What a Rollover Is

Rolling over your 401(k) allows you to transfer the money from one retirement account to a new one, either another 401(k) at your new job or an individual retirement account (IRA). This could maintain the retirement fund’s tax-deferred status, and let you continue building toward your goal. It’s always best to discuss these options with your tax advisor to determine what’s right for you.


Direct & Indirect Rollovers

If you choose a direct rollover, the money from the 401(k) is sent directly to a new account you’ve chosen, instead of going to you. In the case of an indirect rollover, you’d get the check to deposit on your own, but you could be taxed on the income if you don’t do it within 60 days of receiving the money.


Rolling Your 401(k) to an IRA

Many people rollover to an IRA to protect the tax-deferred status of their 401(k) account.

A Traditional IRA is an individual retirement account with tax-deferred growth and potentially tax-deductible contributions. Contributions to Roth IRAs are not tax deductible, so a rollover may get taxed.  There are other differences, too, between Roth and Traditional IRAs.


How to Make the Right Choice

Everyone’s situation is different. When thinking about making a rollover decision, it’s important to think about what you want out of your 401(k) fund. And remember that these are major decisions for nearly everyone, and it can feel overwhelming to consider saving for retirement.

A financial advisor can help you plan confidently for your future, and your tax advisor can help you understand the impact of your decisions.

A+ Tip: The Affinity Plus Investment Center representatives work with members of all backgrounds to plan for retirement.