Starting a new job and don’t want to leave anything behind? Consider rolling over your 401(k) into an IRA with BancorpSouth Wealth Management. It could offer you a simplified approach to managing your retirement plan and your future.
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- No tax penalties when you move your funds
- Ideal if you are changing jobs
- Certain withdrawals may be allowed
How It Works
In the event that an employee separates from an employer, for any reason, there are several options the employee can consider in deciding what to do with a 401(k) account balance. Here is a breakdown of the options:
- Leave the money in the plan: Often a separated employee is allowed to keep 401(k) money in the plan as long as the individual has a vested account balance of at least $5,000.
- Cash out: Cashing out prior to age 59½, even due to separation from employment, could have a drastic impact upon the balance of money received and upon income taxes. The IRS assesses a 10% penalty for early withdrawal (prior to age 59½). Further, the 401(k) plan provider will be required to withhold 20% for federal income taxes and 2% to 8% for state income taxes, depending upon state of residence. Additionally, the employee will receive a 1099R the following tax season that will state that the entire distribution was taxable income – possibly bumping the employee into a higher tax bracket.
- Rollover into new employer’s plan: A rollover into a new employer’s 401(k) plan will not trigger any taxes or penalties. Consolidating these two accounts allows the owner to easily track and manage retirement savings since all money will be in the same account.
- Rollover into IRA: A rollover into an IRA will not trigger any taxes or penalties. Obviously an IRA rollover means an additional account to manage for individuals who have found alternate employment and will invest in the new employer’s retirement plan. A rollover into an IRA account may offer access to a wider array of investment options than a 401(k) account; a more advantageous tax situation for beneficiaries; and, possibly, less extreme partial withdrawal penalties.
BancorpSouth Wealth Management does not offer tax advice. An investor should consult a tax advisor for advice on the investor's particular situation.
Not a Deposit.
Not Insured by any Government Agency.
Not Guaranteed by the Bank.
May go Down in Value.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA and SIPC. Infinex and BancorpSouth Bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.