window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'G-ZVF8E5EG7C');

Complete a 401(k) Rollover with our insurance agents at Best Life Insurance today!

Best Life Insurance specializes in a full range of life and retirement insurance plans. One of these is commonly known as a 401(k)-retirement plan. Employers and employees alike are usually familiar with this plan and may already have a small understanding of it. Nevertheless, it doesn’t hurt to learn more information and gain an even better understanding of your 401K account.

Best Life Insurance will help you achieve this understanding. Are you just signing up and starting your 401k plan?  Or perhaps you are considering a 401(k) rollover? Either way, you will have the full attention of our professional insurance agents. They make sure that you, the client, understand the unique features and standards of a 401(k).

When going through the process and completing a rollover, you are basically merging one or more of your 401(k) accounts into a singular account. This is where the term ‘rollover’ applies. Most people go through a 401K Rollover because they got a new job or because they want to combine the 401(k) plan from one employer to another.

These reasons are something that we see on a regulator basis, so it is not unusual. Let’s dive into the world of a 401(k) and get a deeper understanding of your rollover options.

What is a 401(k)

A 401(k) is simply a retirement plan that an employer can sponsor on behalf of their employees. This means that the company or business you are working with provides this plan for you. Most of the time, there is a percentage or amount that they contribute to the plan. This percentage or amount is negotiated and accepted when you are signing for your employment.

Something that you may or may not already know is that you can contribute to your 401K plan. This can be a certain amount of your salary or maybe some money that you earn from participating in stocks.

Depending on your initial plan, there may or may not be a minimum that you have to contribute to the plan. This is ultimately dependent on your employer and what they have set up. Most employers will probably match whatever you contribute to the plan or come up with their amount. There is a maximum amount that can be put into the account annually. This amount is determined when the account is created.

The truth is that many employees rely on these 401(k) plans and the money that they have invested in it. This is because it provides for them a reliable retirement plan once they have stopped working.

Should You Keep Your Money Where it is or Rollover?

If you have recently left a job, you are probably wondering what the next step is for your retirement account. A 401(k) account receives contributions from your employer so, naturally, when you leave a job, there will be no more contributions from them. As a former employee, you have several options.

First, you can leave your 401(k) right where it is. There is typically no rush to move your retirement from one account to another, unless your employer states as much. Therefore, until you come to an educated decision about where to place your money, consider leaving it be. Withdrawing the money, even to roll it over, it a big decision and comes with financial consequences when steps are not followed.

You might be wondering whether you lose out by keeping your retirement money where it is. The answer is complicated. For simplicity, you should know that there are few life-changing benefits to leaving your 401(k) where it is. Most individuals will choose to do this when their new employer does not offer a retirement savings account.

If you are looking for a way to continuing to grow your retirement funds, the best option is likely to roll it over into a traditional or Roth IRA account. Each one has unique benefits, mostly associated with taxes. Perhaps the most helpful question to ask yourself is: ‘do I want to pay taxes on the money as it goes in or comes out?’

Types of Rollover Accounts and the Benefits of Each

Traditional IRA

A traditional IRA is tax-deferred in the sense that the money you place into the account is considered pre-tax dollars. In other words, you do not pay taxes prior to putting the money into a traditional IRA account. This type of account can easily be confused with a Roth IRA, but the primary distinction is at what point taxes are withdrawn.

The benefits of a traditional IRA center around the amount of wealth you can accumulate as you contribute money to the account. Your money goes in pre-tax, so you can put in more money up front. This builds over time, especially if both you and your employer are contributing. Speak with a Best Life Insurance agent today and learn more about the powerful benefits of a traditional IRA!

In the long run, this type of account is beneficial because you will have accrued an extensive amount over time. Having to pay tax on that would take away a substantial amount. So, this being a tax-deferred account means the money you contributed and accumulated stays with you.

Roth IRA

There are several types of individual retirement accounts. If a traditional IRA is not for you, consider the possibility of a Roth IRA account. Similar to the traditional version, this type of IRA account places a tax on the money you put into it. However, a Roth IRA does not tax the money as it comes out, if you are the age of 59.5 or above. Additionally, this account grows tax-free.

Like most retirement accounts, the Roth IRA has a series of qualifications you must meet in order to make withdrawals from it without thousands of dollars in penalties and fees being applied. To learn more about this option, speak with a life insurance agent from Houston Best Life. We have the expertise you need to help you understand the ins and outs of navigating the finances of retirement.

Not sure where to start? Fill out our unique form and we will find the best life insurance for you.