What should I do with my 401(k)?
“What should I do with my 401(k)?” is a common question we get. In the COVID era, we’re getting more of it than we’d like. Most people make this big mistake. Here’s how to avoid it.
Here’s how to take control of your 401(k) account after you leave your job
What should you do with a 401(k) from a previous employer?
In this episode of Queer money® we explain why you should not take early distributions from your retirement account unless absolutely necessary. We describe what we would advise under normal circumstances and how things are slightly different currently due to the provisions of the CARES Act. We’ll walk you through the two options for rolling over a 401(k) and explain why we recommend moving your money into an IRA rollover account instead of moving it into your new company’s employer-sponsored retirement fund. Listen in to gain insight into growing your retirement account through smart investments and learn the three steps you can take to convert your old 401(k) account into a shiny new IRA rollover account!
To reduce your expenses and have more control, rollover your 401(k) into an IRA rollover account. – John Schneider of Debt Free GuysClick to tweet
Topics Covered About Managing Your 401(k)
Why you shouldn’t cash out your 401(k).
• Pay a 10% penalty if you are under 59½. • Pay taxes on the amount withdrawn (unless Roth 401(k)).
Why you shouldn’t cash out your 401(k).
• You will still have to pay taxes on the amount withdrawn. • Only take early payout if you have lost your job or earn significantly less
How the CARES Act affects the tax consequences of withdrawing a 401(k).
• Waiver of 10% penalty for those under age 59½. • Tax distribution regulations until 2022
The 2 Ways to Roll Over Your 401(k) Account
1. Switch to the new company’s employer-sponsored retirement account. 2. Transfer to IRA rollover account
How to roll over your former employer’s 401(k) into an IRA rollover account
1. Contact the broker and ask to open an account in your name. 2. Contact the old plan administrator or previous HR department to initiate a rollover. 3. Make sure your money is invested
How to transfer money from a 401(k) account to an IRA rollover account
• Direct Transfer: Send the new account number and new brokerage firm name to the old administrator. • Mail Option: Ask that the check be made payable to the new brokerage firm in your name
Why we recommend the IRA rollover versus your new company’s retirement account
• Higher fees associated with employer-sponsored plans. • IRA rollover offers more autonomy and investment options