If You Want To Be Rich, We Can Help You! | 401k Rollover and You

It can be scary to leave a job. Even if you are choosing to transition from one company to another, it is a time of uncertainty, filled with decisions. One important decision that is often left to the last minute or forgotten completely, is what to do with the 401k retirement account. You can leave it to the last minute; there are worse things. Do not however, forget about it! It is not the end of the world if you leave the money with your old companies’ 401k plan. The money doesn’t disappear. At least not overnight. It will begin to whither, like a plant that doesn’t get watered. The account will grow, but the maintenance fees will eat up some, if not all, of the growth.

So take the few minutes needed to fill out the rollover paperwork. 401k rollovers are simple. The forms are simple and the process is super simple. Talk with your benefits person in the Human Resources department at your (soon-to-be) old job. You are allowed to ask questions – remember it is your money! What are the 401k rollover rules? They are simple. You have 60 days to decide what to do and to change your mind. For instance, if you panicked and decided to cash in your account (and take the penalty and pay the taxes on the money) and now you have come to your senses, you can have a do-over.  Save yourself and everyone else the trouble and don’t cash in the 401k account in the first place. If you’ve done it and moved the money or it is quite literally the 61^st day, you are up a creek. So avoid all of that drama by being smart at the start.

A 401k rollover is possibly the most painless money process you will ever endure. It is a simple one-page form and you are done. You pick one of two options. You can rollover to a new 401k account or you can do a rollover to an IRA. For some people this is the perfect chance to fund a second retirement account. If you feel comfortable with a 401k rollover-IRA, it can be a great option. You start your IRA nest egg with a big chunk of cash and you can still contribute the maximum amount for the year. If you don’t think you are disciplined enough to keep two retirement accounts going, you should opt for the straightforward rollover 401k.

Make sure you include this plan in your retirement options (such as purchase structured settlements or self directed roth IRA).

Whatever you decide, 401k or IRA, by taking a few minutes today, you are ensuring a golden future for tomorrow.

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