When you start working, your company starts your retirement plan in which both you and your employer contribute. This is your 401k plan. But once you move to another employer, these contributions stop. In such a case you have to decide what you what to do. It is very important that you understand 401k rollover rules to know about the fee involved. 401k rollover to IRA is the most commonly used option, but it’s good to know all your 401k rollover options.
The easiest option of a rollover 401k is to cash out from the account. Your old employer will make a check in favor of you after deducting 20% withholding tax as a prepayment of estimated taxes. You will also be subjected to federal and state income taxes. If you want to continue to stay invested and get tax benefits, you can either take your 401k and invest in an IRA account yourself or go for a direct 401k rollover. Continue reading All about 401k rollover
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