401(k) Rollover in Jefferson County, MO

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401(k) Rollover in Jefferson County, MO. Changing jobs or careers is the start of a brand new, exciting chapter in your life. However, many Jefferson County, MO residents wonder what the best options are for their existing 401(k) savings. Managing multiple retirement savings accounts can be complex and take more time than many people are willing to put in.


401(k) Rollover in Jefferson County,MO

There are a few different ways to handle your 401(k) rollover in Jefferson County, MO, and usually it takes knowledgeable financial planning and a savvy financial advisor to know which option is best for you. Correct Capital is an independent advisory firm whose advisors hold themselves to the fiduciary standard. This means our only concern is making sure your financial future and planning needs are met. Our business is built on trust and your confidence that we’ll do what’s best for you. We offer objective, expert advice, that we give free of the conflict of interest that can occur with public shareholders or parent company relationships. Call us today at 877-930-4015 or contact us online to learn more about 401(k) rollover options in Jefferson County, MO.

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


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

If you have over $5,000 invested in your 401(k), most, but not all, Jefferson County, MO companies allow you to keep your accrued savings in their plan. The funds stay subject to the same rules, fees, investment plans, and withdrawal options. Many people in Jefferson County, 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 not roll over your 401(k), and to keep the savings where they are. If you leave your job between the ages of 55 and 59 ½, you may be eligible for penalty-free withdrawals. Additionally, federal law dictates that 401(k)s creditors cannot make claims against 401(k)s. If you keep your assets in your old 401(k), you won’t have to make any immediate decisions regarding your money, and you’re still free to roll over the funds whenever you’d like.

However, it should be mentioned that keeping your old 401(k) means you can no longer make contributions to it, which may have an effect on your retirement planning. After the age of 72, you will be required to take out “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 numerous 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 choose whether you should stay with your old 401(k) or not.


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

If your new job in Jefferson County, MO also offers a 401(k), most of the time they will let you roll over your 401(k) assets 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 as long as you are still in the workforce.

If part of your previous 401(k) portfolio includes company stock, 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. An experienced financial advisor will help you decide if a 401(k) rollover or sticking with your previous plan is right for you.

3. Open a Rollover IRA

IRA stands for Individual Retirement Account. A Rollover IRA is an account opened to move money from a previous employer’s 401(k). If you already have an IRA, you can consider moving the money there for your 401(k) rollover. Depending on how you contributed to your 401(k) plan, you may roll money to a Traditional or a Roth IRA. This way, the tax status of your previous contributions stays the same.


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) will likely be put into a traditional IRA. Withdrawals from this account may be subject to taxes and an early withdrawal penalty. After turning 72, you will be required 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 at the time the contributions are made. The benefit is that you do not pay taxes when you withdraw the money. Money you contributed to a Roth 401(k) account is typically rolled into a Roth IRA. At any time you can withdraw the contributions you make without tax consequences, and if you maintain the account for at least 5 years and are 59 ½ years old, you do not pay taxes on your earnings. Contrary to Roth 401(k) contributions, money held in a Roth IRA is not subject to required minimum distributions.

While you may roll pre-tax money from your 401(k) plan into a Roth IRA, you would be “converting” pre-tax money into after-tax money, which means you would have to pay taxes on the money received into the Roth IRA.

You can start an IRA account with many banks or any brokerage firm in Jefferson County, MO, however many of them vary when it comes to fees or other expenses. Our team of financial advisors at Correct Capital partners with several trusted financial custodians and will help you find one that suits your needs.

4. Cash Out.

The fourth option is hardly ever advisable unless you are in urgent need of money now. You will be subjected to a 20% federal tax, 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 back account. 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 the account immediately.



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

There are two ways to rollover your 401(k):

  1. Direct rollover — In a direct rollover, the custodian holding your 401(k) savings will send a check directly to your new retirement account with instructions to put the money into your new plan. Each firm follows a different procedure, 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 funds directly into your IRA or new 401(k). This is also known as a 60-day rollover because there is a 60-day time limit for when you can deposit the money, or else you could end up paying income taxes and early withdrawal penalties.

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

Avoiding Common 401(k) Rollover Pitfalls

Even for Jefferson County, MO residents with a good understanding of their finances, deciding what 401(k) rollover options is best for you isn't easy. The most common mistakes you should avoid are:

  • Not weighing all your options — If you like 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 offer other benefits your current plan doesn't.
  • Not opening a new account first — If you do rollover your 401(k), it's important that the new account is already open, and that your new custodian is expecting a rollover. If they get a check when they aren't expecting a rollover, they may mistake it for a regular contribution that you might have to pay taxes on.
  • Forgetting about your 401(k) — While this may sound strange, Americans lost over $7 billion in retirement savings in 2015. A lot can come with moving to a new job, but accidentally leaving behind your retirement funds 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 assets with it and deposit those new assets into a new account. If you do that, you would have to pay property tax, and if you're less than 59½ you'll have to pay 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 deal with investment, tax planning, and other 401(k) rollover considerations every day.

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401k Rollover Jefferson County, MO | Financial Advisors | Retirement Planning Near Jefferson County

Contact a 401(k) Rollover Advisor Today

Your unique situation will dictate which 401(k) option is best for you. Many in Jefferson County, 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 share with you. 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 Jefferson County, MO today.

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