If you do a rollover to a traditional IRA , the taxes are deferred. You generally have two options for where to get an IRA: an online broker or a robo-advisor.
The option you choose depends on whether you're a "manage it for me" type or a DIY type. If you're not interested in picking individual investments, a robo-advisor can do that for you.
Robo-advisors build personalized portfolios using low-cost funds based on your preferences, then rebalance those funds over time to help you stay on track, all for a much lower fee than a conventional investment manager. If you want to build and manage your own investment portfolio, an online broker lets you buy and sell investments yourself.
Look for a provider that charges no account fees, offers a wide selection of low-cost investments and has a reputation for good customer service. Explore best IRA accounts for These two words — "direct rollover" — are important: They mean the k plan cuts a check directly to your new IRA account, not to you personally.
The new account provider gives you instructions for how the check or wire should be made out, what information to include and where it should be sent. You can opt for an indirect k rollover instead, which essentially means you withdraw the money and give it to the IRA provider yourself, but that can create tax complexities.
We generally recommend a direct rollover. To get that money back, you must deposit into your IRA the complete account balance — including whatever was withheld for taxes — within 60 days of the date you received the distribution. The exception to this is if you want to open a Roth IRA, which will require taxes paid on the distribution, unless your money was in a Roth k.
At tax time, the IRS will see you rolled over the entire retirement account and will refund you the amount that was withheld in taxes. Once the money is rolled over into your new IRA account, select your investments.
Low-cost index mutual funds or ETFs often make sense for many people. You might be tempted to pick individual stocks and bonds, but this is rarely the best approach for anyone but a professional investor. Lots of k s allocate money into target-date funds, which buy shares of other mutual funds with the goal of shifting investments automatically over time as you approach a specific date, such as retirement.
If you like that approach, you likely can find a similar and perhaps less expensive target-date fund for your IRA at an online broker. Doing a k rollover to an IRA offers perks that can include more diverse investment selections than a typical k plan, perhaps cheaper investments and lower account fees. It's also a way to keep your retirement funds organized and ensure you have easy access to them. And while some k plans pass account management fees along to the employees, many IRAs charge no account fees.
In summary, it's a good way to save money, stay organized and make your money work harder. If your ex-employer lets you, you can leave your k money where it is, but you likely can't ask HR any questions, and you may pay higher k fees as an ex-employee. Generally, there aren't any tax penalties associated with a k rollover, as long as the money goes straight from the old account to the new account.
Although this route may help you keep your financial life organized by having fewer accounts to keep track of, make sure your new k has investment options that are right for you and that you aren't incurring higher account fees. See our full list of the pros and cons of rolling over your k to an IRA. If you do a direct k rollover, there are typically no taxes to consider until you start withdrawing money in retirement. If you do an indirect rollover see Step 3 above , you have 60 days from the date you receive the distribution from your old k to get it deposited into an IRA.
If you take longer than 60 days, it becomes a taxable event. Both of these are better than simply cashing out your old k. A rollover isn't for everybody. None of the information provided should be regarded as investment advice or an investment recommendation. Neither Hartford Funds nor its affiliates are undertaking to provide impartial investment advice to any individual investor or retirement plan sponsor. If you are an individual investor or retirement plan sponsor, contact your financial professional or other fiduciary unrelated to Hartford Funds about whether any given investment product or strategy may be appropriate for your circumstances.
In addition, it does not take into account the specific investment objectives, tax, and financial condition of any specific person. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed.
If you've switched jobs, do you know your options for the k you left behind? Investing for Income. Changing interest rates may have a significant effect on fixed-income investments. Do you prefer to minimize your paperwork and simplify your financial life by having all your investment accounts at one provider? Are you willing to pay attention to notices from your k plan administrator about changes to the plan and its investment options?
Are you adjusting your investments as you get older or as your life circumstances change? Do you know how much to withdraw each year to help ensure your portfolio lasts the rest of your life? CCWP Related Content. Many employer-sponsored retirement plans give you access to institutional share class mutual funds and low-cost index funds , especially at large employers. You may like certain lower-cost or unique investment options in your old plan that you won't be able to roll into or hold in an IRA.
Many retirement plans offer specialized money-management services with competitive fees that you may wish to maintain. Employer-sponsored retirement plans provide broader creditor protection under federal law than is provided with an IRA. It can be easy to pay less attention to your old retirement accounts, since you can no longer contribute. So, transferring old k assets to your new plan could make it easier to track your retirement savings.
You also have borrowing power if your new retirement plan lets participants borrow from their plan assets. The interest rate is often low. You may even repay the interest to yourself.
Each plan sets its own rules. Step 1: Find out whether your new employer has a defined contribution plan, such as a k or b , that allows rollovers from other plans. Evaluate the new plan's investment options to see whether they fit your investment style. If your new employer doesn't have a retirement plan, or if the portfolio options aren't appealing, consider staying in your old employer's plan.
You could also set up a new rollover IRA at a credit union, bank, or brokerage firm of your choice. You may have to fill out paperwork to establish an IRA if you do not already have one.
The instructions you get should ask for this type of information:. If you need help with the rollover, your human resources department or IRA custodian can assist. You will need the information you obtained in Step 2.
A direct transfer is the simple option in terms of taxes and penalties. The alternative, an indirect rollover, is not as convenient. Still, direct transfers can take up to six weeks, so be patient.
It all depends on how quickly your current plan administrator responds to the request. With an indirect rollover , you receive a check for the balance of your account that is made payable to you.
That might sound good, but as a result, you are now responsible for getting it to the right place. You have 60 days to complete the rollover process of moving these assets to your new employer's plan or an IRA.
Indirect rollovers can be made once a year. Avoiding cash distributions can save you from taxes and penalties, because any amount you fail to roll over will be treated as a taxable distribution.
Since the taxable portion of a distribution will be added to any other taxable income you have during the year, you could move into a higher tax bracket.
That would put them in a higher tax bracket.
0コメント