Completing a 401k rollover does not have to be the huge and complicated mess that it sometimes turns into. However, even though it does not have to be difficult, there are still a few things that you should watch out for to keep things moving along quickly. Let’s take a look at some of the things you should avoid during a 401k rollover to make things as simple and easy and possible.
The first thing to keep in mind when you need to do a 401k rollover is that, in most cases, you are not under any sort of time limit. There are a few situations where you have to move the money by a certain date, but usually there will not be a specific time frame in which you have to act. This means that you can take your time and investigate things fully. You need to be comfortable with the decisions that you are making. It is your money, after all.
Another thing to avoid is taking the money out of your 401k instead of rolling it to a new financial institution. Many people are tempted to take an early withdrawal from their 401k instead of moving it to a new company, but this is really a very bad decision to make. You’re going to end up paying 30 to 40% of your money in taxes and penalties, and you are going to shortchange your retirement savings. Not a good move.
Make sure to avoid these pitfalls when it comes time to rollover your 401k, and things will keep moving smoothly.