Understanding Retirement Plan Rollovers

When you leave a job, there's a good chance that the last thing on your mind is what to do with the money in your retirement account. However, making sure that the money you've started to accrue for retirement is safe is a very important part of building a secure financial future. When you transition from one job to another, make sure you take into account that you also need to transition the money in your former employers' 401(k) program.

Talk to your financial planner about the best options for rolling over the funds so they can keep helping you make progress toward your retirement planning goals. If you don't already have a trusted financial advisor, when you are faced with making an IRA rollover decision, it's certainly a good time t consider getting one. Your financial advisor can help you make a wise decision that makes sense for your present and future tax situation.

Many people choose to cash out their employer sponsored retirement accounts when choosing to change jobs. While this many be a good idea for some people, it's generally not the best course of action. If you're not yet at retirement age and you take money out of your 401(k) – even if it is through a company that you have left – you're going to be responsible for paying taxes on the money, as well as early withdrawal penalties.

However, if you take advantage of an IRA rollover instead of cashing in your 401(k), you won't have to be subject to penalties and taxes on the money you've accrued in your retirement account. That's why IRA rollovers can be so beneficial to people who are changing jobs. Before you make a decision that's going to set back your retirement plans and cause you to have to pay unnecessary penalties, you owe it to yourself to consult with a qualified financial advisor about the IRA rollover options available to you. 

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