Tag: retirement

6 Reasons to Rollover Your 401(k) to an IRA

  1. If you’re not an active employee many 401(k) plans charge higher fees which can eventually $0.00 the account
  2. Rolling over your balance to your new employers 401(k) plan limits your investment options
  3. Cashing out may cost you a 10% early withdrawal penalty, be subject to taxes and your previous employer will withhold 20%
  4. Many 401(k) plans prohibit loans if the account holder is no longer an employee
  5. You can contribute to a traditional or Roth Individual Retirement Plan (IRA) even if you participate in your employers or business retirement plan*
  6. Contributions may be made to established individual retirement accounts until the IRS tax filing deadline while contributions to an orphaned 401(k) are prohibited
ProductMaximum Annual Contribution Limit
Traditional IRA & Roth IRA$6,500, plus $1,000 catch-up if 50 or older (Limit is for the total contributions to all traditional or Roth IRAs)
Traditional 401(k) & 403(b)$22,500, plus $7,500 catch-up if 50 or older
Roth 401(k) & 403(b)$22,500, plus $7,500 catch-up if 50 or older
457$22,500, plus $7,500 catch-up if 50 or older; potential for additional catch-up when approaching retirement
Thrift Savings Plan$22,500, plus $7,500 catch-up if 50 or older
SEP IRA25% of your self-employment net earnings, up to a cap of $61,000
SIMPLE IRA$15,500, plus $3,500 catch-up if 50 or older
Source: FINRA.org

*traditional IRA contributions may not be fully deductible and Roth IRA contributions may be limited by your modified adjusted gross income