If you’ve changed jobs and still have a 401k balance with that former employer, you should know that you have options for what you can do with your money. One of the best choices you can exercise is to make a 401k rollover to IRA account where your money can continue to grow tax free just as it did inside the old 401k account. When you consider an IRA vs 401k, there can be a lot of advantages to switching your money from one to the other. Here are a few things you need to know about making the rollover. … [Read more...]
What Is a Backdoor Roth IRA Conversion?
If you’re one of the many people who earns too much to contribute to a Roth IRA but still wants the tax-free benefits that come along with having one, then you might be happy to know that all hope isn’t lost! There’s still a way you can contribute to one, and it’s done using a little-known technique called a Backdoor Roth IRA Conversion. The way that a Backdoor Roth works is simple: First you make a contribution to a Traditional IRA. Even though there are income limits on contributing to a Roth IRA, there are none for a Traditional. Typically this contribution will be non-deductible, though it could also come from a deductible … [Read more...]
Why Banks May Not Be the Best Place to Rollover 401k Plans
Since 2007, the majority of Americans who are rolling over their 401k plans are choosing to put their money into an IRA offered through major banking institutions. However, some financial advisors are wondering if that is the best place to rollover 401k plans. This is because there are some indications that banks are not necessarily a safe place for your money. Of course, rolling over your 401k to any IRA is better than not rolling it over at all and taking a lump sum withdrawal when you leave your company. If you choose to withdraw your funds instead of rolling them over, you will not only immediately pay income tax on the amount you … [Read more...]
The Benefits and Drawbacks of a 401k Transfer
If you are employed by a company that offers a 401k plan that you have been contributing to while you worked there, you know how beneficial it can be in terms of helping you save for retirement. However, if you are considering leaving your company for other employment, you will need to determine whether or not you want to make a 401k transfer or leave your money in your company’s 401k. There are benefits and drawbacks to both strategies, but until you know what those are, you shouldn’t be in too big of a hurry to make your decision. You are under no obligation to remove your money from your company’s 401k. You can leave it there for as … [Read more...]
How and When to Rollover IRA to 401k
When most people consider rolling over one retirement account to another, it’s because they are leaving their current employer and want to take their money with them. Even though in most cases they can leave their money with their employer’s retirement fund company, they often want to rollover the funds to an IRA or their new employer’s retirement plan. However, on occasion, some people want to learn how to rollover IRA to 401k. If you find yourself in this situation, you might not be able to find a lot of information on it because it is rarer than other types of rollovers. For your convenience, here are some tips on rolling over your … [Read more...]
Answering the Question – What is a Rollover IRA?
If you are asking the question, “What is a rollover IRA?” then you are probably thinking about leaving your current company for other employment (this is usually the only scenario where someone would need to know what a rollover IRA is). A rollover IRA is a type of individual retirement account that is designed to receive your funds from a company retirement plan when you leave. You want to use a rollover IRA so that you do not have to pay early withdrawal penalties for taking your money out of your retirement fund before you retire. The IRS has made it easy for you to continue to save for retirement even if you are no longer employed … [Read more...]
What are the 403b Rollover Rules?
Non-profit employers and public education organizations often offer their employees 403b retirement savings accounts, which allow them to make pre-tax contributions with every paycheck to fund their retirement. 403b accounts are very similar to 401k plans that are offered to employees of larger for-profit and private companies. If you have a 403b plan and you are leaving your employer, you might want to roll the funds in your account over to another type of retirement plan. In general, you are able to do this without paying any taxes on the amount you roll over. However, it is important to follow the 403b rollover rules established by the … [Read more...]
Common Rollover IRA Mistakes You’ll Want to Avoid
Rollover IRA conversions are very popular. Whenever you think you might be able to make higher returns with a different company, have more investment options or want better customer service, you might consider rolling over your IRA to another account. However, along with the popularity of rolling an IRA over, there are several common mistakes that cause IRA account owners to incur penalties and taxes that they could have otherwise avoided. Having an adequate understanding of the rollover IRA rules as set forth by the Internal Revenue Service can save you a lot of headaches and stress. In addition, avoiding these mistakes can help you reach … [Read more...]