Learn Everything You Need To Know About Rolling Your 401k Into An IRA.

Rules for 401k Rollover - Your Options

When you leave a job where you have a 401k plan, you typically have 3 options:

  1. Keep the funds in your previous employer's 401k plan (if allowed).
  2. Transfer the funds to your current employer's 401k plan (if it's available and if transfers are allowed).
  3. Transfer them into an Individual Retirement Account (IRA) with an investment firm.

However, depending on how you rollover your 401k can effect your specific tax situation or the growth potential of your wealth. All of which we cover below.

How Does A 401k Rollover Work?

Sometimes a former employer allows a direct rollover, where the money is transferred from your old 401k to your IRA company without you ever touching it. Otherwise a regular Rollover is permitted, where you receive the funds, usually in the form of a check from your previous employer, for the balance of your old 401k. Then you must forward that check to your IRA company within 60 days. It's crucial to follow the 60 day rule carefully because failure to meet this deadline could result in the distribution being treated as taxable income, subject to your regular income tax rates, and if you're under 59½, you may also face an additional 10% early withdrawal penalty. Now let’s cover rollover 401k to ira tax consequences depending on what type of account you have.

Tax Implications of Rolling Over 401k to IRA

tax implications of rolling over 401k to ira chart.

Simple rule of thumb: Keep your IRA the same as your 401k, and there are no tax consequences. If you have a regular 401k and you're rolling over funds into an IRA, opt for a traditional IRA. If you have a Roth 401k (indicated as "Roth" on your old 401k statements), open a Roth IRA for the rollover to avoid tax consequences. Just remember to fund whichever IRA you create (Traditional or Roth) within 60 days of executing your 401k rollover to avoid IRS penalties.

However, for those who choose to rollover a regular 401k to a Roth IRA, it's important to note that your rollover amount is taxed as ordinary income. If you choose this route, the best thing to do is rollover the 401k into a traditional IRA, then convert it to a Backdoor Roth IRA, which allows you to convert a portion (or all) of your traditional IRA into a Roth IRA. This way, you can plan the correct amount to convert without putting yourself into a new tax bracket. Plus, this also avoids the scenario where, if you're under 59½, you would have to pay an additional 10% early withdrawal penalty.

Additionally, even if you're already in retirement and currently taking money out of your 401k, you can still do a rollover into an IRA if you choose.

Benefits Of Rolling Your 401k Into An IRA

Rolling over your 401k into an IRA can offer several benefits. Firstly, working with a licensed financial advisor makes the process much easier, as you have a guide who knows how to navigate the paperwork, process, and proper investments to put your money in (check out our top Asset Management 401k rollover companies below). Secondly, it provides greater control and flexibility over your retirement savings, allowing you to choose from a wider range of investment options tailored to your financial goals and risk tolerance. Additionally, consolidating multiple retirement accounts into a single IRA can simplify your retirement planning and make it easier to manage. Furthermore, IRAs often have lower fees compared to 401k plans, potentially reducing the overall cost of investing. Lastly, over time, your old 401k company will roll over your 401k into a money market. A money market is a very low interest earning type of fund, thus limiting your growth potential over time. Overall, a 401k rollover into an IRA can empower you to take charge of your retirement planning and optimize your financial future.

What Does An Asset Management Company Do?

What Is A Mutual Fund, IRA, And What Is Their Relationship?

What Are The Best Asset Management 401k Rollover Companies?

Determining the best asset management company requires careful consideration of individual needs and circumstances. We understand that everyone's situation is unique, and that's why Moon Family Enterprise represents many different asset management companies when assisting with rolling over a 401k into an IRA.

Whether it's Invesco, Fidelity, Franklin Templeton, or one of our other top tier asset management companies, each partner brings a distinct set of strengths and expertise. This allows clients to find the ideal match for their investment goals, risk tolerance, and financial preferences.

Our Top Tier 401k Rollover Companies We Represent

Why Choose Us For A 401k Rollover - Moon Family Enterprise 

Risk and reward spin wheel with a hand with money to invest in an ira for a 401k rollover.

Contact Us For A Free 1 on 1 Rollover 401k To An IRA Consultation

Rollover 401k To IRA Client Testimonials

Quinn & Nikki S.

Yucaipa, CA

We have enjoyed the personal 1 on 1 attention to detail and personal touch of working with Moon Family Enterprise. We felt like we have known them forever in our first meeting. They have helped us significantly grow our wealth.

Cody & Halee R.

Xenia, OH

I've loved working with Moon Family Enterprise because just knowing we are on track to hit our financial goals is amazing. Plus they are helping us reach our retirement goals 5 years sooner!

Charlene T.

Glendora, CA

Thanks to Moon Family Enterprise and what they teach I am able to be retired today. I rolled over 30 years of old 401ks and they solidified my retirement assets. I retired the same year COVID-19 started and even with a world pandemic, when the stock market went crazy, I had peace of mind knowing my retirement was secure.

Cody P.

Eugene, OR

Moon Family Enterprise and its affiliates have been indispensable mentors. I have processed several 401k rollovers with them and will continue to use them in the future.

Spencer & Chelsea H.

Saratoga Springs, UT

Our wealth management experience with Moon Family Enterprise has been great. They personally took the time to teach us and made sure we understood all our options and helped us create a lot more wealth for our family tree.

Jim M.

Globe, AZ

Moon Family Enterprise has been instrumental in the success of my early retirement. Because Moon Family Enterprise, I'm now retired because they doubled what I had for retirement otherwise I would be working til the day I died. Plus the rollover process was really simple with them.

Shannan & Rick R.

Santa Ana, CA

We make a decent income for our family but without the education that Moon Family Enterprise teaches, we would have worked until the day we died. I'm happy with their service and have used them for multiple 401k rollovers.

Scott & Brooke M.

Burkburnett, TX

These guys have been super helpful for helping us accumulate a 6 figure investment at a young age. What they do really works for any family.

Troy & Heidi H.

Fort Mohave, AZ

As school teachers Moon Family Enterprise has taught us and held us accountable to have more saved than we ever have had. Plus they got us on track to retire instead of working forever.

Moon Family Enterprise
3707 E Southern Ave., Mesa, AZ 85206

‪(480) 359-6708‬

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