Frequently Asked Questions (FAQ)

Rollovers

Q: What’s the difference between a 401k and IRA?
A: Tax treatment is the biggest difference between the two retirement savings plans. 401ks were designed to complement employer sponsored pension plans (defined benefit plan). They have become the preferred retirement benefit because employers match employee contributions (which are optional, by the way). However, anyone can open an IRA with some earned income; they just don’t have matching funds provided by an employer or other third party. 401ks also have higher contribution limits than IRAs.
Q: Why can’t I just keep my 401k where it is?
A: You can. However, there are several reasons that you shouldn’t! You have to ask yourself, "do you trust your former employer/administrator to manage your money?" Wouldn’t you prefer to manage it yourself? Also, you are probably incurring administration fees, which can be avoided by transferring it into a different retirement savings vehicle. And, chances are strong that the funds inside of the 401k are at market risk and avoid fees. Finally, if you were to die prematurely, tax rules for beneficiaries can be complicated.
Q: Why do I need to rollover my 401k into an IRA?
A: Avoidance of fees is the biggest reason (no fees in FIAs). Go to the VIDEO link at the top of the page and view the video titled "The Truth Behind Hidden Fees in 401ks". Once you answer the questions to get help on the home page, you will also see a 5 minute video on other reasons including the affects of fees. Also,IRAs are inheritable. Most 401ks are not. IRA just changes the tax treatment of the monies.
Q: I’m not yet 59.5. Why can’t I do a 401k/403b/ rollover now?
A: In some cases you still can, but the exceptions are usually up to the administrator. The Pension Protection Act of 2006 allows plan participants to move their 401k funds into self directed accounts by administrator approval (called an In-Service Distribution). Otherwise,rollovers are only allowed after you have what is called a "triggering event." Triggering events include: severance of service from the company that provided the 401lk, turning 59 ½ (regardless of whether you’re still employed with the company) or death.
Q: If I’m still working where I have my 401k, why can’t I do a rollover?
A: You can, if the administrator allows it (see above answer), or if you are 59 ½ years old. More importantly, we emphasize that if you are STILL WORKING and are 59 ½, a rollover is a GREAT IDEA for many reasons. We are not suggesting that you stop contributing to the 401k, especially if the company matches your contributions! We are only suggesting that you separate from the 401k that which has already accumulated and get it out of market risk. This way, you can properly plan for a retirement income with a fixed amount rather than an amount that could drop in half in a matter of weeks due to circumstances that are out of your control, such as: WAR, Market Crash, Gas prices, etc.
Note: A good way to find out if your plan allows for in-service distributions is to call the plan administrator (401k trustee) and ask. If you are over 59 1/2, they really have no say in the matter....and you can ask them to send you the rollover forms while you have them on the phone.
Q: I’ve already moved my money from my 401k into a different account of some sort. It’s just sitting there, waiting for me to do something with it. Where do I go from here?
A: If you’ve previously done a rollover and you are happy with the performance of the new account, you probably wouldn’t be here. Assuming that you dislike the fees, or the fact that it loses money, you should still fill out the form on the home page and note this in the comments section. This way, we can get back with you to discuss safer options which will also give you a cash bonus to add to the start of your account, and eliminate market risk, while still being able to take advantage of market upside. Watch the video for details after filling out the form
Q: I’m planning to retire in about 5 years. I want to make sure I have a steady, solid income stream when I’m no longer getting a paycheck. What are my options?
A: When you are within 5 years of retirement, you should get your money out of market risk, to ensure your retirement savings does not decrease before you retire. Then, when you have a triggering event (retirement), you can do a proper rollover into a legal reserve product that provides contractual guarantees and you can still take advantage of market upside, without risking your money during market downturns.

Almost all brokerage houses you see advertised on TV/radio concentrate on the accumulation phase of your retirement money. When you start taking money out, their paycheck goes down, so they don’t encourage you to do so. We’ve even seen Certified Financial Planners advise clients to wait until they are 70 ½ to take a dime out of their account, and even at that, that they should only remove the required minimum. However, the products that Ask 401k offers provide a contractual guarantee that says you can start using your money whenever you want, and that you will never run out of money no matter how many years you live!

Q: I’ve inherited someone else’s 401k because I was listed as their beneficiary after they died. How can I transfer it into something beneficial to me, both now and in the long run?
A: This can be a little complicated tax wise. Be sure to consult with your tax professional for proper advice. If your spouse dies and names you the beneficiary to their 401k, you can roll the plan into an IRA in your name. Non-Spousal beneficiaries are treated a little differently. In most cases, you can avoid having to take a lump sum distribution of all of the funds - and paying taxes on all of it at one time - as long as you do it soon enough after the death of the plan holder.
Q: My dream retirement savings product would be something that would grow over time, not be subject to the craziness of the stock market, and provide me income for the rest of my life. Does such an animal exist? How can I get one?
A: Yes it does exist! Everyone sees insurance companies as those who insure cars, lives, houses, property, etc. The most unknown product that a few large insurance companies offer is retirement savings income protection, and they do it very well. The only way to obtain this product is through an insurance carrier that specializes in this type of product. The 401k People are here to help you obtain this for yourself.
Q: My retirement savings is insignificant (under $10,000), but I want it to grow into something that will keep me comfortable for the rest of my life after I retire. Any suggestions?
A: We have plans that you can start for as little as $2,000 initial deposit, and will give you a 10% cash bonus on all of your deposits for up to 7 years…..you can add to it forever….and it will allow for IRA tax treatment (you get deductions for all funds added in years that you have earned income!). The 401k people can help make this happen!
Q: The economy is tough, so I don’t have a whole lot of extra cash to set aside for my retirement. When I have it taken out of my paycheck, I don’t want it to go down the black hole of the current economy. How can I be sure that the money I set aside will not be lost to me forever?
A: The products that the 401k People at Ask401k.com recommend are guaranteed in writing that your money will never be lost because the financial institution fails or the market declines. In the history of these types of product, NO ONE has ever lost any money.
Q: My specific question hasn’t been answered, but I think your other answers are on the right track. What’s the best way to reach you?
A: Answer the questions on the form that you access on the home page. You will be given the name of a person in your area who can answer your questions by you calling them, or you will have the option to have them call you!