401k Rollover Options 2023 (Rollover to IRA, to Roth IRA, or to New Employer)
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- เผยแพร่เมื่อ 30 ก.ค. 2024
- Here are your 401k Rollover Options for 2023. In this video I explain the 401k Rollover to Roth IRA, 401k Rollover to IRA, 401k Rollover to your New Employer Plan, {Hey, I recently started a Financial Vlog - would like to invite you to follow along if interested: • Escape the Rat Race & ... - Kyle} as well as the option to NOT Rollover your Old 401k and to simply keep it invested with your old employer. When you're rolling 401k to Roth IRA there is a taxable consequence because you're moving your pre-tax money into an after tax account & you'll pay taxes based on your tax bracket for the year in which you initiate the rollover to Roth IRA & deposit the funds into your Roth IRA.
If your New Employer Plan has a Roth 401k Provision then you can rollover your old Roth 401k to your new Roth 401k and there will be no taxable consequence.
If you make too much money to be able to contribute to a Roth IRA due to income limitations and are interested in doing the Backdoor Roth IRA Strategy then you may want to consider keeping the money in your old employer 401k OR doing a 401k Rollover to New Employer....check out my Backdoor Roth IRA video OR Roth Conversion Explained video.
Hope you enjoy the video and find a nugget or two of information to help you on your financial planning journey.
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Timestamps & Chapter Links
0:00 - Intro
1:55 - Don't do a 401k Rollover
2:29 - 401k Rollover to IRA
5:35 - 401k Rollover to IRA CONs
10:16 - 401k Rollover to Roth IRA
11:09 - 401k Rollover to New Employer
13:25 - 401k Rollover BONUS TIPS
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ABOUT ME 👇
I've been involved in people's financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)...I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course...my experience as a Former Financial Advisor.
This channel allows me to share my passion for personal finance, stock market investing, real estate investing, and entrepreneurship. I produce content that I would want to watch, and because of that, I give 100% effort in every video that I make. I also believe in complete transparency and open communication with my audience.
Subscribe if you are interested in:
#401kRolloverOptions
#401kToRothIRA
#FinancialPlanning
DISCLAIMER: I am not a financial adviser or a certified public accountant. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion.
Hey, I recently started a daily 2023 Financial Vlog - would like to invite you to follow along: th-cam.com/video/YnZrh9YwNQo/w-d-xo.html - Kyle
Keep em coming 🔥
Love the video!!
Love your stuff, I can see your channel going to 🚀🚀🚀
@MH - Thank you for taking the time to watch the video and for the kind feedback...it would be amazing to have that kind of positive financial impact on so many people. Appreciate you! Cheers!
Great information 👍. I'm subscribing as soon as I am done sending this to you.
Thanks.
@DioScuri Mas - Hey very kind of you to share...thank you so much! Hope that you find a financial nugget or two in some of the other videos within my content library. Appreciate you, boss! Cheers!
Thank you for this video. I recently left the workforce and have a 401k with my former employer. I intend to move my 401k to a traditional IRA.
@tegxtegx - Love to hear it! That is a very common rollover option taken by many.
If your income increases and you intend to begin a backdoor Roth strategy, then you’ll want to roll your IRA back into a 401k so you can do the backdoor correctly…but again, that’s only if your income increases beyond the Roth IRA income limit thresholds.
Thanks for checking out this vid! Hope there are others of interest to you on the channel. Cheers!
Like the video. Thanks for sharing
Great insights! Managing your 401k during job transitions can be tricky, but it's crucial to make informed decisions. Speaking of retirement planning, have you ever considered diversifying with crypto? Platforms like My Digital Money are making it easier than ever to invest in crypto within a tax-advantaged IRA or in cash. Just a thought for those looking to spice up their retirement portfolio!
Lower fees and better performance is definitely worth a few moments of learning more about your 401k. Typically the company you work at will put you in a "safe" portfolio which most likely will not lose money, but also won't perform as well over 20-30-40 years. Company portfolios also usually have high fees, .5 to 1.75. Meaning if you have a growth of 8%, you reduce it by the fees in your portfolio. Good vid.
@iwantcheesypuffs - Hey thank you very much! Appreciate that feedback. If you want to binge a few more, I recently started doing daily financial-vlog style vids...in this one I talk about my 3 careers and our financial journey. It's a little more personal than the traditional educational ones I make. th-cam.com/video/J7xmmvTAms8/w-d-xo.html
Cheers!
Thank you this was very clear and easy to follow
@FABaron - That’s awesome to hear - I appreciate you sharing the feedback! Cheers, boss!
I’m in desperate need of the money in my 401k I wish I knew about the cares act I would’ve done it then but what do you recommend to do with it now to get the most money out.
Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking the bold steps we need in other to reach our goals.
One note here on the cons....not all 401k plans allow loans; so if you have one of those then that con is basically irrelevant.
@8:30 Is it really a "fiduciary" type of relationship if the financial advisor is trying to profit from you and your AUM?
@AWoL - I do see your point here. We should remember that the type of person that selects this type of client/Advisor relationship is one that actively chooses to be “hands off” and relies more on Advisor than him/her self. So there’s that.
A fiduciary has to act in their clients’ best interest…that’s the main benefit in hiring an Advisor and paying them a % of AUM…when account underperforms the Advisor gets less and it kinda has a ‘win-win’ feel to it because the advisor does better when client does better. The issue I have with this comp structure to advisor is…when the account doesn’t do well and has a negative return….the advisor still gets paid a % of entire AUM.
IMO, most retail investors can do some simple research and select enough good quality funds/stocks to manage their own assets without needing an advisor at all…or at least not after a year or two of a client LEARNING from the Advisor. The cost of working with an Advisor for 2-3 decades is absurd, but people are lazy and don’t do math. 🤷🏼♂️
@@Financial_Awareness thank you for the detailed and solid response. It gave me extreme clarity. I'm looking for a fee-only advisor at this time. It's been so stressful scouring through YT videos and reading articles on the internet that it's causing such high anxiety to the point where I feel paralyzed. I'm trying to educate myself as much as possible before taking the next step to start a relationship with a retirement planner. Little did I realize how much a high balance taxable retirement account affects SSI, Medicare, and taxes owed. If I could turn back time....
Thank you.
I just retired from my job after I turned 55, have a traditional 401K with 222,000 and 97,000 in a checking account, what will be my best option: traditional IRA or Roth?
@Jorge A. Munoz - Congrats on retiring! WooHoo! Happy for you, Jorge.
If you keep the money within the same 401k as your last employer (that you just retired from) then you can begin taking withdrawals now, without penalty, because you're 55. However, if you roll those funds over into a Trad. IRA then you're stuck waiting until age 59.5 before you can liquidate without penalty. IF you decide to liquidate now from the 401k then you'll still owe taxes (obviously), but as I just mentioned you'll avoid the 10% early withdrawal penalty.
I've heard some retirees say that doing a Roth Conversion now (at your age of 55) isn't worth it, but the way I think is in regards to liquidation order...meaning...any funds that you convert from 401k to Roth IRA or from Trad IRA to Roth IRA need time to grow tax free (to get the benefit of actually doing the conversion)...so in my opinion if you do decide to convert any of your pre tax funds into a Roth IRA....those converted funds should stay invested and growing for 10+ years before you pull any out.
You asked what the best option would be....if you don't need to liquidate any of the money over the next 5 years then I would roll the pre tax into a Trad IRA so you have more investing options available to you and then consider converting some based on your tax bracket each year...don't convert too much to where you jump up another tax bracket is the point there.
Hope that helps...hit me up with more questions if you like. Cheers boss!
@@Financial_Awareness Thanks for the quick reply, I was actually looking onto a traditional IRA mainly because the time-frame to recover the taxes due to the conversion to a Roth.
I think I'll go with a traditional but I will wait a little bit to do more research on the investing options since I have enough money in my Bank and I'm planning on getting a part time job somewhere just to pay bills.
Thanks again for the Info.
Hi. I'm going from full time to part time (8 hrs per week) with my Walmart job to a much better paying job with crazy over time. BUT I have an outstanding 401K loan with my current plan. I can't afford to pay that loan back completely at this time. How do I prevent a taxable event? I do NOT want the checks! Merril Lynch (Walmart) tells me they will take out of my vested 401K balance the loan. How do I prevent this? I thought I could still make bi weekly paycheck deductions. Any advice? Thank you!
Hey man l, great information. I took out a loan against my 401k and still owe 2.5 years on it. About to start new job and they don't offer 401k. If you were in this situation, what would you do?? Thanks
continue paying the loan
Actually, you will pay the tax of that money your borrowed. It is due once you leave that job (or the following tax season). Open a small business which could help you write off a lot of expense (and lower your taxes).
If youre not happy with any of the funds available through your employer is it possible or does it makes sense to move all the funds to a seperate IRA while still contributing to the employers one. Another words stay employed and maintain the 401k with contributions while managing a seperate IRA? Say there's another 10 years of employment left.
If the employer has a self directed brokerage option within the plan you have the ability to invest outside of the plans core mutual fund options*
Ah.. crap! I still don't know what to do :-( My company was bought , I have a 401k with the old company and the new company has a 401k option, conveniently also with fidelity. Now I need to decide to roll my 401k over to the new company 401k or into an IRA. My income might be too high to benefit from some of the IRA benefits, but what's more important.. I'm planning to move to my home country within the next 2 years, and am not so sure I want my retirement money all tied up here for, basically, forever :-( so.. what do I do???
Would you be prevented from liquidating your American retirement accounts while living in your other country?
If I move to Italy I’d hope I could still access my American US dollar assets. 🤷🏼♂️
great vid. I have a question I retired from my job and i'm in a new job with a 401k. what happens to the money in my old job if I don't roll it over? will it just lie dormant and not decrease or increase or will it go up and down
Congrats on the job change! By now you likely know that the money in the old 401k will remain in the exact situation it was when you left that job/last opened that account online…if the money was already invested then yes, it will remain invested and the account will be somewhat dormant until you take action, but invested money remains invested and cash will remain in cash. Some employers force you out of the plan within 30-45 days of your termination date. Some don’t.
This video educates folks like you on what you could do with that old 401k…hope it was helpful! How’s the new job going?
If I completely cash out my traditional IRA account EARLY, am I able to just close the IRA account?
I would hope so! Don’t see why that wouldn’t happen. If you cash it out in full I believe it’s an option during that process. If not then just take that one last step to close after the funds have been transferred and settled.
Ok here my Q I retired and left my 401k with my employer I was thinking about Rolling it over to my IRA but within my 401k I have A SDBA is it possible to just transfer the 401k along with the SDBA to my IRA or do i have to close all the position in the SDBA transfer the funds back to may 401k before I can roll it over to my IRA MY SDBA is with Charles S and my IRA acc is with C/S Thanks
Is millennium trust company legit? I just got a letter saying that my old employer roll over my retirement plan to them. But I have been searching more info about that company but there’s little to no information at all
I can roll over from 401k if I still employed???
An older IRA or 401k from an old employer can be rolled into your current 401k, but you can do a 401k rollover into a different account from your current 401k if you are still employed… unless your employer allows for an “in service distribution” which some do allow, but not many.
General answer = nope.
This rollover chart is great. Searched for "irs rollover chart" found it. Can I move money from a traditional 403B/401K directly to Roth IRA, and pay taxes from my savings when filing tax returns? The chart shows as YES.
Thanks for this video.
Oh hell yeah!!! Dude, this comment just made my day. Thanks! Sorry I haven’t uploaded any newer videos lately…just been busy livin’ 😎
Fidelity has a specific IRA for rollovers called a Rollover IRA. Not sure what the difference is between it and a "traditional" IRA.
@RKGSD - Yeah they’re pretty much the same in terms of how they grow tax deferred. The only real difference is the source of funds in that the rollover money came…rolled over…from a previous employer’s plan. Same income limitations and contribution limitations apply to both.
Hey, thanks for taking the time to check out this video and being part of the channel. Cheers boss!
So basically it's best to get out of a typical 401k plan and into somewhere that has more stock options to invest in like Webull's IRA plan?? I'm going to have to watch these vids a few times, phew.
@Bryant Epperson - Hey, thanks for taking the time out of your day to watch this video...appreciate you! Yes, once you roll it over into an IRA (whichever platform you choose), you’ll have way more options of how to invest it...just keep an eye on fees and operating expense ratios. You absolutely should be spending way less on fees. Alternatively, if you’re doing a Backdoor Roth type of strategy then there are benefits to keeping funds in old 401k OR transferred into existing 401k account. Appreciate you...cheers!
@@Financial_Awareness I just got into Webull for stocks so I’ll start looking at their IRA options. Im going to need to watch more videos now. 🤦♂️🤣
@Bryant Epperson - Awesome! Good job learning and taking the time to educate yourself about your personal financial plan & whats best for you. That’s a great habit to continue. I’ll be the first to tell you I don’t have all the answers, but I hope some of my other videos can help you along the way. If there are any other financial-related topics you’d like to see a video on please let me know and I’ll work it into my content calendar. Appreciate you...cheers boss! 😃
Depends, if you have 401k with fidelity, you can buy all the stocks and even sell cover calls. You just need to call them about brokeragelink if you don't already have it
Can you rollover to Roth ira without leaving a job?
@Horacio Rubalcaba - Yes, if your employer allows for it to happen. If so, it’s called an “in service distribution.”
Very thorough
@DOUglas Jones - Hey thank you! I enjoyed making this video. Appreciate you sharing your positive feedback!
Should you rollover when the market is doing good ? is there any consequence rolling over if market is crash
@Rey More - Hey Rey - if you do an in-kind transfer of same funds from within your plan to same funds in your rollover then no - doesn't make any difference. As long as you get the newly rolled over funds invested relatively quickly upon the funds settling...and they are invested very similarly to how they were within the 401k then you won't see too much change/interruption. However, what may have more impact to this question is doing a conversion from pre-tax to after-tax accounts...I have a video on that and that is a different question/answer. Hope that helps! Cheers!
Great videos like always, i have a question if you don't mind Mr Scholl, if we over contribute the amount and then excess contribution the extra amount, on tax return do we report the total amount with the over the limit amount or the amount after excess contribution? Many thanks
@Banana Roll - Thanks for the good vibes! I’m assuming you mean over contribute into an IRA. I believe if you over contribute into an employer sponsored 401k then your plan administrator will return the excess amounts to you and halt your ability to contribute more. Regarding excess contributions into an IRA, I would contact the company where your account is located and ask them to do a return of your excess funds OR ask for some of your funds to be recharacterized....for example, if you didn’t fully contribute into this account in 2019, then your contributions made between Jan 1st 2020 - April 15th 2020 could be recharacterized as 2019 contributions which will in turn lower your total 2020 contributions to hopefully where you’re now under the max contribution amount.
The reason why you want a return of your excess contributions OR a recharacterization is because there is a tax on excess contributions to the tune of 6% per year for each year the excess funds remain in the account. Yikes! Ouch! What I would do is get those excess funds outta there and only claim the maximum allowed on your tax return to prevent that tax.
You can learn more about it here:
www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
Hope that helps answer your question...good job on over-saving! ...but yeah, you’ll want to fix this for sure. Appreciate you taking the time to check out the video...cheers!
@@Financial_Awareness Mr Scholl, my apologize for not giving out the full information, i am actually self employed and i maxed the contribution, and however i wasn't sure if SEP Ira was right for me, so i did excess contribution, and later i recontribute to the same SEP account, right now my numbers is good, and i didnt over contributed but my question is on 2020 tax return do i report the "total" with over contribute or only the amount after excess contribution? Thank you
@Banana Roll - I’m not trying to be difficult, I am just confused. You said you did contribute too much then you said you didn’t and that your numbers are good. Confusing.
As you’ll see from the IRS website link, if you contribute too much there is an additional tax each year - which you don’t want (unless you simply want to help chip away at our nation’s deficit and debt by paying more taxes - in which case I say thank you). It would be a good idea to get rid of any excess contributions by doing a “recharacterization” of some of those funds OR a “return of excess funds.” ...once you do that, then you’ll report only the maximum amount allowed to contribute into your retirement account and will be free from needing to pay that additional 6% tax on the excess funds each year.
Does that help provide some additional clarity or is there still confusion?
@@Financial_Awareness I am so sorry about the confusion, i am not very good at explaining or might even use the wrong terms, in 2021 last month i contributed 57,000 to my 2020 SEP Ira, which is the maximum amount, however i thought i could be better with solo 401K, So i withdraw all the money out by using " excess contribution"- (57000), and later only to found out that it is too late to contribute solo 401k for 2020, so I contributed 57000 back into my SEP Ira again, for 2020 tax return do i report $114000 or $57000 for 2020 Sep Ira, Thank you for your time again!
If you go (401k > ira > roth ira [you still pay taxes here]) or if you go (401k> roth ira[you also pay taxes here]). Is there an advantage to either method as they'll both end up in the roth.
@papijelly - The advantage in my opinion is based on where you live now and where you plan to live during your retirement years. I may have mentioned this during this video or maybe another one, but if you live in a high state-income-tax state NOW & plan to move to a NO-state-income-tax state during retirement then I think (401k > IRA > Roth) has some validity to it. That said though, I have a strong belief that overall tax bracket rates will be higher over the coming 5 - 20+ years…so I think getting as much tax-free growth inside Roth accounts is super important from a financial planning / tax diversification stand point. I’d rather pay taxes now while I have all these tax write-offs than later when I’ll have less revenue from business and more revenue from dividens/cap gains with fewer tax write offs and tax credits. Like I said though…just my opinion.
Appreciate you taking the time to check out the video…cheers boss!
@@Financial_Awareness thank you and awesome video.
My employer lost,m😊y 401k
Not cool. Sorry! Can you make some calls and find it? Seems highly unlikely it could just disappear. 😢
Great content, thanks! Question: When moving the money from a 401K to an IRA in this bull market, wouldn't it be a disadvantage to be buying stocks or stock funds at such high prices? Do you have any recommendations on the timing aspect?
@H - Really appreciate your time as you watched this video and others on the channel...thank you! In my opinion, your question is a risk tolerance & time horizon question. Most folks that invest money for their retirement dollar-cost-average into their account each paycheck / month...so yeah sometimes you'll be buying when the market is up & sometimes when the market is down...in the end it all averages out. Back when I was a Financial Advisor, when I had a client that wanted to try and "time the market" - what we would do is immediately invest half the money they contribute and the other half stayed in the account, but just sitting in it as cash...then...as the market would have corrections or pullbacks we would then place a trade to invest the cash into the same investment positions they already own. For the bulk of your retirement savings efforts - I would not encourage anyone to get too cute and "time the market"...."time IN the market" is more important and many studies have proven this statement to be true.
If your time horizon is long enough then this market we're in now might be lower than where we'll be in 15-20+ years...but if your time horizon of investing this new money in your IRA is like 1-2 years...then yeah you'll want to take that timeline into consideration when getting these funds reinvested once the transfer settles in to your IRA. Just my opinion.
Hey, thanks for taking the time to check out this video and the channel...cheers boss!
If one day I can leave my job to do TH-cam full time I’m definitely gonna use this video roll over my 401k to my Roth IRA. I’m investing into both but it feels satisfying having it all in one account 😂 great content as always !
@Unorthodox Savings - Joe! You’re thinking too small! I think what you meant to say is, “Yo, KScholl when a recruiter from another company calls me to hire me for another job with another company for 50% more money plus quarterly bonuses...I’m going to re-watch this video and do a rollover.” 👊🏻👊🏻
Regarding YT - if you build it, they will come. Keep it up man! Keep the faith. Appreciate you.
Question: In 2020, I did a 401K conversion to a Roth IRA. I understand I need to pay taxes on the amount I moved over. I also did a backdoor ROTH IRA as well for $6K. My question is, do I pay taxes only on the 401K conversion to Roth IRA or do I need to pay taxes on both the 401K conversion as well as the backdoor ROTH IRA.
I have my own self-directed IRA, how can I take money from my 401k at my current employer and move it to the IRA each month? Can I do a Direct Transfer Rollover? Can I do an In-Service Rollover (I'm NOT over 59.5)?
@Justin Roysdon - This is possible...to move your funds from your open/active employer 401k TO your own IRA...but it's only possible if your current employer sponsored plan allows for in-service distributions.
Thanks for checking out the video...hope there are others on the channel that are of interest to you. Cheers, boss!
Great stuff. I watch several youtube videos on how to trade in the stock market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands.
@Catherine Gonzalez - Thank you for taking the time out of your busy day to watch this video. I appreciate you for that. Also, I completely understand you not wanting to make mistakes by taking risks in your own hands. One of the main reasons why I started this channel to begin with was because making smart financial decisions is actually easier than many people think. From my 8+ years of experience as an Advisor myself (walked away from that career last summer and I have nothing to 'sell you' in my videos) I can tell you that your financial plan & your financial knowledge is a journey where you will continuously be learning. However, once you get some of the basic fundamentals down and you create a path...each next step gets easier and easier. Decide which account you want to contribute to...then simply start by looking at low fee index funds (there are many out there that are well diversified)...then...as you invest more time by reading articles, watching videos, etc...your knowledge and confidence will grow together.
All that said, what questions do you have? How can I help?
@@eileenr.nelson2966 - Hey, thanks for checking out this video! Not sure if you are new to my channel or not, but I was a Financial Advisor for over 8 years (I voluntarily left that career & no longer manage assets for clients). I can assure you the average person just getting started with their financial journey doesn't need to work with an Advisor - there's so much good/healthy information online for people to consume/read/watch to help them get started on their journey without spending fees on a percentage of assets under management. Just my opinion. Have you worked with an Advisor or are you one yourself?
hi, no I haven't do you know any or can you point me in the right direction?@@eileenr.nelson2966
I want to go into stock but i need a certified/registered professional who will guide and handle my account.
@@emilyharley8002 - No you don't. You don't "need" one...you may "want" one, but I assure you....you don't need one. Furthermore, this comment thread is starting to feel like it is a planned spam that I happened to comment on quickly.
Keep em coming 🔥
Keep em coming fire 🔥 🔥
Keep em coming fire 🔥 🔥