We Can Help with Your 401(k) Rollover

401(k) rollover options

Changing jobs or retiring? Consider all your 401(k) rollover options.

It's important to understand your retirement plan options when you leave your employer. If you've retired or changed jobs, you may have questions about whether to roll over your employer's 401(k) retirement plan.

You typically have four options for your old 401(k):

• Option 1: Roll over the money to a Traditional or Roth IRA 

• Option 2: Leave the money in your former employer’s 401(k) plan

• Option 3: Transfer the money to your new employer’s 401(k) plan

• Option 4: Cash out the 401(k) account, which is subject to tax consequences

If you have a 401(k) from a previous job, we can help you decide if moving the funds to a Traditional or Roth IRA is your best option. We’ll help you look at your current plan’s benefits and set a plan for your retirement goals. If you find a 401(k) rollover¹ is your best option, we make it easy and handle all the paperwork for you.

401(k) Rollover: Option 1

Roll over your 401(k) to a Traditional or Roth IRA with WoodmenLife or Woodmen Financial Services Traditional or Roth IRA (Roll it)

Rolling your 401(k) into an IRA is an option that offers several benefits:

• Ability to add money: You should be able to add money to your IRA as long as you meet certain income requirements. This allows you to consolidate your retirement savings and other accounts, which may make it easier to monitor your investments and simplify your account information at tax time.

• Investment choices: Traditional and Roth IRAs typically have a broader range of investment options than employer plans, but you may not have access to the same investments that are in your current plan.

• Available services: A WoodmenLife Representative can review your 401(k) rollover options and tailor an investment strategy based on your personal needs and goals.

• Fees and expenses: IRA’s generally include an annual account fee, investment-related expenses and termination fees. Variable annuities contain additional fees.

• Penalty-free distributions: Generally, you can withdraw money from an IRA without penalties at age 59½.

• Required minimum distributions: Generally, you must take minimum distributions from a traditional IRA beginning at age 72.

401(k) Rollover: Option 2

Leaving money in your former employer's 401(k) plan

Leaving money in your current 401(k) may be an option, depending on the terms of your plan. Many additional factors, such as the option to add money and make certain investment choices, will also depend on the terms of your plan. Here's what you should know:

• Ability to add money: Once you leave your employer, you generally won't be able to add money to your plan.

• Investment choices: 401(k) plans typically have a more limited number of investment options compared to an IRA, but they may include investments you can't get through an IRA.

• Available services: Some plans may offer educational materials, planning tools, telephone help lines, and workshops. Your plan may or may not provide access to a representative.

• Fees and expenses: 401(k) fees and expenses often include administrative fees, investment-related expenses and distribution fees. These fees and expenses may be lower than the fees and expenses of an IRA.

• Penalty-free distributions: Generally, you can take money from your plan without tax penalties at age 55, if you leave your employer in the calendar year you turn 55 or older.

• Required minimum distributions: Generally, you must take minimum distributions from your former employer's plan beginning at age 72.

• Protection from Creditors and Legal Judgments—Generally speaking, plan assets have unlimited protection from creditors under federal law, while IRA assets are protected in bankruptcy proceedings only. State laws vary in the protection of IRA assets in lawsuits.

Contact your plan administrator to learn more about fees and the terms of your plan. Your Participant Fee Disclosure and/or Summary Plan Description should have this information.

401(k) Rollover: Option 3

Transfer the money to your new employer's 401(k) plan

Moving money to your new employer’s 401(k) may be an option, depending on whether your current employer has a 401(k) plan and the terms of the plan. Like your former employer's plan, many factors ultimately depend on the terms of your plan, but you should keep the following mind:

• Ability to add money: You'll generally be able to add money to your new employer's plan as long as you meet the plan's requirements. This option also allows you to consolidate your retirement accounts, which may make it easier to monitor your investments and simplify your account information at tax time.

• Investment choices: 401(k) plans typically have a more limited number of investment options compared to an IRA, but they may include investments you can't get through an IRA.

• Available services: Some plans may offer educational materials, planning tools, telephone help lines, and workshops. Your plan may or may not provide access to a representative.

• Fees and expenses: 401(k) fees and expenses often include administrative fees, investment-related expenses and distribution fees. These fees and expenses may be lower than the fees and expenses of an IRA.

• Penalty-free distributions: Generally, you can take money from your plan without tax penalties at age 55, if you leave your employer in the calendar year you turn 55 or older.

• Required minimum distributions: Generally, you must take minimum distributions from your plan beginning at age 72, unless you are still working at the company.

Contact your plan administrator to learn more about fees and the terms of your plan. Your Participant Fee Disclosure and/or Summary Plan Description should have this information.

401(k) Rollover: Option 4

Cashing out your 401(k)

While withdrawing your money is an option, in most circumstances, it means those funds will not be there when you need them in retirement. In addition, cashing out your 401(k) generally means you'll have to pay taxes on the withdrawal, and there's typically an additional 10% tax penalty if you're younger than 59½, unless you left your employer in the calendar year you turned 55 or older.

Employer Stock—If you hold significantly appreciated employer stock in a plan you should consider the negative tax consequences of rolling the stock to an IRA. If employer stock is transferred in-kind to an IRA, stock appreciation will be taxed as ordinary income upon distribution. The tax advantages of retaining employer stock in a non-qualified account should be balanced with the possibility that you may be excessively concentrated in employer stock. It can be risky to have too much employer stock in one’s retirement account; for some investors, it may be advisable to liquidate the holdings and roll over the value to an IRA, even if it means losing long-term capital gains treatment on the stock’s appreciation.

Should I roll over my 401(k)?

The decision about whether to roll over your 401(k) is dependent on your individual situation. A representative will work with you to help identify your goals and determine what's important to you. By understanding your investment personality, the representative will be able to advise if rolling over your 401(k) is the best option for you.

5 Reasons to Choose a 401(k) Rollover

By rolling over your 401(k) funds to a WoodmenLife retirement account, you can:

1. Continue to add money to the account and build more funds over time, thanks to tax deferral and potential growth.

2. Work with a WoodmenLife Representative to make sure your retirement account choices will set you up to accomplish your long-term goals.

3. Switch products easily with a direct 401K rollover. A direct rollover allows the ability to change products or accounts without incurring a tax penalty.

4. Avoid the red tape of trying to move the funds yourself.

5. Continue to defer taxes until withdrawal², possibly at a time when you’re retired and may be in a lower tax bracket³.