In today’s economy, the average worker changes jobs 5-7 times over the course of their career. As a result, many will need to transfer their employer-sponsored retirement savings through a process known as rollovers. It is important to be educated on the process and benefits of rolling over retirement assets.
What are rollovers?
A rollover is a process to move your retirement funds from one plan (employer) to another. This is typically done in one of two ways.
The most common is a direct rollover. This is when retirement funds are transferred directly from one institution to another. The account owner doesn’t handle the funds themselves during the process, which helps them avoid potential taxes or penalties.
In contrast, a 60-day rollover pays the distribution directly to the participant. The participant is then required to deposit the funds into a new retirement account within 60 days of receiving the distribution, otherwise the funds will be treated as taxable income.
Why you should rollover your account
It’s important to understand the advantages of rolling over retirement funds.
Centralized Management: Rather than having money in several different places, keep all your money in one spot, making it simple to manage and track your finances.
Cost Savings: When you leave a job, the recordkeeper of the former employer’s retirement plan may charge fees to maintain the account. Rolling over your savings can help you avoid these unnecessary charges.
Ease of Process: Managing a single account reduces the unnecessary complexity of managing and monitoring investments in multiple accounts.
Tax Benefits: Depending on the type of retirement account, you may be able to maintain tax-deferred status, ensuring you don’t incur unnecessary tax penalties.
How to rollover your plan
The process can get complicated, but 401GO makes it easy. All participants have to do is go into the 401GO account and click on the “Rollover Funds” tab under “Account.” From there, just answer a few simple questions. We will provide them with a letter to send to the previous retirement account provider. Submit the letter and we will handle the rest.
Prepare for your future even as your present situation changes by taking advantage of rollovers. As always, if you have any questions or concerns, 401GO is eager to help.
