401k Rollover Answers

With your retirement plan or pension account, there are a number of different options that are readily available once you leave your employment.  Depending on the nature of your existing program, you may want to consider a 401k rollover to Roth IRA.  401k transfer can be a stressful process, and require a number of time-sensitive interactions to properly execute.  Take some of the stress out of the process by determining where you want your funds to go before you pull any funds out of your account.

Once you take money out of the account to transfer to another account, the 60 day timer begins.  If you do not complete the transaction within that short timeframe, you are going to incur tax penalties and lose a considerable amount of your retirement nest egg.  There is really no reason to not finish the transaction within this period of time, however many individuals find themselves falling a couple of days short of the restrictions.

Don’t assume that just because you are a day or two late on your transfer that the IRS will be forgiving.  They are not.  There are only a couple of reasons that the Internal Revenue Service will consider waiving the penalty for being late.  These reasons include complete disability, death, and other permanent or terminal reasons for missing the deadline.

An excellent option that has gained some traction in just the last couple of years is a 401k rollover to IRA.  This sort of 401k rollover used to only be available through a number of tedious transfers and account changes.  Now, many plans offer the option to simply transfer the account into a Roth IRA.  The main thing that you need to keep in mind is that you are going to have an upfront and sizable tax payment to make the transfer.  You will be expected to pay the tax on the previously tax-deferred portion of your retirement account.