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Reasons To Consider a Rollover Now

When you move on from your job, don’t just roll your old 401(k) into your new 401(k). It can be subject to poor, limited service relegated to “past employees” or get stuck in litigation if the business changes hands or shuts down. With our guidance, you’ll regain control over your money – including optimizing your taxes. And when you have questions or curiosities, our Phoenix fiduciary advisors are only a phone call or an email away.

Few Americans stay at one job for their whole working lives. However, moving companies can leave 401(k) accounts in multiple places, without strategic planning and with higher insurance costs. At Trajan Wealth, our Phoenix fiduciaries can help you complete the Transfer Initiation Form (TIF) for a streamlined rollover process.

When to Cash Out Your 401(k)

Before you take 401(k) funds to buy a home or fund college, know that the repercussions are serious and permanent. For any withdrawal you take, you pay ordinary income tax.

Real-Life Example: If you earn $60,000 annually and withdraw $100,000 from your company retirement plan, you must report $160,000 to the IRS that year. That jump will severely impact your tax bill.

Don’t get surprised by financial hits like that. A Phoenix financial advisor can look ahead and prevent an expensive mistake.

401(k) Rollovers in Phoenix:
FAQs

Depending on your previous employer’s plans and a few other factors, it usually takes rollovers 2–4 weeks to finalize.

Your retirement savings contributions are yours, but situations can delay your rollover. Employers can freeze your 401(k) due to pending litigations, mergers, or administrative changes. This legally requires them to provide a 30-day notice prior so you can make necessary arrangements. However, during this time, you cannot contribute or withdraw anything.

Also, you may not get employer-contributed funds when your old plan involves a vesting schedule. You must work a certain amount of time before your contributions are entirely yours. If you’re at 0% vested status, you can only withdraw funds you’ve added. Once fully vested, your entire 401(k), including interest or company additions, is fully accessible. If your employment ends earlier than stipulated within the vesting schedule, some or all the employer contributions may not belong to you.

Simply put, a 401(k) plan is not required to accept rollover contributions. Your new employer may also limit the types they take, including 401(k) plans, 403(b) plans, 457 plans, or IRAs.

It depends on how and where you decide to roll over the money. Talk to our Phoenix financial advisors before acting. Here are 4 common 401(k) rollover types:

Direct rollovers. This option lets you transfer funds from your old plan directly into your new employer’s 401(k) plan without incurring taxes or penalties.

Indirect rollovers. Funds from your previous employer’s plan will arrive as a check – but be warned: if you don’t deposit it within 60 days and are under 59 ½, you’ll get hit with a 10% early withdrawal penalty. This is In addition to any taxes you’ll be paying. A further complication: your ex-employer will be required to withhold 20% of it for taxes. To deposit your total balance into an IRA, you must source other funds to account for the withheld 20%.

Traditional 401(k) to Traditional IRA. You’ll be deferring taxes and won’t owe anything.

Traditional 401(k) to Roth IRA. You’ll owe income taxes on the amount you roll over. Depending on how low future tax rates dip, you may save money over time.

Set Up Your Financial Future

With Trajan Wealth In Phoenix

If your retirement savings are spread out among former employers or financial advisors – don’t just leave them sitting there! Our Phoenix-based team at Trajan Wealth can navigate the transfer process and manage your assets in one convenient centralized location. With offices in Peoria, Gilbert, Goodyear, and Scottsdale, we’re happy to assist our fellow Arizonans. We’re excited for you to have peace of mind for your financial future!

 

Contact Us Today