You’ve worked hard and you’ve saved money away in your companies 401(k) but now you’ve moved on. Maybe you retired or just changed jobs. Either way, it’s important to know what your options are.
Usually, when you leave a 401(k) behind at an old job you will have some options. Here’s 4 You typically will have one or all four of the following options that you can choose from:
#1 ROLL IT.
Roll over the money in your old 401(k) to a P.R. Curtman Traditional or ROTH IRA.
Rolling over your 401(k) is an option that can generate several benefits for you.
You can usually continue to make contributions. You’ll be able to add money every year as long as you meet certain income requirements. This also allows you to consolidate other retirement and savings accounts and could make it easier to monitor investments and simplify your account at tax time.
You’ll have a broader array of investment choices. Traditional and Roth IRAs usually have a broader range of investment options than what you might currently have in your companies 401(k) plan. If you roll over your 401(k) into an IRA, you could be unlocking a host of new options, but you might also not be able to access some of your plan options anymore.
Service. At P.R. Curtman, you’ll have a partner who can review your 401(k) rollover options and help create a custom investment strategy based on your goals and tolerance for risk.
Fee based. P.R. Curtman is a FEE ONLY advisory, meaning that we don’t charge commissions. We charge a flat fee as a percentage of assets under management, that way, we do better when you do better. We don’t make commissions off trades, and we have zero quotas to fill. We are a fiduciary, that means that we have a legal and moral obligation to provide services that are in the best interest of our clients.
#2 LEAVE IT.
Leave the money in your former employer’s 401(k) plan.
You might have the option to leave your money in a 401(k) after you terminate employment. Generally speaking, you will not be able to make further contributions to your 401(k) after you leave your employer. P.R. Curtman can help you find out what options are available within your plan if you decide to leave it at your old employer.
Investment choices. 401(k) plans generally have a limited set of investment selections compared to an IRA but in some cases. they might also offer investment selections that are not available to IRAs.
Services. A plan might offer educational materials, planning tools, telephone hotlines or workshops. Your plan might or might not provide access to an advisor.
Fees and expenses. In a 401(k), you might incur administrative fees and other investment related expenses and distribution fees.
#3 MOVE IT.
Move the money to your new employers 401(k) plan.
You might have the ability to roll your old 401(k) into the 401(k) plan at your new employer. This all depends on how the plan is designed and if it is allowed. P.R. Curtman can help you find out whether this is an option.
#4 TAKE IT.
Cash out the 401(k) account.
Withdrawing your money is an option, however, in most cases, it also means that those funds will not grow tax deferred and be available for you when you retire. Cashing out your 401(k) is also a taxable event in which case the IRS will want you to report those funds as income for tax purposes. In addition to that, you might also have to pay a 10% penalty for taking your funds out of your qualified plan before the age of 59 1/2 unless you left your employer in the calendar year you turned 55 or older.
Contact P.R. Curtman Investments and we can help you understand the options available to you. Whether you roll over your old 401(k), leave it where it is, move it into your new employer's plan, or cash it out, you should do so with a strategy that makes good sense for tax purposes and also helps you achieve your overall financial and investing goals.