Rolling Over Your 401(k) the Right Way

If you're changing jobs, you may wonder what to do with your 401(k). While it may be tempting to cash out, that's usually not the best idea. In this blog post, we'll explain how to roll over your 401(k), so you can keep growing your nest egg.

Step 1: Figure out what type of account you have

The first step is to figure out what type of account you have. There are two types of 401(k)s: traditional and Roth. With a traditional 401(k), you contribute pre-tax dollars and pay taxes on withdrawals in retirement. With a Roth 401(k), you contribute post-tax dollars and don't have to pay taxes on withdrawals in retirement.

Step 2: Choose how you want to roll over your account

Once you know what type of account you have, you can choose how you want to roll over your funds. You can roll over your account into a traditional IRA, a Roth IRA, or a new employer's retirement plan. If you're rolling over into a traditional IRA, you'll need to make sure the money is deposited into the account within 60 days. If it's not, the money will be considered a distribution and you'll be subject to taxes and penalties. With a Roth IRA, there are no time restrictions on when the money must be deposited. However, if you're not careful, you could pay taxes on the conversion.

Finally, if you're rolling over into a new employer's plan, there are no tax consequences as long as the transfer is done directly from one plan administrator to another. 

Rolling over your 401(k) doesn't have to be complicated—as long as you take the time to do it right. By following the steps above, you can ensure that your hard-earned money continues to work for you long after you've left your current job.

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