Jeffrey M. Siegel
CPA/PFS
Financial Advisor, RJFS

4330 La Jolla Village Dr.
Suite 330
San Diego, CA 92122
Phone: 858-866-3550
Fax: 858-535-0763
Toll-Free: 877-752-6463
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401k & IRA Rollovers

 There are many important issues to consider when planning a 401(k) rollover, distribution or withdrawal, as well as the common 401(k) mistakes you can easily avoid.

What is a Rollover?

 A rollover refers to the tax-free transfer of money from one qualified plan to another qualified plan or IRA.  To qualify for a rollover you must be leaving, changing or retiring from a job, or have an "in service" withdrawal provision in your current plan.  In essence, you can take your vested retirement assets with you when you leave a job.  More importantly, when managed correctly a rollover allows your money to continue growing on a tax-deferred basis.

 Properly transferring your retirement assets, will avoid the 20% IRS withholding on the value of your plan.  Done improperly, your rollover could be treated as an early distribution and could result in paying taxes and a possible penalty and the money will no longer be tax deferred.  

 
Why do a 401(k) rollover?

 Before we examine the options you have to rollover your retirement assets, let's outline the rationale behind exercising the rollover option when you leave an employer:

 Severing ties with your former employer -there may be numerous reason, some personal and some financial.

• You may want to build a more diversified portfolio.

• Your 401(k) plan may have high expenses.

• Handle mandatory distributions wisely.

• Avoid the spousal consent rule.

• Control the access to your funds.

• Reduce the tax burden on your beneficiaries.

• You may lose the flexibility to borrow against your 401(k).

• Be careful with IRA rollovers - IRA rollover requirements can be complex, depending on the original source of the funds and the objectives of the IRA rollover, different requirements may apply.
  
  

 
401(k) Rollover Options

 When you change jobs or retire, you generally have four alternatives for dealing with the assets you've accumulated in your former employer's retirement plan: Ask me about the advantages and drawbacks of each:  

• Rolling assets into an IRA  
• Take a cash distribution  
• Leave the assets in the plan
• Move the assets to your new company plan   

 
401(k) & Retirement Strategies

 Regardless of the rollover option you choose, you should never lose sight of your overall retirement investment strategy as this will ultimately determine the type of financial retirement you will enjoy.

 You'll need to carefully consider:  

• The amount of time you have left until retirement.  
• The level of risk you are comfortable with.  
• The amount of money available to invest for retirement.  
• The amount of money available for other goals.  
• How much time and effort do you want to put forth to manage your investments?