401(k) Rollovers

Leaving your employer?

If you have retired or changed jobs, you may have questions about what to do with the money in your employer retirement plan. You typically have four options:

  • Leave It– Leave the money in your former employer’s plan
  • Move It– Move the money to your new employer’s plan
  • Roll It– Roll over the money to an IRA
  • Take It– Cash out the account, subject to tax consequences

Although taking your money is an option, you should avoid doing so in most circumstances because taking it now means it won’t be there when you need it in retirement. Plus, if you take your money, you will generally have to pay taxes on the withdrawal, and there is typically an additional 10% tax penalty if you are under age 59½, unless you left your employer in the calendar year you turned age 55 or older.

Your other three options – Leave It, Move It or Roll It – will allow your retirement dollars to continue to grow on a tax-deferred basis, but there are some differences. As you consider your options, it’s important to consult with your tax professional before making any decisions.

You can compare these three options using the table below.

I am no longer with my employer. Is this option available to me?

Leave It     Move It Roll It
It depends on the terms of your plan. It depends on whether your current employer has a plan and the terms of the plan. Generally yes

What will it cost?

Leave It Take It Roll It

Fees and expenses for your employer plan may include:

  • Administrative fees
  • Investment-related expenses, which vary depending on the types of investments and services you select
  • Distribution fees

These fees and expenses may be lower than the fees and expenses you would pay in an IRA. Contact your plan administrator to learn more about your plan’s fees.

Edward Jones IRA fees generally include:

  • An annual account fee
  • Investment-related expenses, which vary depending on the types of investments and services you select
  • Termination fees

For the current fee schedule, see IRA Schedule of Fees.

Will I be able to add money (up to the annual limits)?

Leave It Move It Roll It
It depends on the terms of your plan. Generally yes, but you may have to meet certain plan requirements before you can. This option also allows you to consolidate your retirement accounts, which may make it easier to monitor your investments and simplify account information at tax time. Generally yes, as long as you meet certain income and age requirements. This option also allows you to consolidate your retirement and other accounts, which may make it easier to monitor your investments and simplify account information at tax time.

What investment options will I have?

Leave It Move It Roll It
Plans typically have a limited number of investment options that are selected by the employer but may include investments you can’t get through an IRA. IRAs typically have a broader range of investment options than employer plans, but employer plans may offer investments you can’t get through an IRA.

What types of services are available?

Leave It Move It Roll It
It depends on the plan. For example, some plans may offer educational materials, planning tools, telephone help lines and workshops. Your plan may or may not provide access to a financial advisor. Through our face-to-face approach to serving clients, your Edward Jones financial advisor can help you identify and implement strategies to help you reach your financial goals.

When can I take money without tax penalties?

Leave It Move It Roll It
Generally at age 55, if you leave your employer in the calendar year you turned age 55 or older. Generally at age 59½

When do I have to take money?

Leave It Move It Roll It
Generally at age 70½ Generally at age 70½, unless you are still working at the company. Generally at age 70½

Will the money in my account be protected from creditors?

Leave It Move It Roll It
Assets held in employer plans and those held in IRAs may have different levels of protection under the law. For more information, consult your attorney or tax professional.

What if I have employer securities?

Leave It Move It Roll It
If you have stock/securities of your former employer that have increased in value from your original investment, you may be able to receive special tax treatment on these securities. This is referred to as net unrealized appreciation (NUA). If you roll the employer stock into an IRA or move it to your new employer’s plan, the ability to use the NUA strategy is lost. NUA rules are complex. If you are considering NUA, we suggest consulting with a tax professional prior to making any decisions on distributions from your existing plan.

What options will my beneficiaries have upon my death?

Leave It Move It Roll It
It depends on the terms of your plan. Your plan may or may not allow your beneficiaries to stretch required distributions from the plan upon your death. IRAs generally allow your beneficiaries to stretch required distributions from your IRA, extending your IRA’s tax deferral upon your death.

Important Information:

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

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