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Rolling Over Funds from an Employer Retirement Savings Plan: What You Need to Know

CPCU February News Letter

Why consider a rollover?


When you roll over a distribution from a 401(k), 403(b), or governmental 457(b) plan, you generally don’t pay any taxes until you receive a distribution from the new plan or IRA. If you take a distribution but don’t roll it over, it will be subject to federal (and possibly state) income taxes (except for any after-tax contributions you’ve made); and if you haven’t yet reached age 59½, you may also be subject to a 10% early distribution penalty tax unless you’re eligible for an exception.1 If you take a cash distribution, you’re also foregoing any further tax-advantaged growth; and if you spend the funds, you may not have sufficient assets to last
throughout retirement.


Download the FULL ARTICLE HERE

 

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