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Rollovers & Retirement Plans

Do you have a 401k, 403(b), TSP (Thrift Savings Plan) or a 457 plan? If so, then a ROLLOVER is something you need to know all about and may want to consider.

Let’s cover some of the BASICS of 401k Plans and other similar Retirement Plans, such as 403(b), TSP or 457 plans:

• Money contributed into these plans are usually “pre-tax dollars”, meaning this money was contributed before taxes. These plans also allow your money to grow “tax-deferred”, which means that you don’t pay taxes until you withdraw the money from the Retirement Plan. Contributions to plans can come from Employee salary reduction, from the Employer, or both.

• Employees are immediately 100% vested with their own contributions, and if/when they retire/quit/resign, they can ROLLOVER their account into an Individual Retirement Account/Annuity (IRA).

• Some plans offer direct loans, hardship loans and disability loan provisions, but not all plans.

• Withdrawals from any retirement plan: 401k, 403(b), 457 plan or IRA’s are income taxable when you take the money OUT! If you are UNDER 59 ½ (except hardship cases and other special situations) there may be an “IRS Early Withdrawal 10% Penalty” as well. To AVOID the above mentioned additional 10% penalty, see how a 72T works.

• Retirement plans are established by your Employer, but are generally managed by a “Third-Party Administrator”, not your Employer (except some governmental plans). The company chosen as the “Administrator” can, and may change from time to time.

• TSP’s (Thrift Savings Plan) can also be “rolled over” into an IRA and a 72(t) can be set-up to provide a penalty-free income stream, prior to Age 59 ½, for any reason.

Got a Question?

 

What is an “IRA ROLLOVER”?

Generally, after a person retires, quits or is let go, they are given the option to “Rollover” their retirement plan(s) into a new company’s plan, if available, or into an IRA (Individual Retirement Account/Annuity).

Frequently, the choice is made to ROLLOVER into an IRA because of the flexibility and vast array of investment choices available.

Most retirement plans can be easily rolled into an IRA, which can invest in a variety of Mutual Funds, ETF’s, Stocks, Bonds, Alternative Investments or Annuities. However, there may be some charges and expenses to do this, as well as ongoing costs that should be considered. There may be surrender charges when you want to move some or part of your money as well. Check with your Financial Advisor and read the prospectus regarding any risks, charges and expenses.

Do I have to Rollover or Transfer my money to an IRA to access my money through
a 72(t) distribution?


 

What are some of my OPTIONS when doing a ROLLOVER?

1. You can move/rollover all or PART of your plan into one or more IRA’s.

2. You can move/rollover all or PART of your plan into one or more companies and multiple IRA’s.

3. You can move/rollover all or PART of your plan into one or more IRA Mutual Funds and/or IRA Annuities.

4. You can move/rollover all or PART of your plan into Stocks, Bonds, etc. within an IRA account.

NOTE: Most plan administrators do NOT allow partial rollovers. It’s all or nothing in most cases. However, if you want to transfer your retirement money into more than one place, we would be pleased to show you a way to accomplish this. Just Ask!

There are many options and choices. It takes the experience and wisdom of a knowledgeable Financial Advisor to know what is best in each particular scenario. Everyone is different and so are their goals, needs and desires. EMAIL us if you like and we can discuss YOUR SPECIFIC NEEDS! Got a Question?

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Rollovers & Retirement Plans

TSP (Thrift Savings Plans) “Rollovers”. Is this allowed?
What is a TSP? The Thrift Savings Plan (TSP) is a defined contribution plan for U.S. Civil Service employees and retirees, as well as for members of the Uniformed Services. The TSP is one of three components of the Federal Employees Retirement System (FERS), the others being the FERS Annuity and Social Security. YES, these plans can be rolled into an IRA for potentially increased investing options, continued tax-deferred growth, and/or penalty-free distributions (INCLUDING a 72T at ANY age). To AVOID the above mentioned additional 10% penalty, see “How a 72T Works.” EMAIL us and we can discuss YOUR SPECIFIC NEEDS! Got a Question?

457 PLAN “Rollovers” & 72T
What are 457 plans?

The 457 Plan is a type of Non-Qualified, Tax Advantaged Deferred Compensation Plan that is available for government and certain non-government employers in the United States. Can a 72(t) be set up from my 457 Plan money? Not all 457 Plans work the same. YES, as of January 1st, 2002 (due to the 2001 Tax Reconciliation Act), a 457 Plan may also be rolled into an IRA, AFTER YOU LEAVE THEIR EMPLOYMENT! You have to check with your Plan Administrator and have them check the WORDING of your specific plan (they differ widely). But in most cases, these plans can be rolled into an IRA for potentially increased investing options and continued tax-deferred growth, distributions and possibly better control. A 72(t) can be established for anyone at any age.

Past performance is not indicative of future results. Please review the prospectus for risk, fees and expenses. Annuities are NOT used for their tax-deferred growth when combined with an IRA. There are many other reasons (as described here) for using an annuity, since an IRA already offers tax-deferred growth without the use of an annuity. Neither Spivak Financial Group nor Centaurus Financial Inc. offers legal advice. Please consult with a Tax Professional for your personal tax consequences. All Guarantees are based on the financial strength and claims paying abilities of the company chosen for your annuity. Feel free to contact us for more detailed information.

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