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Common Questions About 401(k) Rollovers

  • What do I do with my old 401(k)?
  • I have recently changed jobs… what happens to my 401(k)?
  • I am getting ready to retire… what do I do with my employer-sponsored plan?
  • Am I able to consolidate my various old 401(k) plans into one account?

What options do I have with my 401(k) when I leave employment or retire?

These are just a few of the questions that we are asked most frequently here at Asset Strategies. They’re important questions because, oftentimes, your 401(k) plan houses the majority of your retirement savings. It reflects years of your hard work and diligent saving practices, and you want to ensure you’re maximizing that benefit.

There are a few options regarding your 401(k) when you leave an employer:

1) Most 401(k) plans have provisions that allow you to leave it where it is. With this option, you can no longer make contributions or receive any matching contributions from the employer. It simply sits *as is* and is invested in whatever funds you had previously selected.

2) You can cash it out. There are a couple of careful considerations to keep in mind when choosing this option as you may be subject to paying taxes and a 10% penalty on the funds.

3) You can roll it out of the 401(k) and into an IRA. This is called a 401(k) Rollover and is a seamless transition of funds out of the 401(k) plan and directly into an IRA. With this option, Asset Strategies is there to help you every step of the way.

Three reasons why should I consider rolling over my 401(k) into an IRA?

1) The greatest benefit to participating in any employer-sponsored plan is the matching contribution offered by the employer. This is “free money” that you don’t want to leave lying on the table. However, once you terminate employment or retire, this benefit is no longer available to you.

2) Oftentimes, the investment options offered within a 401(k) plan are few. The plan may feature a line-up of only a small handful of funds.

3) Generally speaking, the investment options that are offered within a 401(k) plan are mediocre, at best.

It is because of these three reasons that your dollars may be better served in a more diversified and customized portfolio of funds selected specifically with you in mind. Rolling them out of the plan and into an IRA also grants you more control over that asset.

What’s the best way to invest my old 401(k)?

The answer to this question truly does vary from person to person.

BIG PICTURE: We move those dollars you worked so hard to accumulate into a portfolio built specifically tailored to address your current situation, your future goals, your tax strategy, and your investment risk tolerance. We then actively manage those dollars to ensure they’re diversified and working as hard for you as possible.

401(k)’s at retirement

You’ve spent your entire working career saving month by month in your 401(k) and now it’s time to turn things around and start pulling those $’s out. How do you do it, and what does it mean to your tax situation when you do? Many people at retirement decide to do a 401(k) Rollover into an IRA. This might be a place that they put previous 401(k) rollovers or saved outside their employer’s plan. These 401(k) rollover accounts historically have been “Traditional” retirement investments, which means that the money went into the account “pre-tax” and is taxable when you pull those dollars out at retirement. These withdrawals are considered ordinary income and will be taxed at your marginal rate.

In recent years, some companies have started offering Roth 401(k) plans. These plans allow you to put contributions in after tax and then after age 59.5 you can take these contributions plus the growth out of the portfolio tax-free. Sometimes it’s a good idea to have both Traditional and Roth 401(k) rollover plans when you get to retirement age so you have different options tax-wise to draw from to maximize your income. As always, if you have questions, please send us a message through the website or call us at 402-933-4642 during regular business hours.

What’s the difference between a 401(k) and an IRA?

When it comes to saving for retirement, there are different options a person can consider. One of the first options a person looks at is their 401(k) at work. A 401(k) is a defined-contribution plan that allows an employee to contribute up to $19,500 (2021). If you are 50 or over you can contribute a catch-up provision amount of $6,500 additional dollars to max out at $26,000. On top of the employee contributing money to the account, oftentimes the employer will provide a specific percentage match as well. In the traditional 401(k), any dollars the employee puts in can be a tax deduction on their income tax statement for the year they contribute. These are considered pre-tax dollars. The money can then be invested in mutual funds that the 401(k) has to offer. Those dollars grow tax-deferred year after year and are then taxed as income when the owner pulls the dollars out for retirement at age 59.5 or later. If a person gets behind financially and needs dollars, most 401(k)s allow a person to take a loan on their account and pay it back through their paychecks.

Another option to save money for retirement is the traditional IRA. The IRA (Individual Retirement Account) differs from the 401(k) in several ways. A person, if eligible, is allowed to invest up to $6,000 a year (2021) from age 49 and younger. Age 50 and over is allowed to contribute an additional $1,000 a year. In most cases, a person has more options to pick from when investing in an IRA as opposed to the options a 401(k) gives you. While the IRA has more options, it doesn’t allow you to contribute as much. There are no employer matches in an IRA and you are not allowed to take a loan against your IRA. The money in the Traditional IRA grows tax-deferred like the 401(k) and can be used after the owner reaches 59.5 years old or has held the account for five years, whichever is longer. Any distribution is looked upon as income. If you take money out of the IRA before 59.5 years old, the money is taxed as income and you receive a 10% penalty on the amount taken as well.

Both investment options have several benefits. It comes down to the individual’s goals when deciding which one to use. When a person leaves a job, they have the option of taking the 401(k) and rolling it over to a Rollover IRA. This allows the owner to control the account and have the option to invest the money based on their age, risk tolerance, and investment objectives.

How do I roll over my 401(k)?

Once you have separated service from a previous employer, you have the option of moving your 401(k). If you choose to roll over your 401(k) into an Individual Retirement Account (IRA), you can have the funds sent directly to the IRA. This is called a direct transfer rollover. This process does not create a taxable event; therefore, you would have no taxes or penalties owed. There is no age restriction on doing a 401(k) rollover. When your 401(k) contains Roth 401(k) contributions and also pre-tax contributions, you will open a traditional IRA and a Roth IRA to ensure that your funds maintain their correct classification.

The 401(k) process can seem daunting. First, you would need to open an account(s) to roll over the 401(k) money. Second, every 401(k) plan has its own process for submitting a rollover request. One of our advisors will walk you through the process to help you determine your 401(k) plan’s process. Some plans allow for the rollover request to be submitted online or with a telephone call to the 401(k) plan sponsor. Other times the 401(k) plan requires some additional paperwork to be completed and submitted. No matter what the process requires, our team here at Asset Strategies will guide you step-by-step through the process.

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Jump to: Background  |  Financial Philosophy  |  Personal Background

Background: Ryan was born and raised in Omaha, NE. He has led Dave Ramsey’s Financial Peace University since 2012 and attended Ramsey Solutions Financial Coach Master Training in 2016. Also, in 2016, Ryan started Nelson Financial Coaching to help clients improve their behavior with money. Ryan is an investment advisor representative and registered representative holding series 7 and 66 registrations with Western International Securities.

Financial Philosophy: Ryan believes in being a guide to help clients on their financial journey. Ryan enjoys teaching and encouraging others. He believes clients should only invest in something that they truly understand. “I want to listen and understand your story. I want to know why you want to invest your money and what your financial goals are. That way we can create a plan together.” Ryan believes that one size does not fit all. Each client is different and helping them create a plan is what drives him every day.

Personal Background: Ryan currently lives in Elkhorn, NE with his wife Courtney. They have 3 daughters Zoey, Harper, and Maggie. Ryan and Courtney enjoy leading FPU at their church. Ryan enjoys spending time with family, reading books, and cooking with friends.

Schedule Your Free, No-Obligation Zoom or Telephone Consultation

Schedule 10-15 minutes to learn a bit more about us here at Asset Strategies, understand our philosophy, and ask all of your financial questions. I hope that this introductory call will help you decide if we would be a good fit for you and your family.

Schedule Your Free, No-Obligation Zoom or Telephone Consultation

Schedule 10-15 minutes to learn a bit more about us here at Asset Strategies, understand our philosophy, and ask all of your financial questions. I hope that this introductory call will help you decide if we would be a good fit for you and your family.

Personal Background: Chrissie is a native of Nebraska, born and raised in Norfolk. She and her husband have 4 children, two boys and two girls. She loves to spend time with her family. Her favorite past time is cheering on the Huskers and her favorite hobby is running.

Personal Background: Mary is a native of Nebraska, born and raised in Wahoo. She and her husband have 3 children and 7 grandchildren. They thoroughly enjoy all of their antics and activities. In their “spare” time they also enjoy camping, golf, horseback riding, traveling and the Huskers.

Personal Background: Katherine is a native of Nebraska, born and raised in Aurora. After graduating from high school, she went on to study English at the University of Nebraska at Kearney. Katherine moved to Omaha in 2006 to be closer to family. In her spare time, Katherine enjoys spending time with family and friends, relaxing at her family’s farm, being outdoors, and is an avid fan of tennis.

Personal Background: Sarah is a native of Nebraska, born and raised in Omaha. She has come to accept the unpredictable weather Nebraska offers. Sarah loves spending time with her husband and three children, cheering for her favorite sports team (Huskers, Royals, Packers and Thunder), reading, cooking and being outdoors.

Personal Background: Anna was born and raised in Omaha, Nebraska. She recently received her Master’s Degree in Business Administration from the University of Nebraska at Omaha. In her spare time, Anna enjoys spending time with her family and playing the guitar.

Jump to: Background  |  Financial Philosophy  |  Personal Background 

Background: If you had asked Mandy what she wanted to be when she was growing up, she would have said she wanted to be a dancer like her mom.  She never would have imagined herself following in her father’s footsteps instead, pursuing a career in the field of business.  After being a stay-at-home mom for 12 years and having personal experiences with her own financial advisors, she realized that this was the path for her.

Mandy has been in the industry since 2016.  Her undergraduate work was completed at The Master’s College, and she later earned her MBA from Bellevue University. She is an investment advisor representative and registered representative holding series 7 and 66 registrations with Western International Securities.  Mandy is a licensed fiduciary.

Financial Philosophy: As the common saying goes, “most people don’t plan to fail, they simply fail to plan” and Mandy understands that the topic of money is not generally something folks want to talk about.  Addressing one’s financial situation, for a variety of reasons, oftentimes gets pushed to the back burner.

Mandy enjoys educating her clients – ensuring they understand their investments and how they work.  She is passionate about building relationships, answering questions, and guiding her clients along the way.  She steps back and looks at the big picture, outlining a path for her clients to follow that leads them to their goals.  She is very passionate about this process, treats her client portfolios with the care and commitment she would her own, and finds her job extremely rewarding.

Personal Background: Mandy was born and raised in Montana. She has since traveled the world and now resides in Nebraska with her husband and three boys. She enjoys exercising, finding adventures outdoors with her family, and a good glass of wine over conversation with a friend.

Jump to: Background  |  Financial Philosophy  |  Personal Background  |  Quote

Background: Chadd Hoeft began his career in 1999 and co-founded Asset Strategies in 2002. Because of his experience, integrity, and professionalism, Chadd has been helping Dave Ramsey and Ramsey Solutions fans with their investments for nearly 19 years. Chadd believes in the principles that Ramsey Solutions teaches and serves each client using those investment philosophies. Chadd is an investment advisor representative and registered representative holding series 6, 7, 63, & 66 registrations with Western International Securities.

Financial Philosophy: Chadd believes that the best approach in helping clients is to get to know them personally. “It is important to sit down with the prospective client and take time to learn who they are.” Chadd strives to understand their financial concerns to identify areas in which he can add value to their lives. The next step is to educate the client on the game plan that has been built. “It is the client’s money; they need to be educated on how their accounts are being invested.” Furthermore, Chadd’s goal is to serve his clients over the long-term. “Whether it is the accumulation phase or the distribution phase, we want to be here to help our clients make good decisions.”

Personal Background: Chadd was born in Grand Island, grew up in Omaha, and graduated from the University of Nebraska-Lincoln. His home is in Elkhorn with his wife Suzi, son Drew, daughter Campbell, and wheaten terrier, Wrigley. Chadd and his family’s Christian faith are very important to them. He happily serves on a couple of boards at their church. You’ll find Chadd spending time with family and friends and coaching Drew’s football, baseball, and basketball teams. He is an avid sports fan. If one of his favorite teams is playing, he will be watching with high interest.

"Success is peace of mind, which is a direct result of self-satisfaction in knowing you made the effort to do your best to become the best that you are capable of becoming."

Jump to: Background  |  Financial Philosophy  |  Personal Background  |  Quote

Background: Justin grew up on a farm ranch in Southwest Nebraska. Justin began his career as an advisor in 2000 and co-founded Asset Strategies in 2002. As an Investment Advisor Representative with Western International Securities, Justin has been helping Dave Ramsey and Ramsey Solutions fans with their investments for nearly 19 years because of his experience, integrity, and professionalism. Justin believes in sharing the same investment philosophies with his clients that Dave teaches on his program. He enjoys helping clients begin their journey to building wealth and helping clients manage the wealth they’ve already accumulated or inherited.

Financial Philosophy:

Justin tries to put himself in his client’s shoes when making recommendations. He values trusted and honest relationships, and that is the kind of advisor he wants to be for his clients. Additionally, Justin wants his clients to feel like they can come to him with all of their financial questions. “Whether it is about investing with us or making a personal financial decision outside of our company, I want my clients to feel comfortable talking to me about the decisions they are faced with.”

Justin is also knowledgeable and strives to educate his clients on the investing options they have. He does not believe “one size fits all”. “Each client has their own unique interests and situation, and I want to make sure my recommendations fit their individual goals.”

Personal Background: In his spare time, Justin enjoys coaching youth sports, reading, trips to the farm ranch, spending time with friends, and serving in his church. He lives in Plattsmouth, Nebraska with his wife Jenny, daughters Rachel and Ashleigh, and son Braden. Justin graduated from Hastings College with degrees in Business Administration and Economics. He is an investment advisor representative and registered representative and holds series 6, 7, 63 & 66 registrations.

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."