What is the Time Period for Rolling Over a 401K Plan?
Full Question:
Answer:
When you change jobs you need to decide what to do with your 401k plan. There are 3 basic options: (1) cash it out, (2) leave your funds in your old 401k plan, (3) roll it over into an IRA or other tax deferred plan. A 401k rollover refers to moving a 401k plan from a former or current employer into either an IRA or another qualified plan. The answer will depend on what you're rolling over into. For example, if it is a direct rollover into an IRA, to avoid penalty you must meet deposit the money into your IRA within 60 days of receiving the check from withdrawing the funds. A trustee-to-trustee transfer, or direct transfer, moves your 401k plan assets to another qualified retirement plan without having to worry about cashing it out and having to pay taxes or early withdrawal penalties.
With an indirect IRA rollover, you receive a check for the amount of your 401k plan assets, minus an automatic 20% tax withholding. You then have up to 60 days to deposit the entire amount that was in your former plan into a tax deferred retirement account. Otherwise the amount you don’t deposit will be treated as a withdrawal for tax purposes, and may be subject to income taxes and early withdrawal penalties.
Please see the information at the following links for further discussion:
http://www.irs.gov/retirement/article/0,,id=160469,00.html
http://www.irs.gov/retirement/article/0,,id=160470,00.html
http://www.irs.gov/publications/p590/ch02.html#en_US_publink1000231036
http://genxfinance.com/2009/01/15/how-to-roll-over-your-401k-when-you-leave-or-lose-your-job-the-401k-rollover/
http://www.smartmoney.com/Personal-Finance/Retirement/Rolling-Over-Retirement-Accounts-7943/
