If you have been steadily investing in your company’s 401k plan and are now moving on from your current employer, you may be wondering how do I collect my 401k? It is important to know your options when it comes to your 401k account in order to avoid paying costly taxes and fees.
Even if you do not have a large 401k balance, the right moves with your capital now can pay off in large returns down the road. It is important to look at all aspects of your finances – even the relatively small ones – in order to grow and preserve your wealth for the future.
What option is right for you will depend on a variety of circumstances including your current age and your time-frame for investing, whether your new employer offers a 401k plan, and your present and estimated income and tax bracket.
The Retirement Solutions Center at online brokerage ETrade can assist you in making the decision that is best for you. This site offers a combination of online retirement tools, and personalized assistance to help you achieve success in your retirement investing.
How Do I Collect My 401k? Rollover To A New Retirement Account
If you are asking yourself, “how do I collect my 401k?” and you are starting a new job that offers 401k plans, you can always rollover your old 401k into your new employer’s plan.
While this is one of the easiest options available, your new plan will probably have the same drawbacks as your old one – high fees and limited investment options – so it may be wise to take advantage of the opportunity to take you funds elsewhere.
Online broker ETrade makes it easy to choose and invest in the account that is right for you. You can research plans, potential investment options, and speak directly with a Chartered Retirement Planning Counselor to compare and contrast retirement plans to maximize returns and secure your financial future.
If you are becoming self employed, you also have the option of rolling over your old 401k account to a Personal or Solo 401k. These plans can provide you with a broad rage of options for your business including investment opportunities and tax advantages.
Rollover Your 401k To A Traditional Or Roth IRA
How do I collect my 401k? You also have the option of rolling over your 401k to an IRA, and for many people this is the best course of action. Traditional IRAs and Roth IRAs are popular retirement investment vehicles that can provide excellent tax benefits and growth potential.
The easiest way to rollover your account is through a direct transfer. With a direct transfer the money is transferred directly from your old account to your new account, and you never have to handle the money. This is the best way to avoid the penalties that can come with errors and missed deadlines.
If you are mailed a check by mistake, you need to make sure that the funds are redeposited in your new retirement account within the 60 day time frame mandated by the IRS. Failure to comply with this 60 day deadline will result in you having to pay personal income tax on the amount withdrawn, as well as a 10% early withdrawal penalty if you are less than 59½ years of age.
These same taxes and fees apply to all early withdrawals from your 401k, unless you meet certain age or hardship requirements. These taxes and penalties can cause serious damage to your investment capital, and jeopardize your financial future.