How to Avoid Tax Penalties with Different 401K Rollover Options

The best way to avoid tax penalties with different 401k rollover options is to understand how these different rollover options work and which one is most likely to create a tax burden for you.  It’s also important to understand what these options are called and to ask for what you want by name when you request a rollover plan. As always, any 401k taxes or penalties on your money are your responsibility.

Two Types of 401k Rollover Options

Indirect Rollovers

The two main types of 401k rollover options are direct and indirect. In an indirect rollover, you request the money from your old 401k plan, receive a check from your former account provider and invest it yourself in another retirement account, such as an IRA. Continue reading

Protect Your Retirement Savings with Different 401k Rollover Options

When you initiate a 401k rollover, be aware that there are two different rollover options for you to choose from – direct or indirect rollover. The former offers greater protection for your retirement savings, while the latter may expose you to a potential tax burden. This isn’t to say that indirect rollover options are always a bad choice – just which the circumstances under which they’re the best choice are few and far between. Continue reading