Retirement Fund Rollovers

I still have my Meta 401k even though it has been 2 years since I was laid off. The old dogma was that you should roll your workplace 401k into a rollover IRA after you leave, but in my case that would be a mistake. Meta folks, and really all FAANG folks, generic advice for you can often be flat out wrong. Three Main Reasons: 1. Meta's 401k plan is fantastic. It offers funds I can't get outside of the 401k and the fee's for the funds I can get are lower than publicly available! For example, they have a State Street Total Market Fund with an expense ratio of 0.01%. You can't beat that! One fee to be aware of is a tiny $23 per year record keeping fee. 2. Keeping my funds in the Meta 401k mean I am able to do the backdoor roth for $7,000 per year. This is separate from the 401k, but if I had a rollover IRA it wouldn't be worth doing due to the pro-rata rule. 3. Even if I didn't like the options available in the Meta 401k, they have a feature called Brokerage Link. This allows you to buy any funds you want. There are some other benefits around asset protection, but those two above are the primary ones. If someone gives you generic advice it might be wrong or outdated. The default for FAANG workers shouldn't be to roll over their 401k into an IRA. Personal finances is personal.

Saw another gross violation of fiduciary duty yesterday! Nurse and her spouse come to see us to look at retirement planning. She is 61 and still working. Great saver with about $1.5M in her work 403b (same health system for 38 years!😲) She described how F******y proactively reached out to her and suggested she move her money from her existing F******y 403b to a new F******y IRA with an "advisor." I asked what their advisory fee is?🤔 They didn't know, but said the "advisor" told them the new IRA fees would be "slightly higher" than her 403b fees. Hmmm...advisory fees are supposed to be clearly disclosed (and I'm not talking about buried in pages of IRA application documents that few fully read or understand) I asked them to check their new advisory fees, but my guess is they are going to be around 1% of assets in her account per year. What will she get for that fee?? A broadly diversified portfolio of F******y funds...yes, F******y funds from a F******y "advisor." They will periodically rebalance. They told her she would have a "more customized" portfolio than her 403b.🙄 They did NOT tell her that she could have the same functional equivalent by investing in a F******y Freedom target date portfolio (broadly diversified proprietary funds with rebalancing) with no advisory fee. Would have a similar functional outcome...but minus the roughly $15,000 per year of advisory fees!🤫🤨 No financial planning. No advice. No discussion of her pension (which was the largest pension I have seen from an MNA RN!), Social Security, health insurance, or even the potential meaning and purpose of their investments. No putting together retirement puzzle pieces. We are seeing custodians get much more aggressive in targeting their employer retirement plan participants for rollovers to IRAs. Anyone over the age of 59 1/2 with a substantial plan balance is a likely target (it appears to be over $500K of plan balance) In her case there was no need for her to rollover her active employer retirement plan until after she retires and plans to start taking income. She didn't know until she came to see us. Happens all the time! The "advisor" calls himself a fiduciary. Gross.🤢

I stopped a 28-year-old from making a $30,000 rollover mistake last week. His old 401(k) had two parts: Roth money (his personal contributions). Pre-tax money (employer contributions). He was planning to do a rollover because that’s what he read about online. Except it wasn't that simple. Rolling pre-tax 401(k) money into a Traditional IRA brings the pro rata rule into play. That rule means the IRS looks at ALL your IRA money and taxes your backdoor Roth contributions proportionally. Translation: one IRA rollover early in your career hinders your ability to do a backdoor Roth in later high-income years. For a high earner who can't contribute directly to a Roth IRA? That's a costly door to close. Here's what we did instead: → Rolled the Roth portion into his Roth IRA (clean, no tax issues) → Rolled the pre-tax portion into his NEW employer's 401(k) (keeps the backdoor Roth open) It's the same old account with two destinations... and a completely different long-term outcome. This isn't rare. I see this mistake almost every time a client changes jobs. The rollover paperwork looks identical either way. But the long-term consequences are not. Before you roll anything over, talk to your advisor. Not after. Before. Because the moves that seem like no-brainers are often where the real money gets lost. Have you ever made a financial decision that seemed obvious, until someone showed you what you were missing?

If you are one of the many who have changed jobs or left a W2 job to start your own business, you will need to figure out what to do with the savings in your 401(k) or other retirement account. There are four main options: ► Roll them into an IRA ► Roll them into the new employer's plan ► Keep them with your former employer ► Cash them out   Each option has different implications, so it's important you understand them before making a choice.   𝐑𝐨𝐥𝐥𝐨𝐯𝐞𝐫 𝐭𝐨 𝐚𝐧 𝐈𝐑𝐀   There are three types of rollovers you can do: ► A rollover from a traditional 401(k) to a Roth IRA – you’ll owe taxes on the rolled-over amount. ► A rollover from a traditional 401(k) to a traditional IRA – the taxes are deferred. ► A rollover from a Roth 401(k), to a Roth IRA – you won't incur taxes.   With any of these, you need to contact your former employer’s plan administrator, ask for a direct rollover, complete a few forms, and ask for a check or wire of your account balance to be sent to your new account provider.   You can also request the balance be sent directly to you and then deposit it into the new account. With this option, you have to make the deposit within 60 days of receiving the funds and there will likely be withholding on the distribution so you will need to assure you deposit the full amount into the new account.   𝐑𝐨𝐥𝐥𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 𝐨𝐥𝐝 401(𝐤) 𝐨𝐯𝐞𝐫 𝐭𝐨 𝐚 𝐧𝐞𝐰 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐫 𝐨𝐫 𝐤𝐞𝐞𝐩𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 401(𝐤) 𝐰𝐢𝐭𝐡 𝐲𝐨𝐮𝐫 𝐟𝐨𝐫𝐦𝐞𝐫 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐫   While there aren’t any tax implications with these options, be sure to evaluate the investment options and account fees when considering them.   𝐂𝐚𝐬𝐡𝐢𝐧𝐠 𝐨𝐮𝐭 𝐲𝐨𝐮𝐫 401(𝐤) If you really need the money, you can take the cash out of your retirement account. This is typically considered an early distribution, subject to a 10% penalty in addition to any income taxes due., unless you meet one of the penalty exceptions.   Are you sitting on old retirement accounts? Now is a great time to consolidate! #taxes #financialliteracy #financialwellness

3,800,000+ people leave their jobs every month. That leaves millions of old 401(k)s to determine the next steps. Here is everything you need to know (and avoid) for a 401(k) rollover: (Pay close attention if you make more than $230,000 as a family) ⬇️⬇️⬇️ - First some context: A 401(k) is a company-sponsored retirement plan. When you leave your employer you have four options: 1. Cash it out 2. Do Nothing 3. Roll it to a new 401(k) 4. Roll it into an IRA account Everything to know ⬇️⬇️⬇️ - 1. Cash It Out This is far and away the worst option. All of your gains will be taxed at ordinary income. If you are under 59.5 years of age you will also be subject to a 10% penalty. This is a last-resort option. - 2. Do Nothing If you choose to do nothing, your 401(k) operates just as it did before. The things to consider with this are: Overall Plan Costs Investment Choices The biggest issue with this is if you forget about it or fail to monitor it. - 3. Roll It To A New 401(k) Let's say you left your job and have since started a new job. Many 401(k) plans allow you to roll in money from an old 401(k) into their plan. Remember they are making money on you have money with them so they often encourage this. - 4. Roll It Into An IRA Account This is far and away the most common practice. Yet this is one of the biggest mistakes I see high-income earners making. By doing this you eliminate your ability to do Backdoor Roth IRA contributions. Let me explain ⬇️⬇️⬇️ - The income limits for contributions directly to your Roth IRA are: $146,000 single $230,000 married Roll your 401(k) into your IRA and you set off the pro rata rules. This inhibits your ability to work around those income limits with a Backdoor Roth IRA. - Remember millions of Americans (myself included) have old 401(k)s. The key is understanding your options and then determining the best solution. P.S. If you are a high-income earner and rolled your 401(k) into your IRA, you can still roll it into your new 401(k).

3 clients changed jobs this month. All 3 asked me the same question: “What do I do with my old 401k?” Here’s what we did that could save them thousands in taxes later. When you leave a job, you have 3 options for your old 401k: Option 1️⃣: Leave it where it is Most people do this by default. The problem? No control over investments. No flexibility for tax planning. And eventually, your old employer will send you a letter asking you to move it anyway. Option 2️⃣: Roll it into your new employer’s 401k Some people like this because 401ks allow borrowing provisions that IRAs don’t. The downside? You’re stuck with whatever investment menu your new employer chose. Most plans don’t offer strategic rebalancing. And they typically don’t allow conversions from pre-tax to Roth, which matters if you want tax flexibility down the road. Option 3️⃣: Roll it into an IRA This is what all 3 of my clients chose. An IRA is in your name. Full investment discretion. You’re not tied to a preset menu. And you can work with a tax professional on pre-tax to Roth conversions based on your income and tax bracket. Here’s why this matters: We’re now converting a large portion of their pre-tax IRAs to Roth. This could save them thousands in taxes later in life. Something we couldn’t do if their money was sitting in an old 401k. Sales leaders, tech executives, and business owners making $300K+ shouldn’t be leaving retirement accounts on autopilot at old employers. You worked hard for that money. Take control of it. If you want to learn more about strategies like this, I send out the High Earner Money Playbook 2x week. Sign up at www.dylangrocer.com. P.S. Did you leave a 401k at your old employer? What’s holding you back from rolling it over?

One Retirement Move Could Save You Six Figures in Taxes Most employees never hear about this. Let’s be real: Retirement planning isn’t just about saving. It’s about strategy. Small moves can make a massive difference in taxes. No amount of standard advice will fix: Missed opportunities inside your plan Default rollovers that trigger heavy taxes Years of compounding lost to ordinary income rates The right move builds wealth and keeps more of it. 1️⃣ The Overlooked Opportunity Employer stock often carries huge unrealized gains. → Special tax treatment applies, but only if you know NUA. 2️⃣ The Default Move (And Its Cost) Most people roll company stock into an IRA and sell later. → Entire value taxed as ordinary income, losing capital-gains advantage. 3️⃣ The One Move: Net Unrealized Appreciation (NUA) Move stock out of the retirement account, splitting the cost basis between growth and cash. → Cost basis taxed as ordinary income, appreciation later at lower capital-gains rates. 4️⃣ Why NUA Can Save Six Figures Capital gains rates are far lower than ordinary income. → Decades of growth can compound at favorable tax treatment. 5️⃣ Who Benefits Most Long-tenured employees, executives, and anyone with highly appreciated company shares. → Timing is critical: retirement, job change, or separation triggers eligibility. 6️⃣ Timing Matters Mistimed rollovers eliminate NUA eligibility. → Plan ahead to maximize the tax advantage. 7️⃣ Risks Most People Miss Holding stock too long = concentration risk. → Selling too early or incorrect transfers can erase the benefit. → Always consider overall portfolio balance. The smartest retirement moves don’t just save money. They protect decades of growth while reducing unnecessary taxes. ✨ Spot hidden opportunities ✨ Optimize stock moves strategically ✨ Keep more of your wealth in retirement Are you confident your retirement plan is using every available tax advantage? Follow me Marc Henn for more. We want to help you Retire Early, Supercharge Your Cash Flow, and Minimize Taxes. Marc Henn is a licensed Investment Adviser with Harvest Financial Advisors, a registered entity with the U. S. Securities and Exchange Commission.

This guy I just met was given some bad advice for his situation.... He recently retired at 56, had been advised by another professional to roll over their 401(k) into an IRA immediately upon retirement (you know, because of all those advantages that an IRA rollover offers). Unfortunately, this decision meant missing out on the “Rule of 55” benefit—an option that allows penalty-free withdrawals from a 401(k) when you retire at 55 or later. And guess what, he needs income planning. Now he's stuck. This experience serves as a reminder that every financial decision carries long-term implications. The Rule of 55 can provide crucial flexibility for early retirees, offering access to funds without the burden of early withdrawal penalties. Had my client maintained their 401(k) as is, they would have retained this valuable option. As advisors, it’s our responsibility to ensure that every strategy is thoroughly examined and tailored to each client's unique needs. If you’re considering your retirement options, make sure you fully explore the benefits and potential trade-offs before making any moves. Sometimes it makes sense to roll the 401k and sometimes it doesn't. Easy on the trigger and take all things into consideration. #financialplanning #retirementplanning #401kplans

A last minute call saved a client 10 percent. The setup felt routine. Large 401k balance. Turning 55 next year. Plan was to take money out before year end for liquidity. That move would have triggered a 10 percent early withdrawal penalty. Not because it was aggressive. Because the age 55 rule was never explained. Here is the key detail that changed everything. If someone separates from service in the year they turn 55 or later, withdrawals from that employer’s 401k are not subject to the early withdrawal penalty. No IRA rollover required. No unnecessary rush to a bank. The client had every intention of rolling the account into an IRA and pulling money from there. Ironically, that would have eliminated the very flexibility he needed. This is what real planning looks like. Not chasing products. Not reacting to headlines. Just slowing things down long enough to understand the rules before making an irreversible move. Most people think the options are: • Leave the 401k alone • Roll it into an IRA • Take it out and accept the penalty Sometimes the most valuable option is the one no one bothered to mention.