I recently changed jobs. Is there anything I need to do with my 401k plan?

EggsAnswer: For most people the answer is to rollover your 401k when you leave an employer. If you leave it behind it is often neglected. You forget how it is invested, or the employer changes plans and your money ends up in cash instead of invested. It is important to take care of your 401k, and moving it when you leave a job is usually the right answer. You can often roll it to your next employer’s plan, but you could also roll it over to an IRA. The IRA will give you more investment options and more control.

The best way to move it is called a Direct Rollover. When you do this, your money transfers directly to the IRA and does not go through your hands. When properly handled, the Form 1099 you receive for your taxes will show that you do not owe any tax on the transfer.

Rule #1 is: Don’t spend it! And, Rule #2 is: Don’t forget rule #1!

There is a temptation when this money becomes available to put it in your checkbook and pay off your credit cards or buy a new car. Resist this temptation. Most people change jobs several times during their working life and if you spend your 401k every time, you will pay a lot in taxes and end up at retirement without any money.
When you move on, move your 401k, but be very careful to protect it from taxes and keep it growing for the day you want to retire.

Call us at Guelich Capital 540-772-4545 if you have questions or would like more information about rolling over a 401k account. We have been helping clients protect and grow their 401ks for thirty years and we would like to hear from you.

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