401(k) Rollover in Cottleville, MO

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401(k) Rollover in Cottleville, MO. Changing jobs or careers is the start of a brand new, exciting chapter in your life. However, many Cottleville, MO residents wonder what the best options are for their existing 401(k) savings. Managing multiple retirement savings accounts can be stressful without a team of expert and honest financial advisors.


401(k) Rollover in Cottleville,MO

There are a few different ways to handle your 401(k) rollover in Cottleville, MO, and oftentimes it takes trustworthy financial planning and a savvy financial advisor to know how to best deal with your savings. Correct Capital is a privately owned firm with fiduciary advisors. This means our only concern is making sure your financial future and planning needs are met. Our business is built on trust and your belief that we’ll do what’s best for you. We offer objective, expert advice, and will never try to convince you of something we don’t believe in ourselves. Call us today at 877-930-4015 or contact us online to learn more about 401(k) rollover options in Cottleville, MO.

In general, you have four options to consider when considering a 401(k) rollover.


1. Keep Your 401(k) With Your Previous Employer

If you have over $5,000 invested in your 401(k), most, but not all, Cottleville, MO companies permit you to keep your retirement savings in their plan. The funds stay subject to the same rules, fees, investment plans, and withdrawal options. Many employees in Cottleville, MO already like the benefits of their 401(k), such as their investment options, website, or any investing tools or guidance they offer. In this case, it may make sense to keep them where they are instead of a 401(k) rollover. If you leave your job between the ages of 55 and 59 ½, you may be eligible for penalty-free withdrawals. Additionally, per federal law, 401(k)s are generally protected against claims by creditors. keeping your assets in your original 401(k) frees you from having to make rushed decisions about where to place your money, and you’re still free to roll over the funds at some point in the future.

However, it should be mentioned that if you don’t rollover your old 401(k), you won’t be able to continue adding contributions to it, which may have an effect on your retirement planning. After the age of 72, you will be required to withdraw “required minimum distributions” from those 401(k) accounts you have at old employers. It can also be complicated to oversee several different retirement plans with several different recordkeepers. Withdrawal options can be limited and large amounts of your money will be withheld. You would not be able to take out a 401(k) loan. Correct Capital's retirement consultants can help you decide if sticking with your old 401(k) is the best option for you.


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2. Roll Over Your 401(k) to Your New Employer

If your new job in Cottleville, MO also offers a 401(k), most employers will allow you to roll over your 401(k) savings to their plan. You may consider this if the new plan has better benefits than the previous plan, including lower fees, better investment options, opportunities, insight, or loan options. Also, you will not be required to withdraw required minimum distributions after you turn 72 if you are still in the workforce.

If you have company stock in your previous 401(k) portfolio, you may have special financial planning needs when rolling over your 401(k) to a new employer. The 401(k) plan with your new employer may also contain higher fees or less diverse investment options. A trustworthy financial advisor will help you decide if you should stick with your previous plan or roll over your 401(k) to your new employer.

3. Open a Rollover IRA

IRA stands for Individual Retirement Account. A Rollover IRA is an account started to move savings from a former employer’s 401(k). If you’ve already opened an IRA, you can consider transferring the savings there for your 401(k) rollover. Depending on which type of 401(k) you were contributing to, you may roll money to a Traditional or a Roth IRA. This way, you maintain your tax status with the money you have contributed.


Traditional IRA

Money deposited into a Traditional IRA are considered to be pre-tax money. Your pre-tax money you contributed to your 401(k) is likely to be rolled over into this account. Withdrawals from this account may be subject to taxes and an early withdrawal penalty. After turning 72, you will have to take out required minimum distributions regardless of your status in the workforce.


Roth IRA

Savings deposited into Roth IRAs are made with after-tax money, so there is no tax benefit until the money is withdrawn. The benefit is that Roth IRA money grows tax-free. Money you contributed to a Roth 401(k) account is usually rolled into a Roth IRA. At any time you can withdraw the contributions you make without tax consequences, and your earnings are not taxed if you keep your account for at least 5 years, and are at least 59 ½ when the money is withdrawn. Different from Roth 401(k) contributions, there are no required minimum distributions in a Roth IRA.

While you may roll pre-tax money from your 401(k) plan into a Roth IRA, you will pay taxes on the amount received into a Roth IRA as you are “converting” pre-tax money into after-tax money.

You can open an IRA with many banks or any brokerage firm in Cottleville, MO, however many come with varying fees or other expenses. Our team of financial advisors at Correct Capital partners with several trusted financial custodians and will help you find the best choice for you.

4. Cash Out.

This last option is almost never advisable unless you are in serious need of money now. You will be subjected to a 20% federal withholding rate, and could face a 10% early withdrawal penalty if you take the money out before you are 59 ½ years old or if you separate before 55 years old. This could result in a large amount of your withdrawal going towards taxes and not into your pocket. Additionally, the money won’t keep growing and it will no longer be tax-deferred. Therefore, a 401(k) rollover is preferable if you do not need the money in your pocket immediately.



Indirect vs. Direct 401(k) Rollovers in Cottleville, MO

There are two different ways to actually move the funds in your 401(k):

  1. Direct rollover — In a direct rollover, your former 401(k) company will send a check directly to your new retirement account with instructions to put the money into your new IRA or 401(k). Each firm has its own way of doing things, so the best first step is to reach out to your previous employer's 401(k) company to ask them how to proceed.
  2. Indirect rollover — In an indirect rollover, you withdraw the funds from your account, and then you deposit the savings directly into your IRA or new 401(k). This is also called a 60-day rollover because the money needs to be deposited into the new account within 60 days in order to avoid paying income taxes and early withdrawal penalties.

Like cashing out a 401(k), an indirect rollover is typically not advisable except under specific circumstances. Your Cottleville, MO financial advisor will be able to help you determine which option is best.

Avoiding Common 401(k) Rollover Pitfalls

Even for Cottleville, MO residents with a good understanding of their finances, a 401(k) rollover is not something most people have experience with. The most common pitfalls people make when considering their options include:

  • Not considering a rollover — If you like some aspects of your current 401(k) plan, you may be better off sticking with it. But you would be doing yourself a disservice not to consider how a rollover could allow your money to grow more, or have tools and resources that are not offered by your current plan.
  • Not opening a new account first — If you do open up an IRA or new 401(k), it's important to open a new account first and inform your new custodian that they'll be receiving a rollover check. If they get a check when they aren't expecting a rollover, they may mistake it for a regular contribution that could be subject to taxes.
  • Forgetting about your 401(k) — While you might think it's hard to lose track of their retirement savings, Americans accidentally abandoned almost $8 billion in retirement savings in 2015. A new job brings a lot of life changes with it, but neglecting to do anything about your 401(k) could significantly reduce what you have available for your golden rules.
  • Forgetting about the same property rule — The property your new account receives must be the property that was rolled over. Meaning, you can't take a cash distribution from your 401(k), buy bonds or another asset with it and move those assets into a new account. The IRS considers that taxable income, and if you're less than 59½ you'll also be subject to a 10% early withdrawal penalty.
  • Rolling over a required minimum distribution — You are not allowed to roll over a required minimum distribution. If you do, you will be subject to a 6% penalty tax on any excess amount.
  • Not consulting with a retirement planner — Financial advisors are well-versed in 401(k) rollovers, proper procedure, and the advantages and disadvantages of each of your options.

Other services we offer in Cottleville, MO include:

401k Rollover Cottleville, MO | Financial Advisors | Retirement Planning Near Cottleville

Contact a 401(k) Rollover Advisor Today

What to do with your 401(k) from your previous job depends on your unique situation. Many in Cottleville, MO have found choosing Correct Capital as their financial advisors to be the best decision for them. Our financial advisors operate under the fiduciary principle, which means that we are legally bound to act in good faith and have your best interests at heart. As Registered Investment Advisors, we have access to a vast array of investment research that we’ll provide you with. We’re based on trust, honesty, and integrity.

Call us today at 877-930-4015, contact us online, or schedule an appointment with our financial and retirement planning advisors to decide how to best manage your 401(k) rollover. Call 877-930-4015 or reach out to our financial advisors in Cottleville, MO today.

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