It happens to the best of us: you opt into your employer’s retirement plan and then “set it and forget it,” or you open Individual Retirement Accounts (IRAs) at various companies. You go about your daily life, all the while, savings are automatically added to your employer retirement plan and you make contributions to your IRAs. But what happens to those retirement assets when life changes (retirement, job change)?
It might be time to consider moving those assets from your current retirement plan into an IRA with Thrivent Mutual Funds. You certainly should understand all your options, weigh the pros and cons, and make a choice which is right for your goals and circumstances.
When can I move assets?
While you can move your IRAs anytime you choose, if you experience any of the following life events, a rollover from an employer-sponsored retirement plan may be an option for you depending on the actions allowed under the plan document:
- Job change
- Reaching age 59½
- Plan termination
Options for moving assets
- Direct rollover
Your employer will have your retirement assets sent directly to an IRA or new employer plan. You don’t take receipt of the funds, so no federal tax withholding is required. Learn more about direct rollover IRAs.
- Indirect rollover
You take receipt of the funds and have 60 days to deposit them in an IRA or other employer retirement plan to avoid paying taxes and penalties on the distribution. Distributions from employer retirement plans are subject to a mandatory 20% tax withholding, or 10% for assets coming from an IRA (which may be waived). As taxes are withheld, you have to use other funds to rollover the full amount of the distribution. This is important as any portion not rolled over, including amounts withheld, will be considered a distribution and subject to income tax and generally a 10% penalty if under age 59 ½ unless an exception applies.
Note: you can only make ONE indirect rollover of assets from an IRA once in any 12-month period, no matter how many IRAs you have.
- IRA to IRA transfer
Transfer assets from one institution to another (known as a trustee-to-trustee transfer, such as from your current institution to a Thrivent Mutual Funds account) for the same type of account (e.g., IRA to IRA). Learn more about IRA to IRA transfers.
- Roth IRA conversion
Convert one type of retirement account to another (like a traditional IRA or Employer Retirement Plan to a Roth IRA). Part or all of the distribution may be subject to income tax. Learn more about Roth IRA conversions.
It’s important to consider your needs and circumstances when looking to move your retirement assets. Some factors to keep in mind include:
- Investment flexibility & fees
Compare the options you currently have with the options available with Thrivent Mutual Funds. Look at the investment fees and other expenses, as well as the variety of options available.
Plans and providers potentially offer a variety of account services you may want. Compare current services and conveniences to those available with Thrivent Mutual Funds. With consolidation and having all your retirement assets in one place, it may be easier to manage your accounts and monitor your progress.
Both IRAs and employer-sponsored plans may offer options you want or need. Compare access to early withdrawals, loans, employer stock considerations, required minimum distributions and the frequency distributions are available. Some plans may restrict the frequency of withdrawals.
IRA distributions that are used for certain non-retirement purposes, such as a first-time home purchase1 or qualified education expenses, are exempt from the 10% federal penalty tax that typically applies to distributions taken prior to age 59½. And as long as you still have earned income, you can continue to make contributions to the IRA.
Generally, employer-sponsored plans have unlimited protection from creditors under federal law. IRA assets are less protected and laws vary by state.
What can I rollover?
You can rollover or transfer assets from almost any kind of retirement plan, the most common include2:
- Traditional IRAs
- Roth IRAs
- Roth 401(k)s
- Roth 403(b)s
- SIMPLE IRAs
- SEP IRAs
Moving from my employer plan
You’ve worked so hard for your retirement assets, so before you move them, it’s important to do your homework and to make a decision which is right for you. Here’s a quick comparison of other available options: