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What To Do With Your 401k, 403b or 457 when you retire or change jobs.

In this video, I’m going go over your options on what to do with your 401k, 403b, 457 or other qualified retirement plan when you retire or change jobs.

If you’re retired or separated service from your company, and have a qualified retirement plan you basically have 4 options as to what you can do with it.

Do Nothing. Most 401k’s and other qualified retirement plans don’t force you into rolling your account over to an IRA. So if you like your current plan, one option may be to simply do nothing. Double check on this with your plan sponsor just to be sure.

There are 3 reasons why you may want to leave your retirement plan with your employer.
– You like the investment options that you have available
– You have an outstanding loan, and plan to continue making payments.
– You retired after your 55th birthday and plan to take penalty free withdrawals until you turn 59 1/2

The second option is to Roll it over into an IRA

Probably the most common option. Rolling over your plan to an IRA can give you more control over your investment options. Even the best 401k plans are still quite limited on your investment choices. Rolling over to an IRA can give you a much broader selection of investments to choose from.

When you rollover your account, you will want to be sure to separate the pretax portion of your account from the after tax portion of your account.

For the pretax portion, have the check made payable to the financial institution you are rolling over to F.B.O. (for the benefit of) you the participant. For example, if you are rolling your account over to ABC investment company, you would instruct your plan provider to make the check payable to, ABC Investment company F.B.O. Your Name.

Your third option is to take a Check.

Probably one of the least desirable options.
If you take a check without rolling it over, 20% will be withheld from your check right off the top for tax withholding. This may not be all of your tax. You could end up owing more than 20% depending on your tax bracket and any penalties that may apply.

If you elected this option by mistake, you can put it back into an IRA account within 60 days to avoid paying taxes on it. However, you will have to make up the 20% that was withheld, out of your own pocket. Depending on the amount of your check, this could be a lot of money. When you file your income taxes next year, you will get this money back as a refund.
And finally the 4th option is to Roll it to a new 401k, if you are going back to work.

Check with your new employer’s plan to make sure they will accept rollovers.
Before you roll it over make sure you like the investment options and terms of the new plan. Once you roll it into the new plan you may be locking your money up for longer than you want. Most likely until you turn 59 1/2 or separate service with the new company.
two other things to consider on this.
You may like the plan now and the investments they offer, but companies are under no obligation to keep the existing plan. It can change at any time. Also they can add or remove fund options within the plan at any time and without warning.
If you have a smaller account balance it could make sense to roll it into your new plan, but if you have a larger account you will probably want to look into a rollover.

That’s it for this video. Hope you got some great information. If you want to get more tips and strategies like this, click on the link below to check out my free retirement guide, how to retire happy, 7 simple steps to creating your ideal retirement…(read more)

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