Summary of how to do a 401(k) rollover

Links to other helpful videos:

Pros and Cons of a 401(k) to IRA Rollover –

Employer Plan Rollover Pros and Cons –

What is the Rule of 55 –

To listen to my podcast, “retirement planning Education” –

To join my Facebook group, “Taxes in Retirement” –

To subscribe to my newsletter, “retirement planning Insights” –

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DISCLAIMER: This video is only helpful hints and education. It is not specific tax, legal or investment advice. Before considering acting on anything you see in this video, first consult with your tax, legal or investment advisor. While the information expressed in this video is believed to be accurate, neither Andy Panko, CFP®, RICP®, EA nor Tenon Financial LLC make any guarantees to its accuracy….(read more)

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How to Do a 401(k) Rollover: A Step-by-Step Guide for Financial Success

Planning for retirement is essential, and one crucial aspect of it is understanding how to manage your 401(k) funds effectively. If you’ve recently changed jobs, you might be wondering what to do with your old employer-sponsored 401(k) account. This is where a 401(k) rollover comes into play. In this article, we will guide you through the process of doing a 401(k) rollover, ensuring you make informed financial decisions.

Step 1: Research and Understand the Basics

Before proceeding with a 401(k) rollover, familiarize yourself with the two main types: direct and indirect. A direct rollover involves transferring your funds directly from one retirement account (employer-sponsored 401(k)) to another (an individual retirement account or IRA), without having the money pass through your hands. On the other hand, an indirect rollover is when you receive a distribution from your old 401(k) and have 60 days to deposit it into an IRA to avoid penalties and taxes.

Step 2: Decide between a Traditional or Roth IRA

Now that you know the types of 401(k) rollovers, you must consider whether to transfer your funds into a Traditional IRA or a Roth IRA. With a Traditional IRA, contributions are tax-deductible, but withdrawals are taxable. In contrast, a Roth IRA offers tax-free withdrawals but contributions are made with after-tax dollars. Research the advantages and disadvantages of each option to determine which is better suited to your retirement goals and current financial situation.

Step 3: Choose a Financial Institution

Decide where you want to open your new IRA. Research various financial institutions such as banks, credit unions, brokerage firms, or online platforms. Consider factors like account fees, investment options, customer service, and ease of use. Pick an institution that suits your needs and connects with them to initiate the rollover process.

Step 4: Initiate the Rollover

Contact the chosen financial institution and let them know you want to do a 401(k) rollover. They will guide you through the necessary paperwork, which typically includes an account application, rollover request form, and a distribution request from your old employer’s 401(k) plan. Be sure to follow all instructions and provide accurate information to ensure a smooth transfer.

Step 5: Review Investment Options

Once your new IRA account is open, review the investment options available to you. Determine your risk tolerance and goals, and choose a diverse portfolio that aligns with your investment preferences. Consider consulting with a financial advisor to make informed decisions and maximize your retirement savings potential.

Step 6: Monitor and Adjust

After completing your 401(k) rollover, it’s important to regularly monitor your investment performance. Review your portfolio, adjust as needed, and stay informed about market changes and trends. Remember, retirement is a long-term goal, so periodic evaluation and adjustments are necessary to ensure financial success.

By following these steps, you can successfully complete a 401(k) rollover and secure your financial future. Remember, it’s essential to research, understand your options, and seek professional advice, if needed, to make the best decisions for your retirement savings. Start planning today for a comfortable and stress-free retirement tomorrow.