Sometimes it makes sense to roll over your 401(k) plan. "Rolling over" your investment funds means transferring them from your company's 401(k) into a traditional individual retirement account (IRA) or a Roth IRA. People often do this when they change jobs because IRAs tend to offer more investment options than 401(k) plans do. If you've got a traditional 401(k) plan, you can roll it over into a traditional IRA tax-free. You can also roll it over into a Roth IRA, although this move would require you to pay taxes, as it would be considered a conversion.
Have a Roth 401(k)? You can roll it over into a Roth IRA without paying taxes. (Although the IRS says you must begin to take withdrawals on a Roth 401(k) at 70 years and six months, the same as a traditional 401(k), there's nothing to stop you from rolling it over at that point into a regular Roth IRA.) The only move that cannot be made is rolling over your Roth 401(k) into a traditional IRA. One other qualifier: Any rollover into a Roth IRA, whether from a traditional 401(k) or a Roth 401(k), can only occur if your adjusted gross income is below a certain amount in the rollover tax year [sources: Investopedia, Vanguard].
Finance Planning Tips
Here are some tips to help you with generating income and planning for the future.
Presented by United Way of Greater Atlanta Powered by SunTrust Foundation