You Can’t Rollover a Pension


I had many misconceptions when I first rolled over my retirement accounts. Here is a guide to what and how you can roll over.

You can rollover your employer sponsored plans (401k, 403b) and your IRAs (Roth or Traditional). But why would you?

  1. To keep it simple. Having all your money in one place makes it feasible to keep track of it all and know exactly how much you’ve saved. (It’s likely you’ve saved more than you thought!) Managing one as opposed to four retirement accounts is much less expensive and time consuming.
  2. Have more options. Your employer’s retirement plan likely has limited investment options than an IRA.
  3. Pay less fees. Company sponsored plans tend to have higher cost investment options. Rolling over to an account with less fees means more money in your pocket.

OK, I got it. So how do I do it?

Two ways to rollover a retirement account:

  1. Withdrawal of funds to you. A check is sent to you or deposited in a personal account. You then deposit those funds into the rollover account of your choice within 60 days. If you fail to do this within 60 days, your 401k withdrawal will be considered earned income (and thus taxed). Additionally, 401k withdrawals are subject to mandatory 20% withholding. If you choose this option, 20% of your funds will be withheld until you file your taxes the following year (aka lost interest earnings!)
  2. Direct payment to the custodian of your rollover account. Your retirement funds are directly transferred to the brokerage firm of your choice and you avoid the mandatory withholding and any early withdrawal tax penalties.  Depending on the type of account you are looking to rollover, the process may vary however, most brokerage firms provide 1 on 1 assistance to make this as painless as possible for you.


And… where I am rolling this over to?

I use Wisebanyan and if you sign up using my referral link they will give you $20 just to try their service for 6 months. Almost any financial institution (aka your bank) and brokerage firm offers IRA accounts. There are a plethora of options to choose from depending on how hands on you want to be with your account.

Now, get to rolling. #letstalk


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