Comments on: Five Biggest 401K Rollover Mistakes

By: webmaster a401

webmaster a401 — Sun, 06 Feb 2011 18:40:47 +0000

Thanks.It sounds simple, but “rolling over” a 401k can still go wrong if a few rules aren’t followed. One main rule is the same property rule, which prevents people from trying to make other income non-taxable. Basically, the money that you move has to be the same money in the account. You cannot, for example, take the money in your 401k account, purchase some other assets with those funds, and then deposit the money that is left into the new account. That purchase money will result in the ten percent penalty for an early withdrawal from your 401k.

By: scott brooks

scott brooks — Mon, 21 Jan 2008 23:50:53 +0000

Not exploring NUA and the age 55 rule are two big mistakes.
Other mistakes include chasing investment returns.

If I had a $1 for every Rollover IRA that was demolished by the Nasdaq bubble I would be a rich man.

By: » Roundup: Happy New Year Edition! on Blueprint for Financial Prosperity

Mon, 31 Dec 2007 16:37:25 +0000

[...] out the top 5 retirement mistakes at My Retirement Blog. 12/30/07, Read more in Personal Finance | 34 [...]

By: Honest Dollar

Honest Dollar — Fri, 28 Dec 2007 22:55:36 +0000

A minor mistake: Rolling over into your new employer’s 401(k). This isn’t a horrible mistake since (if you roll it over directly into the new custodian) you won’t be hit with a penalty or a tax. However, an IRA at a reputable brokerage will give you far more investment choices, which can help you find better funds with lower fees.

Exception is if new employer is a firm (most often a financial institution) that requires you to disclose all investment accounts (even retirement accounts) in which you can make trades. My employer not only required this disclosure, but I also had to roll any investment accounts into its brokerage. Consequently, I couldn’t just drop my 401(k) into an IRA. Still, I’m pretty happy with the fund choices in my 401(k) so I’m not too bad off.