A 401k is a means of retirement plan granted by employers to their employees. No income tax is charged over the money until the person withdraws it during retirement. A 401k rollover happens when an employee resigns and decides to make changes with his retirement plan, and then reallocates the money.
When deciding to move your retirement savings, it is important to look at all the options. A financial planner would be able to assist with moving your money as well as explaining any risks that may be involved with each option.
One 401k rollover option is to move the money from your employer-sponsored 401K to an Individual Retirement Account (IRA). With an individual retirement account, your money will remain tax deferred and you decide what types of investments are best suited for you based on your long term goals.
There is a wide variety of investment options to choose from with a brokerage or mutual fund company IRA when compared to an employer-sponsored 401k plan. It is your option when choosing a brokerage firm or mutual fund company but I always suggest finding someone that you can trust. It would not be good for someone you don't trust handling your 401k money. After all, this is your life and retirement savings.
Another 401k rollover option is to move the retirement funds into a fixed or variable annuity. This would continue to provide an investment option with tax shelter benefits until retirement and would provide you with a guaranteed, steady income upon retirement.
Another option available is when you change employer and you want to move your 401k from your previous employer to your current one. The 401k will be assumed and will have to follow the available investment options and rules of the new account.
Now, you should look into a 401k rollover when losing a job for more information. You can find more tips and suggestions at 401k rollover school.
