Our Thoughts

To Rollover your 401(k), or Not?

When changing jobs or retiring, should you roll the balance in your 401(k) to an IRA or leave it in the company plan? In the Weekend Investor section of the August 15-16 edition of the Wall Street Journal, Anne Tergesen and Anna Prior suggest that you weigh the following factors: Fees, Investment Options, Simplicity, Distributions (between ages 55 and 59½), Creditor Protections, and Tax Breaks (if you own company stock). The take-away from this article for me applies to those working beyond age 70½. If you continue working after turning 70½ – the age at which you are required to start taking minimum distributions (RMDs) from your 401(k)s and IRAs – you can postpone taking distributions (and paying income tax on those distributions) from your current employer’s 401(k) plan. Furthermore, 98% of employers accept rollovers from other company plans and 66% of those also allow rollovers from IRAs. So, if you are 70½ or older and still working, check with your employer to see whether rollovers from other company plans and/or IRAs are permitted. You may be able to postpone all RMDs for long as you are still working!

Subscribers to the Wall Street Journal may read the article here.