Leaving one job for another job can sometimes be an overwhelming transition, and one thing that can get lost in your shuffle is your 401k — but rolling over your MassMutual 401k is an important step you should take.
Forgetting or neglecting to roll over a 401k from your previous job could lead to issues down the line, but fortunately, rolling over a MassMutual retirement account is a relatively simple process.
Here are the steps you should take to successfully roll over your old 401k.
Step 1: Decide What You Want to Do
When you change jobs, you have several 401k rollover options:
- Roll over your MassMutual 401k to an IRA
- Roll over your MassMutual 401k to a new workplace plan
- Stay in your old workplace plan
- Cash out
Take a look at the pros and cons that come with each option.
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Roll Over Your MassMutual 401k to an IRA
Rolling over your MassMutual 401k to an IRA consolidates your retirement funds into a single account that you control. However, the drawbacks of an IRA are that these accounts have fewer legal protections in bankruptcy proceedings than a 401k, and you can’t borrow against an IRA account.
Roll Over Your MassMutual 401k to a New Workplace Plan
Like a MassMutual 401k rollover to IRA, rolling over your MassMutual 401k to a new workplace plan is a way to consolidate your retirement accounts. However, you should check your new plan’s fees and the financial products offered before making the switch. If you prefer MassMutual’s offerings, you might not want to go with this option.
Stay in Your Old Workplace Plan
Keeping your old MassMutual 401k is the easiest thing to do, but remember, you could lose the option of early withdrawal and you can’t take advantage of loan provisions.
If you cash out your 401k, you’ll get immediate access to your funds — but you’ll also get hit with early withdrawal penalties if you are younger than 59 1/2, and you’ll have to pay out a large chunk of your retirement savings to cover taxes.
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Step 2: Set Up a Rollover Account
If you decide to roll over your MassMutual 401k to an IRA or 401k with a new company, make sure your new retirement account is set up before beginning the rollover process. If you pull funds from your MassMutual 401k and do not deposit them into your new retirement account within 60 days, taxes will be withheld. Once you set up a rollover account, you can deposit your funds there directly.
To roll over your funds from a MassMutual account directly to another retirement account or to cash out, you will need to fill out a Separation from Service Distribution Request Form. The company that is managing your new retirement account can also assist you with the rollover process, from filling out the correct forms to choosing the retirement plan that is right for you.
If you choose to stay with MassMutual and roll over your 401k to an IRA, a MassMutual representative can help with the process.
Step 3: Contact MassMutual
MassMutual has a customer service line specifically for people who have been terminated from their jobs, and representatives can provide additional assistance with the rollover process. Call 800-743-5274 Monday through Friday, 8 a.m. to 6 p.m. EST, to speak with a representative.
If you plan to roll over your 401k to a new retirement account, ensure that you request a “direct rollover” so the funds are deposited directly into the account. With an “indirect rollover,” MassMutual makes out a check to you to deposit into the new account. With an indirect rollover, you might end up owing taxes on the funds.
Step 4: Report the Rollover on Your Taxes
You will use a 1099-R form to report designated distributions of $10 or more from pensions, annuities, profit-sharing and retirement plans, IRAs and insurance contracts. Direct rollovers should not require you to pay any taxes, but you will need to report the rollover to the IRS. When you transfer funds from your MassMutual 401k into a new account, you should receive a 1099-R form directly from MassMutual. Be sure to fill it out and file it with your other tax forms.
Click through to learn all the benefits of a 401k rollover.