Just this year, we have experienced several lifestyle changes. Office work transitioning to remote work, company goals adjusting, and even a number of job changes. If you are one of the millions of Americans who has experienced a transition in your job, you might want to look into a 401(k) rollover. If you participated in your employer-sponsored retirement plan, you will want to keep reading to learn more.

What is a 401(k) rollover?

A 401(k) rollover is a financial move that you make when you change jobs or want to switch to a different type of retirement account. In other words, when you make the decision to rollover your 401(k), you are deciding to take your current retirement funds and transfer them elsewhere, such as an IRA or other retirement account. There are numerous options for where to rollover your 401(k).

Where can I transfer my funds from my 401(k)?

As mentioned above, you can move your 401(k) funds to another retirement account. Other retirement accounts include a traditional IRA, Roth IRA, or even another 401(k). No matter where you transfer your 401(k), you might have consequences such as taxes and extra fees.

Why would I rollover my 401(k)?

Rolling over your 401(k) is ideal for those who are switching jobs. If you have had multiple jobs in the past for different companies, it is likely that you have several different 401(k) accounts to keep track of. If you want to make it easier, a great tip is to combine your 401(k)s and consolidate the number of accounts you have.

For those that want to grow their 401(k) beyond where they currently are, a 401(k) rollover to another type of retirement account might be best for you, as there are plenty of other investment options and have more of a choice when it comes to exactly how you want to invest your hard-earned dollars.

If you are holding on to older 401(k)s from previous jobs, you might be required to one day rollover your 401(k). Reasons for this include if your old employer changes 401(k) providers (Forbes). Depending on where you previously worked, your employer might have different requirements for your 401(k) plan that require you to rollover your savings.

To start, there are several items to consider prior to making the decision to rollover your 401(k), such as fees, taxes, and differences in funds when you rollover. If you rollover your savings and keep the same funds, you “you might need to take a few extra steps, including having the money sent to you first. When this happens, you have 60 days to move the money into a qualified account or you risk the penalties and taxes of an early withdrawal” (Forbes).

As you can see, 401(k) rollovers are complicated. We highly recommend speaking with a financial professional when weighing out your options for your 401(k) and your financial future. If you would like to schedule a call with us, visit our website. We’re here to help!