If you have a 401k retirement fund, you have probably been spending a lot of time recently stressing about it. The economy is in a tailspin and many people are seeing the funds in their 401k plans really drop in value. To make matters worse, many people are losing their jobs all over the country and are wondering what to do with their 401k plans since many companies will not allow you to participate in their 401k programs if you no longer work there. The good news is that you can do a 401k rollover: taking the money in your current 401k and rolling it over into a new one. The bad news - which isn't all that bad - is that there are 401k rollover fees.
When you rollover your money from one 401k fund into another one, or if you roll it over into an Individual Retirement Account (IRA) or a Roth Individual Retirement Account (Roth IRA) or any other kind of retirement savings account, you have to take special steps in order to fulfill certain legal, statutory requirements as stipulated by the government.
With a 401k retirement plan, you are not allowed to access the funds in it until you reach the age of 59-and-a-half. That is to say, you are not allowed to access the funds in your 401k without being heavily taxed and penalized for it. That's because 401k plans are specifically designed for retirement, and have all kinds of tax incentives attached to them to make sure you don't use the money in them before retirement. If you do access the money in your 401k before retirement, you're going to see government - both state and local - take out a huge portion in taxes and penalties.
When you rollover your 401k into an IRA or another 401k, you have to make sure that you don't "touch" the money - have your former employer move the money into the new employer's 401k fund. Or pay a financial professional to move the money for you. This is because, if you do you will get taxed very heavily.
To learn more about 401k plans, 401k rollover fees, IRAs, Roth IRAs or any other investment question, be sure to consult with a finance professional.
