Learn How to Move Your Old 401(k) Into a Rollover IRA

When it comes to growing your money over the long-term, studies have shown that tax advantage is one of the biggest benefits you could have in growing your money. Tax advantage is a main reason Individual Retirement Accounts (IRAs) and 401(k)s are so popular when it comes to saving for retirement.

One of the most important and misunderstood aspects of owning an IRA or 401(k) is how you should approach taking income or withdrawals from those accounts. If you don’t know the rules, you can end up paying more in taxes than you have to.

Rollover a 401(k) to IRA – Tax Consequences

When it comes to taxation, there are basically three different types of investments: 1) regular taxable investments; 2) tax-free investments, like Roth IRAs; and 3) tax-deferred investments, like traditional IRAs and 401(k)s, which are taxable when you decide to withdraw your funds.

Taking advantage of the tax benefits that IRAs and 401(k)s provide can help to boost the amount of income your investments can generate in retirement. However, since tax codes are constantly changing, you must make sure to keep up with the changes.

Through our tax minimization strategies, Arbor Financial Services can advise you on some of the best ways to withdrawal funds from your qualified retirement accounts so you can try to maximize the tax advantages offered by each one. In other words, we’ll keep up with the changing tax codes so you don’t have to.

IRA Rollovers

One of the services we offer that can help you try to maximize the tax advantage includes rolling over a 401(k) to an IRA. Doing so can not only provide you with access to more investment options, but it can also help to lower the fees you pay.

IRA Rollover to Roth IRA – Tax Implications

Converting a 401(k) to a Roth IRA is another way that may provide certain tax benefits. For example, you could convert some funds that are in a qualified retirement account, like a 401(k), into a Roth IRA ahead of retirement. Although you’ll still owe taxes on the amount you convert, you won’t have to pay taxes on withdrawals you make later on in retirement.

Give our office a call to schedule a complimentary consultation with one of our advisors so we answer any IRA or 401(k) questions you might have, such as:

What is the cost to rollover a 401(k) to a Roth IRA?
What is the best time to convert a 401(k) to a Roth IRA?
Can I transfer my 401(k) to an IRA while still employed?