401K Rollover Guide
A very popular way of opening a Gold IRA is to instigate a 401K rollover. The U.S. Bureau of Labor Statistics shows that the average person has 12 different jobs between the ages of 18 to 45. This could mean that you have one 401K or maybe several 401Ks from a number of different previous employers and would prefer to consolidate them by rolling them over into a Gold IRA. Making a 401K rollover is much easier than most people imagine but it is very important that you fully understand all the options available to you.
For many people their 403, 457B or 401K represents most if not all of their retirement savings so it is vitally important to ensure that they are producing good results and that you have control over the investments you have made for your retirement plans. If you have one or more 401Ks from previous employers you normally have four different options to consider.
- Withdraw the balance of your 401K (not recommended).
- Leave the funds in your previous employers plan.
- Move the funds into your new employers plan.
- Make a 401K rollover to an IRA.
- 401K withdrawal prior to you reaching the age of 59½ is without doubt the worst possible option to take for a number of reasons. Let us assume that your 401K or a combination of your 401Ks has a value of $100,000 and you decide to cash out. The effect of that withdrawal is likely to put you into a higher tax bracket therefore the combined state and federal tax rate could be 35%. When you add the 10% penalty for early withdrawal you would be paying $45,000 in tax and penalties leaving you with just $55,000. In addition to losing almost half of your investment in taxes, now you don’t have that $100,000 in your retirement fund for your future.
- Leaving your 401K in your previous employers plan is another option to consider. If the performance of that plan has been exceptional and you will not be charged any fees by leaving it there, then it may be worth leaving it where it is. However, many 401K plans have much higher charges than you could be aware of so it is best to ask the HR department to find out exactly where you stand regarding fees. Most people prefer to consolidate their various 401Ks from previous employers into a Gold IRA which gives you control of what you choose to invest in.
- You also have the option to move the funds from an old 401K into the retirement plan of your new employer. Before taking this option you should check and make sure that the new 401K is performing well and find out exactly how and where your money is invested. Many 401K plans are sadly lacking in the returns they provide for retirement. According to the Fed the average 401K balance for somebody approaching retirement in 2007 was just $78,000 which is enough to provide a retirement income of just $3,100 per year.
4. Making a 401K rollover has become a very popular option. This is mainly because a Gold IRA allows you to choose exactly what you want to invest in and gives you the additional option of investing in gold and other precious metals to diversify your retirement portfolio. The process of rolling over a 401K is very fast and easy to do.
You can initiate a 401K Rollover in three situations.
- When you reach 59½ years old.
- When you retire.
- After you have left your employment where you have a 401K.
To maintain the tax deferred status of your investment this must be a direct transfer from custodian to custodian so the distribution must go directly to the new custodian or trustee for your Gold IRA account. If you wish to rollover a 401K to a Gold IRA first fill out the “free gold investment kit request” on the right of this page or call 1-855-682-1046 to speak to a Gold IRA executive if you have any further questions. We are here to help you Monday to Friday, 7:00 AM to 6:00 PM PST. Contact Us.