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401(k) Rollover

401(k) Rollover Louisiana

We are here to help you every step of the way with all your retirement needs, including 401(k) rollover in Louisiana. What is a 401(k) rollover? Generally, a 401(k) rollover refers to the transfer of assets from one retirement account (401(k)) to another. There are various kinds of 401(k)s and other different types of retirement accounts that one can roll over their 401(k) into. For example, an Individual Retirement Account or IRA is an owner-established account set up with a financial institution. It offers individuals a retirement vehicle to save for retirement with tax-free growth or on a tax-deferred basis. A 401(k) is an employer-sponsored retirement savings plan that has its own set of rules. A 401(k) can be rolled over into another account of its kind, or it can be rolled over into another type of retirement savings account.

401(k) Retirement Plan

  • 401(k) Retirement Plan – A 401(k) is a retirement savings account that allows individuals to contribute portions of their salary into this retirement savings plan with investment options. Funds in a 401(k) grow over a period. They are employer-sponsored accounts. A lot of employers offer contribution matches at a certain percentage.
  • How 401(k) Plans Work – A 401(k) is a qualified retirement plan. This means that 401(k)s are eligible for the Internal Revenue Service (IRS) tax benefits. There are two types of qualified plans, defined benefit and defined contribution. A defined contribution plan is generally tax-deferred and lets individuals contribute either fixed amounts or a percentage of their paycheck. Defined benefit plans are employer-sponsored, and benefits are calculated based on various factors. Defined benefit plans are also known as pension plans. A 401(k) is a defined contribution plan.
  • 401(k) at Retirement – How does a 401(k) retirement plan work at retirement? The answer to this question is dependent on numerous factors. For example, your age will be an important factor in determining how your 401(k) works at retirement. Some options available to you regarding how you use your 401(k) at retirement will be based on what your income needs look like when you reach retirement age.

401(k) Rollover Options

Depending on where you are at in your retirement journey, there are numerous options available to you for a 401(k) rollover. 401(k) rollover options include leaving the money in your former employer’s 401(k) plan, moving the money into your new employer’s plan if you have switched jobs, roll over the money into a traditional or Roth IRA, and cash out the 401(k) account. The latter option of cashing out a 401(k) is generally not the best solution for most people as this would cause serious tax penalties. Each option comes with different tax implications, investment options, services, rules, potential fees, and sometimes distribution requirements once retirement is reached. It is always best to consult your financial professional before deciding which 401(k) rollover options will work best for you.

401(k) Rollover Rules

  • In most cases, the Internal Revenue Service (IRS) gives you sixty days from the date of distribution to complete a 401(k) rollover.
  • So long as contributions are made equal to the 401(k) distribution into an IRA or other eligible retirement savings account within the allotted time, there won’t be taxes or tax penalties assessed.
  • If the sixty-day deadline is missed, there are generally taxes assessed, and you may end up owing other fees or penalties depending on age and other factors. Penalties for cashing out a 401(k) or missing the deadline before retirement age eat up much of the assets you have in your 401(k). It is generally best to complete a 401(k) rollover within the allotted timeframe so that you preserve your hard-earned retirement savings funds.

Use a Financial Advisor

A 401(k) rollover planning financial advisor may be your best asset in coming up with a sound financial strategy that meets your individual retirement needs. You do not have to figure it out on your own. No one wants to imagine what life would be like if they outlived their retirement savings. Your quality of life in retirement matters too much to risk it. A financial advisor creates detailed, comprehensive, and sound financial plans that work for unique individuals. No two people are the same, so their financial plans should not be either. Wondering what to do with your 401(k) plan after leaving your company? McLoughlin Financial can answer all your 401(k) questions today! Call us!

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