Next Avenue: Should you roll over your 401(k) to an IRA? Here are 3 tips for this key retirement decision.

by | Jul 30, 2022 | Stock Market

This article is reprinted by permission from In his classic tune “Roll Over Beethoven,” Chuck Berry famously belted: “Roll it over then move on up.” Well, if you’ve saved for years in a 401(k) plan, you’ll want to know how — or whether — to roll it over to move on up when you retire.

My “Friends Talk Money” podcast co-hosts Terry Savage, Pam Krueger and I just released an episode all about this, where Savage offered tips for 401(k) rollovers, which I’ll share below. You can listen to the episode wherever you get podcasts. The advice seems especially needed. As Savage said on the podcast, your 401(k) is probably your biggest asset aside from your home, but the new “Retirement Outlook of the Workforce” survey from the Transamerica Center for Retirement Studies found that 62% of employed workers said “I do not know as much as I should about retirement investing.” Also read: 3 common IRA rollover tax traps — and how to avoid themDifference between an IRA and a 401(k) Before I provide our podcast’s tips on 401(k) rollovers, a definition: A 401(k) rollover happens when you move money from your employer’s retirement plan into a financial services company’s individual retirement account (IRA), typically within 60 days of leaving your employer. Once you turn 72, you must start taking out money from a traditional IRA each year through what’s called a required minimum distribution, or RMD. There are no RMDs for Roth IRAs. You don’t have to roll over your 401(k) money to an IRA when you leave your employer for retirement. You can instead keep the money where it is with your employer or cash out and take the money all at once. …

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