Retirement Planning

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.

If you have a 401k 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 401k. Your options could include leaving your money in your current 401k plan if your soon-to-be-former employer allows it. You could also transfer it over to your new company's 401k plan. Or, you could roll it over into an Individual Retirement Account (IRA) or Roth IRA. You may also choose to cash it out - however doing so could cost you a lot of money so the prudent thing to do is to hold on to the 401k fund. If you do transfer it over to either a new 401k fund or an IRA, there could be penalties involved. Read on for some ideas on how to avoid 401k transfer penalties.

When you transfer money from your 401k to another 401k or an IRA, you may have to pay transfer penalties. 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 401k is quite quick - it is not difficult because it does not involved 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.

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