100 Filbert St.
Riggle Wealth Group
The factor that separates Riggle Wealth Group from the rest is our research-based approach to financial planning and wealth management. Our diverse group of experienced financial professionals obtained various degrees and certifications from well-respected universities around the country, including designations such as Chartered Financial Analyst®, Accredited Investment Fiduciary®, Chartered Retirement Plans Specialist, Certified Financial Planner®, and Certified Public Accountant. We specialize in 401(k) Rollover planning, tax planning, and financial management for doctors. Our founding principles are trust and a client-centered, research-based approach to financial planning. Founded originally in 2007, Riggle Wealth Group is now a premier member-owned firm. We are proud to serve you and your family, creating a legacy that can last through the generations.
What is a 401(k) rollover? Generally, a 401(k) rollover refers to the transfer of assets from one retirement account (401(k)) to another. There are various kinds of 401(k)s and other different retirement accounts that one can rollover their 401(k) into. For example, an Individual Retirement Account or IRA is an owner-established account set up with a financial institution. It offers individuals a retirement savings vehicle on a tax-free growth/ tax-deferred basis. A 401(k) is an employer-sponsored retirement savings plan that has its own set of rules. A 401(k) can be rolled over into another account of its kind, or it can be rolled over into another type of retirement savings account.
401(k) Rollover Options
Depending on where you are in your retirement journey, there are numerous options available to you for a 401(k) rollover. 401(k) rollover options include leaving the money in your former employer’s 401(k) plan, moving the money into your new employer’s plan if you have switched jobs, rolling the money into a traditional or Roth IRA, or cashing out the 401(k) account. The latter option of cashing out a 401(k) is generally not the best solution for most people as this would cause tax penalties. Each option comes along with different tax implications, investment options, services, rules, potential fees, and sometimes distribution requirements once retirement is reached. It is always best to consult your financial professional before deciding which 401(k) rollover options will work best for you.
401(k) Rollover Rules
A 401(k) rollover to IRA tends to be the choice that will give you the most control and the most investment options. Unless your new employer or old employer is a large corporation, generally, Individual Retirement Accounts offer better and more investment options than most 401(k)s. Most Individual Retirement Accounts offer assets such as stocks, bonds, certificates of deposits (CDs), mutual funds, exchange-traded funds, real estate investment trusts (REITs), and annuities. After deciding to utilize an IRA rollover, you must determine what type of Individual Retirement Account to choose for your 401(k) rollover. This decision will be based mainly on your current tax situation and what your tax situation will likely be in retirement. The different types of IRAs have similarities, but the key differences are in the tax implications, essentially whether you will pay taxes now or later on your retirement funds. With a traditional IRA, you deduct the contributions now and pay taxes upon withdrawals. With a Roth IRA, you pay taxes on the contributions now and receive tax-free qualified withdrawals.
Some IRA’s have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney.
Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty.
Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
In this ebook, we outline your 401(k) choices and explore critical mistakes to avoid. Download it today