If you have a 401(k) and are about to move to another job or now unemployed then you may be wondering what you should do with the money in your account.You could do a 401(k) rollover to an IRA or Roth IRA. Your other options could include leaving your money in your current 401(k) plan if your soon-to-be-former employer allows it. You could also transfer it over to your new company’s 401(k) plan.
You may also choose to cash it out–however doing so could cost you a lot of money, so the prudent thing to do would be to hold on to the 401(k) fund. If you do transfer it over to either a new 401(k) fund or an IRA, there could be penalties involved. Read on for some ideas on how to avoid 401(k) transfer penalties.
When you roll over money from your 401(k) to an IRA, you may have to pay 401(k) rollover fees. You can avoid these penalties by making sure that the funds are never in your hands. How do you do that? By having the money transferred by your old employer to your new employer, a broker could help you perform this transaction.
Transferring 401(k) funds is quite quick–it is not difficult because it does not involve a lot of paperwork and it doesn’t cost you a lot of money.
To learn more about avoiding 401k transfer penalties, 401k’s, IRAs, Roth IRAs and other retirement account options, be sure to consult with a financial advisor. He or she can discuss with you all the pros and cons to your retirement account options and help you avoid any costly mistakes.