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401(k)

Should you transfer your 401(k) to an IRA? If you have a 401(k) and are approaching retirement or changing jobs, consider a rollover IRA. A rollover is merely a transfer of 401(k) plan assets from your 401(k) to your IRA. If done correctly, it is not a taxable event.

Before deciding whether to leave your money in your former employer’s 401(k) or transfer it to an IRA of your choosing, here are few tips to keep in mind:

Know and understand your 401(k) options

If you left your 401(k) with a former employer, you have options:

  • Rollover services assets to his/her new employer's plan, if available and permitted: A plan participant leaving an employer typically has four options (and may engage in a combination of these options), each choice offering advantages and disadvantages.
    • Leave the money in their former employer's plan, if permitted;
    • Roll over the assets to their new employer's plan, if one is available and rollevers are permitted;
    • Roll over to an IRA;
    • Cash out the account value
  • Keep it in an employer plan: If you like your current employer’s plan, leave your money there.
  • Take a lump sum distribution: Your former employer may withhold a percentage; the amount of the distribution will be taxable in the year received and an IRS early distribution tax penalty will apply.

We recommend you discuss each of these alternatives for your 401(k) with one of our Financial Advisors. They can help you identify which option is best based on your retirement goals and current financial situation.


A Wealth Management of Redstone Federal Credit Union Financial Advisor can walk you through the entire process, and assist you with the necessary paperwork.

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Disclosures

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC.) Insurance products are offered through LPL or its licensed affiliates. Redstone Federal Credit Union (RFCU) and Wealth Management at Redstone Federal Credit Union (WMRFCU) are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using the name WMRFCU, and may also be employees of RFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of RFCU or WMRFCU. The WMRFCU site is designed for U.S. residents only. The services offered within this site are offered exclusively through our U.S. registered representatives. LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: AL and TN.

Redstone Federal Credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services.

Please visit https://www.lpl.com/disclosures/is-lpl-relationship-disclosure.html for more detailed information.

Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Redstone Federal Credit Union Guaranteed Not Redstone Federal Credit Union Deposits or Obligations May Lose Value

LPL Financial Form CRS