Rolling Over Your 401(k)? Here’s What You Need to Know

If you’re like many professionals in their 40s, 50s, or early 60s, chances are you’ve built a solid foundation for retirement through your company’s sponsored retirement plan—often automatically through regular paycheck contributions. It’s an efficient way to grow your savings over time with little daily effort.

But once you reach the point of needing to use those funds—whether you’re retiring, changing jobs, or just planning ahead, rolling over your 401(k) decisions become far more complex.

Secure Act and Secure 2.0 Changes

Recent updates to RMD (Required Minimum Distribution) rules and early withdrawal penalties have added new layers to consider. Your next step with these funds could significantly impact your tax bill, investment flexibility, and long-term financial security.

You may be thinking, “Can I just leave the money in the plan?” You can—but that may limit your investment choices and delay certain planning opportunities. Maybe you’re wondering about rolling it into an IRA for broader investment options or even converting to a Roth for potential tax-free income in retirement. Each of these strategies carries different implications, especially when it comes to taxes, required distributions, and beneficiary planning.

Other 401(k) Rollover Options

If you’re between jobs, you might be surprised to know you can often move those funds into your new employer’s plan. That option maintains tax deferral and may protect the funds from creditors. However, it can also come with restrictions on investment choices and access.

And then there’s the lump-sum distribution, something we only recommend in specific situations. While it provides immediate cash, it can come with a steep tax hit and possible penalties if not handled correctly.

To help you understand your full range of choices, we’ve put together a helpful resource. Download our free guide, “6 Options for a Distribution from a Company Plan”

Understanding these choices before you take action is key. Some of the best tax-saving strategies are only available when you initially access the funds. If you miss that moment, and the opportunity may be gone for good.

RFG Wealth Advisory is here to help.

If you’re preparing for retirement, transitioning to a new job, or simply want to be proactive, we’d love to help you make the smartest decision for your goals. Contact one of our advisors at 940-464-4104, or book a free virtual consultation here. 

RFG Wealth Advisory in Argyle, Texas, is an independent, fee-only Registered Investment Advisor firm committed to putting your interests first. We offer clear, transparent pricing and personalized guidance to help you retire with confidence.

Financial success doesn’t happen by chance—let’s plan for it together.

Investment advice is offered through RFG Wealth Advisory, a Registered Investment Advisor.