401(k) | Minneapolis MN | Belay Financial

401(k) Rollovers

Your Quick Guide to 401(k) Planning & 401(k) Rollovers

Your employer-sponsored retirement plan or 401(k) is a tax-deferred savings plan that allows you to contribute money towards your retirement. Typically, the contributions are automatically deducted from your paycheck, and your employer may contribute a matching amount. The 401(k) contributions reduce your taxable income, and the investments inside your 401(k) grow tax free until you withdraw money during retirement.

Our retirement planners offer comprehensive 401(k) advice to make saving for retirement easier for you. 401(k) plans for participants have higher contribution limits compared to individual retirement accounts, or IRAs. Once you max out your 401(k) contribution, you can fund your IRA or Roth IRA. If you switch jobs, it’s best to use the 401(k) rollover rules to move the retirement account to a different employer or move it to an IRA.

401(k) Rollovers

If you leave your job, you can no longer contribute to your 401(k). You can take advantage of the 401(k) rollover rules and move the retirement funds to another 401(k) or IRA. You must deposit the funds into the new account within 60 days of disbursement. If you use a direct rollover, you avoid having taxes taken out of your distribution. It also ensures you put the entire amount into the new retirement account and avoid taxes and early withdrawal penalties.

Our financial advisors can help you with your 401(k) rollover. We can also help you manage your existing 401(k)s by conducting a portfolio review and providing you with appropriate recommendations based on your objectives and timeline.

401(k) Plans for Employers

We can help you set up a 401(k) plan for you and your employees. Our financial advisors can help you find the 401(k) plan that works for your company’s budgets and provides meaningful benefits to your employees. The manager of the 401(k) plan carries a fiduciary responsibility, meaning they have a legal and ethical obligation to act in the best interests of the plan’s participants.

As an employer, you’re not required to match your employees’ retirement plan contributions. But if you do, you have to follow certain guidelines for a qualified retirement plan. We can help you navigate the rules and regulations regarding the creation and administration of your company’s 401(k), so you can focus on running your business.

FAQs about 401(k) Planning

What Should I Do with My 401(k)?

It depends on your goals. If you’re ready to retire, you can use the funds to purchase an annuity and receive a fixed retirement income. If you’re switching jobs, we can help you with a retirement rollover. We can also conduct a portfolio review to help you better understand your 401(k) investments.

How Much Should I Contribute to My 401(k)?

Ideally, aim to contribute 10 to 15% of your salary up to the maximum contribution limit. At a minimum, contribute enough money to take advantage of your employer’s matching contributions. How much you need to contribute to reach your savings goals depends on other factors, such as your age, how much you’re contributing, and when you want to retire.

Should I Rollover My 401(k)?

If you’re leaving your current employer, it’s usually best to rollover your 401(k). If you leave it in place, you can no longer contribute, and you’re not likely to manage the funds, either. We can talk to you about your 401(k) rollover options, which may include rolling it into another 401(k) or IRA.

Is a Roth IRA Better?

A Roth IRA can provide you with tax-free income during retirement, which can be beneficial. The contribution limits to Roth IRAs are much lower than the limits to your 401(k), which is why a Roth account might be a great option for you if you’ve already maxed out your other retirement accounts.

When Can I Rollover My 401(k)?

You can rollover your 401(k) within 60 days of receiving a disbursement. Rollovers are allowed once per calendar year, and there’s no limit to how much you can rollover. If you have questions about your 401(k) rollover, please get in touch with our retirement planners.

Let Us Help with Your Retirement Plan

Your 401(k) plan is a powerful tool to help you build a retirement nest egg. We’re here to help you make the most of those investments, including the tax benefits that come with it. Schedule an appointment with one of our retirement planners today to optimize your 401(k) plan.

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