Whether you are planning to shift jobs or have already moved to a new one it is a wise option to opt for a 401k rollover annuity. One must keep in mind that a 401k rollover annuity must be completed in 60 days after receiving the distribution so that you do not incur any tax on the amount that has been rolled over or on any earnings generated by the amount. So instead of withdrawing cash from your current 401k plan, you may opt for a 401k rollover option so that you do not incur tax and penalty.
You may convert your 401k plan into a 401k rollover annuity so that you incur a number of benefits. Firstly you avoid the 20% federal tax as well as the 10% penalty if you are withdrawing below the age of 591/2. When you invest in a 401k rollover annuity your principal amount is guaranteed which is not the case if you are dealing with mutual funds, stocks or bonds. The interest rates are considered to be considerable higher when one deals with 401k rollover annuities.
One must also note that 401k rollover options are many and you may change your investments as desired and manage them well. Another advantage is that with most of the 401k rollover annuity plans offers loans. While opting for a 401k rollover annuity it would be good if you could take advice from a financial planner who would be able to chart out a strategy that is tailor made to your specific needs. By getting help you can ensure that you do not make any mistakes during the rollover and you do not lose any money in the process.
It is not necessary that you need to change jobs to consider a 401k rollover option, you can also think of it if you are moving into retirement. You can consider moving your 401k plan to 401k rollover annuity so that you can maximize growth through tax deference in the future. One must note that several types of annuities would be beneficial from a 401k rollover like indexed annuities, fixed rate annuities and even immediate annuities for income generation.
While considering about opting for a 401k rollover annuity, one must consider several things like selecting the right mutual fund, variable annuity, fixed annuity, indexed annuity etc. Always make sure to get a detailed prospectus from the company you are investing with and check all expenses and charges before you invest
A 401k rollover annuity is a great idea if you are shifting jobs as you end up saving taxes as well as penalties. If you are in a transition in your career consider 401k rollover annuity.