I’d like to rollover my 401K from my previous employer, but my current employer doesn’t participate in any 401K programs. I was interested in rolling my 401K savings into a Roth IRA but was told that I would be charged taxes. Is there any other type of retirement saving programs where I can roll my money over and not pay taxes on it?
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{ 4 comments… read them below or add one }
You can rollover your 401(k) assets into either a "Roth IRA" or a "Traditional IRA".
If you choose a "Traditional IRA", you won’t pay any taxes today. However, you will pay taxes on the entire balance when you withdraw it in retirement. (This is the same tax treatment you would get if you left the assets in your employer’s 401(k).)
If you choose a "Roth IRA", you pay taxes today - but get tax-free income from the IRA when you withdraw it in retirement.
Generally, if you’re 1) young, 2) in a low tax bracket now, and 3) can pay the taxes from other savings (not from the 401(k) money), a Roth IRA is going to be the better deal. But if you’re really adverse to paying the taxes today, go with the Traditional IRA.
For that matter, you can open both a Traditional and a Roth IRA, and put some of the 401(k) proceeds into each.
Suprised no one has helped you.
This is what you do.
Call Charles Schwab 800-435-4000 or Fidelity Investments.
Ask to open a ROLL OVER IRA
You will pay no taxes with this roll over.
You can invest in anything you want.
If you want to buy stocks or mutual funds - or 30 year cd’s that are super safe.
Schwab or Fidelity will take care of the rest.
They will essentially hold your hand through everything.
I had a problem, and they even called my old employer for me.
Super sweet - never charged me a penny.
Be aware - if you have less than $1,000 they will not pay attention to you.
With the roll over ira you will pay taxes when you retire.
If you decide to pay taxes and do the roth, you pay taxes now, but when you retire you won’t pay taxes.
It is 100% up to you.
Google ROTH ira vs Roll over ira calculator
You might choose to do the roth if you are under 30 years of age.
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If you do a rollover to a traditional IRA (not a Roth IRA), you can move your 401(k) money without having to pay any taxes. Here’s how to do that: http://moneygirl.quickanddirtytips.com/job-changes-401k.aspx.
You can roll it over to a traditional IRA. I would roll it over to a traditional IRA you will owe no taxes. Choose a good no load fund or funds to invest your money. I blog about this subject at length.
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