What Is A 401k Rollover And Why You Should Do It

By Clay Johnson

Sometime in your life you may experience leaving your job or even laid off. When this happens, you will need to transfer you 401k account into a new one in 60 days. When you don't, you will find yourself paying high management fees and other penalties associated with your account.

What is a rollover? A rollover is simply changing your 401k plan from your employers sponsored plan to a new employers plan if you change jobs, or to a private plan if you are currently unemployed. This process does not have to be complicated or cost you any additional money. But you will need to do it within the time frame stated or you could face many fees which will deplete your account in record time.

One thing you should never do: withdraw your 401k account even if you intend to restart it later on. Some of the consequences you will have to face are, weighty fines from the brokerage firm, as well as penalized and taxed by the IRS for early retirement withdrawal.

The best thing to do is find a new account holder to handle your 401k account. Contact their transfer department and let them handle your transactions. They will be responsible for transferring your old account into a new one. With this, you can get rid of all fees altogether which is associated with your 401k because you have not withdrawn the money, but rather moved it to a new account. You won't be charged of taxes and penalties for early withdrawal.

One thing you should bear in mind is to transfer your 401k within the timeframe given you and you seek out a mediating company to finish the transaction. This way, you won't have to pay for taxes and fines, while you keep your retirement savings without all the hassle. - 23211

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Now, you should look into how to rollover your 401k for more information. You can find more tips and suggestions at 401k rollover school.