You have officially decided on retirement and entering the next phase in your life, congratulations! Now comes the question of how to manage your retirement savings, monthly expenses, and what benefits you will need moving forward.
When you submit your resignation and end your employment contract, you will now have access to your retirement savings. Many workers have saved for decades in a 401k or 403b if you work for a non profit. Both of these plans have similar characteristics, and can be rolled over upon retirement.
If you make the decision to transfer those funds to your own IRA account, there's a few steps that you must take.
Setting up an IRA account
In order to rollover your employer sponsored retirement account, it has to have somewhere to be deposited. This is where an IRA comes into play. You can rollover your 401k or 403b into an IRA account without a taxable event. This account will need to be established through an investment firm. It is a similar setup as any other investment plan. You will need to submit all your personal information as well as financials. Once approved and established, you can work on the transfer process.
Completing Transfer Forms
Each employer sponsored plan has a different process for transferring funds. Some may require paperwork and a wet signature. Some may just need a phone call authorizing the transfer. Others may allow you to complete this online. It's important to call the customer service and understand all the required documents that must be signed or completed to begin the rollover.
Once they receive authorization on your behalf, they can begin the process of liquidating any current investments in your 401k or 403b. The funds will then need to be transferred to your new IRA account you established. It's important to provide the plan provider with the mailing instructions as well as the account information for your IRA.
Sending the Money
Each plan will have a different process for transferring your retirement assets. Some plans will send a check directly to your new IRA account. Other retirement plan sponsors will require the check be sent to you as the client. It's critical when rolling over your 401k to make sure the check is made payable to the new financial firm handling your IRA and not to yourself personally. This will avoid any tax consequences in the process. Once the funds are sent and received by the custodian handling your IRA account, it can be deposited and the rollover is complete.
This can seem like a clerical nightmare, and in some cases that may be true. It is not as complicated as it may seem. A rollover is about ensuring the details are correct from one custodian to the other, and that the accounts and checks are labeled correctly. This will ensure a smooth process. In the event you need guidance on rolling over your 401k in Pittsburgh, or assistance on how to actually invest those assets, our team is happy to help. At Sterling Heights Financial we cater to the retirement market and specialize in rollovers. We can create an investment plan that is suitable for your income needs as well as all the other financial considerations in retirement.