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Switching jobs?
You may want to consider what youd like to do with your 401(k) plan.
Check out this guide on how to roll over a 401(k).
Heres a plan that can help:
1.
Ask if a direct rollover is offered.
Heres a look at both options and the pros and cons.
To roll over your 401(k) to a Roth IRA, you could request a direct rollover.
This is the easiest way to roll over your 401(k) to a Roth IRA.
Another option is to cash out and get a check cut from your 401(k).
This amount must be deposited into your Roth IRA within 60 days.
Failure to do so can generate a taxpenalty.
The upside is you wont pay taxes on any withdrawal from your Roth IRA.
The good news is you wont pay taxes when you withdraw from your Roth IRA during retirement.
Underestimating Fees
Dont make the mistake of assuming a 401(k) rollover is free.
Some employers have an exit fee when you roll over your 401(k).
The amount of the fee depends on the employer.
Charles Schwab, Vanguard and Fidelity have zero-fee IRAs available.
To avoid this scenario, look for an IRA provider with commission-free trading.
Consulting with a financial planner about your strategy also results in an ongoing advisory fee.
The best time depends on your situation.
After Changing Jobs
Typically for most people, its best to roll over when you switch jobs.
When you compare rollover options, you gotta examine the switch by looking at the whole picture.
This includes looking at the investment options, fee structure, services offered and account protection from creditors.
Final Thoughts: Is a 401(k) Rollover Right for You?
Rolling over your 401(k) offers several advantages.
You have four options when deciding whether to roll over your 401(k).
you’re able to learn more about GOBankingRates processes and standards in oureditorial policy.
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