Avoid 401K Rollover Mistakes
07/28/2010 0 comments
Moving an old 401K plan to an IRA has many benefits. You have a wider range of investment alternatives and, if you do it right, lower costs. However, you want to avoid silly mistakes that will cost you time and money. Steve Hartel gives an overview of 401k or retirement rollover rules and tips to keep you out of trouble.
- 401k Rollover Mistake: Not following the 60-Day 401k Distribution Rule
- Don't Forget the One-Year IRA Rollover Waiting Rule
- 401k Rollover Mistake: Same Property Rule
- Remember that RMDs are not Eligible for an IRA Rollover
If you want to avoid the trouble of going through the withholding and the resulting reporting requirements, you should probably look strongly at doing direct rollover since that should be used to effectuate your rollover from your qualified plan. A direct rollover is reportable, but never taxable. Another key feature is that there is no 60-day requirement window to worry about. All that you need to do is to check with your plan administrator and the institution receiving the rollover regarding their forms and requirements for facilitating a direct rollover on your behalf.
Remember that it's not enough to efficiently move your money to an IRA, you need to have an effective portfolio and strategy that can deliver high returns at a low risk. For example, using ETF index funds and a tactical asset allocation, you can see five year annual rates of return in excess of 11%.
Tags: Retirement, 401K, IRA, 401K Rollover
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