401k Rollovers - Waukesha Wisconsin
401(k) and IRA Rollover Basics
In the Milwaukee area many clients find themselves with multiple IRAs, 401(k) plans and other retirement accounts scattered across providers. 401(k) and IRA Rollovers can help simplify things. Rollovers into an IRA with The Berrall Kons Wealth Management Group in Waukesha can give you access to advice and a wider range of investment options:
- IRAs from a former employer, and those at a brokerage firm, insurance company or bank can be combined or "rolled" in a single account.
- 401(k) plans, 457 plans, 403(b) plans, Tax Sheltered Annuities (TSAs), and most pension plans can be directly transferred into an IRA as well. This "rollover" feature allows you to consolidate your former employer accounts into one IRA without paying taxes or penalties.*
- Rollovers into IRAs allow you to take control of your assets. Within an IRA you'll have access to countless investment options in a single account.
- Creating a retirement income plan becomes much easier when the investment strategy is coordinated and the investments are consolidated.
- Consolidating accounts can avoid the need to take distributions from multiple accounts at multiple investment firms. It can also make life simpler for you and your heirs.
Before rolling over your IRAs or 401(k) plans be sure to consider all the ramifications. For example, once rolled out of a 401(k) plan, balances in your IRAs are subject to the rules of aggregation and pro-rata rules.
Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options are different and may have distinct advantages and disadvantages.
1. Roll assets to an IRA
2. Leave assets in your former employer’s plan, if plan allows
3. Move assets to your new/existing employer’s plan, if plan allows
4. Cash out or take a lump sum distribution
When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees & expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors & bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.
*Withdrawals are subject to ordinary income tax and may be subject to a 10% additional tax if taken prior to age 59½. Tips for the 401(k) and IRA Rollover Process
- Be sure to select "direct rollover" or "direct transfer" when completing rollover paperwork. Not completing the paperwork correctly could trigger a taxable event.
- When you receive a check from your previous employer or brokerage firm be sure to deposit it with your new financial institution (hopefully that's Wells Fargo Advisors) as soon as possible. Delays could trigger a taxable event.
- Know your basis. If you have an IRA or a 401(k) with a combination of pre-tax and after-tax contributions it's important to know how much you have in each. You may even want to explore some more advanced rollover and timing strategies that can help you avoid paying pro-rata income taxes on future distributions.
- Timing is important. You'll want to start the rollover process well in advance of an anticipated need for income. The rollover process is often as quick as a few days, but in rare situations it can take several weeks before you have access to your money. Be sure you have your income needs met with outside sources before initiating a rollover.
The Berrall Kons Wealth Management Group of Wells Fargo Advisors is a family team of financial advisors in Waukesha, Wisconsin. We would be honored to be a resource for you and your family. Please contact us to discuss your 401(k) and IRA rollover options (262) 798-3787.
The content on this page has been provided for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Since each person’s situation is different you should review your specific investment objectives, risk tolerance and liquidity needs with your financial, tax and legal professionals before selecting a suitable savings or investment strategy. Wells Fargo Advisors does not provide tax or legal advice. Be sure to consult with your own tax and legal advisors before taking any action that may have tax or legal consequences.