401k Rollover Options When Losing A Job
Jan 29, 2010 wealth building
A 401k is a form of retirement plan that is offered to employees by an employer. The employee will not pay income tax on the money until it is withdrawn at retirement. A 401K rollover usually occurs when an employee leaves a company and chooses to move the retirement funds to another retirement plan.
When deciding to move your retirement savings, it is important to look at all the options. A financial planner would be able to assist with moving your money as well as explaining any risks that may be involved with each option.
One 401k rollover option is to transfer your savings from employer-based 401k to an Individual Retirement Account (IRA). IRA allows you invest in your own interests that are aligned to your long term goals. The money also remains tax-free until withdrawal.
If you choose a brokerage or mutual fund company, you will have more investment options to choose from for your IRA. You may not have this kind of freedom in an employer-based 401k plan. It’s always up to you to choose your brokerage company, but I always suggest suggest finding someone that you can trust and that will get you to your retirement goals as fast as possible. This is your life savings though, so don’t just go with anyone off the street.
Another 401k rollover option is to move the retirement funds into a fixed or variable annuity. This would continue to provide an investment option with tax shelter benefits until retirement and would provide you with a guaranteed, steady income upon retirement.
If you think of changing jobs, your 401k funds can follow you to your next employment. Your retirement fund can be transferred with your current employer, and the funds will be subject to the new investment choices and rules of the new account.
Now, you should look into 401k loans for more information. You can find more tips and suggestions at 401k rollover school.
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