401k Rollovers Simply Put to Help You Get It.
Make sense of your options.
Thrivent Mutual Funds helps make options for your old workplace retirement plan or 401k, well... make sense. When it comes to retirement assets, it's important to consider your choices, including a rollover IRA, keeping investments in an employer plan, or cashing out. We also recommend you consider applicable fees and product features, and talk with your tax advisor if you need help deciding.
Wondering if rolling over your 401k to an IRA is right for you? Start by comparing the different ways to rollover accounts and types of accounts below.
- Direct rollover of assets from one institution to another.
- No federal tax withholding required by employer.
- 60-day rule for rollover does not apply.
- You take possession of the assets and have 60 days to roll them over without potential tax or penalties.
- Employer plan administrator must withhold 20% toward any taxes you may owe, placing a burden on you to provide that 20% for your rollover out of pocket, or to have possible tax implications later.
- Penalty for early withdrawal can be waived for qualifying major life events like your first home purchase or college tuition.
- Your future annual contributions may be tax-deductible.
- Converting assets from one account type to a Roth IRA may make part of all of the rollover amount subject to federal and possibly state income tax.
- May benefit those who expect to be in a higher tax bracket later. Or, for those wishing to withdraw investments federally tax-free in retirement.
- Allows qualified withdrawals without penalty.1
WAYS TO ROLLOVER TO AN IRA: DIRECT VS. INDIRECT
Enjoy a hands-off experience with direct rollovers.
Move assets directly from your prior institution to your IRA electronically or issue a check payable to your IRA provider.
Do it yourself within 60 days to avoid penalties.
Receive your retirement assets and deposit them into a qualified retirement account or IRA within 60 days.
ACCOUNT TYPES: TRADITIONAL IRA VS. ROTH IRA
Keep your retirement assets tax-deferred.
Rollover to a traditional IRA and keep your assets and any earning tax-deferred until distributed.
Rollover to a Roth IRA and pay taxes upfront for potential tax-free distributions later.
Pay taxes when you rollover assets now. Qualified distributions can be federal income tax-free later.
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Easy to understand information to help you make wise choices with your money.
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Let's Get Rolling.
1 IRAs provide increased flexibility on early withdrawals due to additional IRS exceptions to the 10% early withdrawal penalty for IRA distributions. Examples include first time home purchase and qualified higher education expenses. See IRS Publication 590B for more details. However, by rolling over to an IRA, you lose the option for penalty-free distributions from 401k plans after the age of 55.
2 Thrivent Financial was named one of the “World’s Most Ethical Companies” by Ethisphere Institute for our leadership in promoting ethical business standards and introducing innovative ideas to benefit the public. “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC. For details, visit Ethisphere.com.