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401K Rollover

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A 401K Rollover is how you continue to benefit from the tax-deferred growth of earnings being provided by your current 401K plan. This Direct Rollover can occur when you change jobs or retire, and will allow all of your 401K plan assets to continue to accumulate on a tax-deferred basis until you begin your retirement distributions.

If you need some money from your 401K Rollover, you can take some or all of it, but your employer will withhold 20% of the amount of the distribution for taxes. You may also still owe federal income taxes, and depending on where you live, state income taxes may be withheld as well. In addition, if you are under the age of 59 , you may have to pay a 10% penalty for early withdrawal. Therefore it is not advised to take cash distributions from your 401K Rollover, unless it is absolutely necessary.
 

Processing a 401K Rollover is simple. You simply open an IRA Rollover account with a new company of your choosing. Banks and Mutual Fund companies can open this account for you. The next step is to send your old employer a completed form called a “Distribution Request” form. Make sure you request a Direct Rollover. If you did not receive this form when you left your previous employer, call your previous Employers Human Resources department and ask them to send you one. Once your employer receives your completed distribution request, they will distribute the check to you or the new Bank or Mutual Fund Trustee. If they send the check to you, send it to the new IRA Rollover Trustee immediately.

According to the Social Security Administration, 401k savings will provide one-third of your income during retirement, which is why you should continue to keep your 401K Rollover fully invested.

Your 401K Plan gave you a powerful benefit--tax-deferred growth of earnings. When you rollover your 401K to an IRA Rollover account, you get to continue the tax deferral benefit. And, since you do not need to pay income taxes on any potential gains earned by your IRA Rollover accounts until you withdraw them at retirement, your retirement savings can grow faster than a regular taxable account.

Please choose from the list of topics for additional information:

401K Rollover Annuities Bonds Investing
Corporate Bonds Forex Trading Futures Trading
Investment Advice IRA Investing Mutual Funds
Mutual Funds Comparison Options Trading REIT
Roth 401K Roth IRA Tax Liens
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