401k – IRA Rollover

In this time of job-changing and downsizing, you may need guidance on what to do with the assets you have accumulated in your company sponsored retirement plan. You may choose to preserve income tax benefits by rolling over into a Rollover IRA, or take the lump sum and pay the tax and penalties.

What is a Rollover?

Rollover means to move money from a 401(k) or other qualified retirement plan into an IRA. If you receive a payout from your company-sponsored retirement plan, choosing a rollover IRA could be to your advantage. You will continue to receive the tax-deferred status on your retirement savings and you will avoid penalties and taxes (restrictions, limitations and fees may apply).

Making Contributions to a Rollover IRA

The Rollover IRA is usually funded by the eligible distributions from a qualified company-sponsored retirement plan. These distributions can be combined with an existing IRA or placed into a separate IRA. If you create a separate IRA for your rollover, you can easily move these funds to another employer sponsored plan in the future if the company allows this. It’s a good idea to keep your rollover IRA separate from any other IRA’s you might have because once you make contributions to a rollover that are not from a company sponsored plan, you lose the right to move this rollover to a company sponsored plan in the future.

Distributions from a Rollover IRA

The distribution rules for a Rollover IRA are the same as the rules for a traditional IRA. Contributions and earnings are taxed when withdrawn after age 59 1/2. Withdrawals before the age 59 1/2 are taxable and subject to an early withdrawal penalty with certain exceptions. Withdrawals must begin by the year after you reach 70 1/2 to avoid penalties.

Your employer can directly rollover your retirement plan payout into a Rollover IRA and you will avoid the IRS withholding tax.

Before making any decisions about your pension distributions, be sure to contact us so that we can discuss the options that best fit your needs.

Educate yourself on this topic. I have two movies you should consider watching and I will email you the links if you request them from me. They will help you learn about the various options that may be available to you, and the financial impact of rolling over versus spending your accumulated retirement assets. Once a move is made, there are NO take backs.

Speak with one of our investment advisers to help you make smart choices on your 401k or IRA today, so you can have enough money to plan your retirement income later.


When you leave your employer’s pension plan you may have as many as four options for your retirement assets. To make a good decision on how best to handle this money, it’s important that you clearly understand the options available to you.


Over time, compounding rates of return combined with tax deferral can turn a small amount of money into a much larger amount. Using an example to illustrate the point, this movie can help you understand why a Rollover IRA can play an important role in strengthening your future financial security.