions

When Can I Rollover My 401(k)?

While it’s sometimes possible to rollover your 401(k) while you’re still employed, you’ll definitely have the option to do so if you leave your current employer. Once you receive the funds from your 401(k), you have 60 days to do the rollover and avoid taxes and penalties. 

Are There Limits to How Much I Can Rollover?

No, there is no limit to how much you can rollover in your 401(k). However, you can only perform one rollover in a calendar year, and you must also meet the timeline requirements and use a qualified retirement plan to avoid the penalties and taxes. 

What Is the Difference between an IRA Transfer and Rollover?

A transfer occurs when you move money from one type of retirement account to another retirement account. It could be transferring your 401(k) to an IRA or the funds of one IRA to another IRA. With a transfer, the money never touches your bank account, ensuring you’ll meet the rollover rules and avoid taxes and penalties. 

What Is the Difference between an IRA and a Roth IRA account?

A traditional IRA allows you to deduct contributions from your taxes. When you withdraw money during retirement, you have to pay income taxes on those earnings. A Roth IRA account uses after-tax contributions. 

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

Can I Rollover My 401(k) to an IRA?

If your 401(k) allows it or you are leaving your current employer, then you are eligible for a rollover of your funds into an IRA. We can help you with the process and make sure you can rollover your funds without being subject to early withdrawal penalties. 

<h2><span style="font-weight: 400;" data-mce-style="font-weight: 400;">We Can Help You with Your Rollover Options</span></h2>

We Can Help You with Your Rollover Options


401(k) rollovers and Roth IRA conversions can be complex, but we’re here to help you with the process. Our financial advisors will make sure you understand the pros and cons of rolling over your retirement account. We’ll also help you mitigate taxes and early withdrawal fees. Call our team today to talk about your rollover options.