Financial PlanningGuide to Your 401(k) Rollover In 2023

Transitioning jobs or leaving an employer is a major life change and your 401(k) rollover is an important part of this change. It is necessary to understand all of your options and to figure out which choice is best for you. Here are your options:

  • You can roll your assets into an Individual Retirement Account (IRA) or a Roth IRA. >>Click here to learn more about Retirement Accounts!
  • Keep the assets at your current employer.
  • You may move your assets to your new employers 401(k) plan.
  • Cash out the 401(k). This will have tax and penalty ramifications.

Benefits of Rolling Your 401(k) to an IRA

401(k)s are a great options for you to take advantage with your employer, especially if your employer offers a matching program. However, they are usually very limited in their investment options. I generally see that most 401(k) plans only have 20 to 30 mutual funds. Whereas, when you invest with a Traditional or Roth IRA, you can invest into a wide variety of investments, included but not limited to; stocks, options, mutual funds, and ETFs. One of the biggest differences between a 401(k) and an IRA is that YOU have control over how your money is invested.


Most of the time a 401(k) will be rolled into a Traditional IRA. This is generally because of the tax implications that these programs offer. Just like a 401(k) a Traditional IRA offers Tax Deferral, allowing you to invest with pre-tax dollars now and pay taxes on the money and its earnings later when you withdraw the funds.


Again, it is possible to move your money into a Roth IRA, if your financial situation can justify it. Roth IRAs work similarly to Traditional IRAs in that they offer tax benefits. Rather than contributing pre-tax dollars to the account, you can contribute after-tax dollars. The benefit comes in that you likely not have to pay taxes, under the current tax laws in 2020, on the money you withdraw so long as you do it after the age of 59 1/2 years old.

Opportunity to Review Your Beneficiaries


In addition, it is important to make sure that your beneficiary forms are properly formatted. This can have a dramatic impact on what happens to your money if something were to happen to you. You should ask yourself who you would like this money to go to. This may be your children, your spouse, or other intended loved one. Rolling over your 401(k) to a financial advisor gives you the opportunity to review who your beneficiaries are.

You can rollover your 401(k) plan to an investment management firm like IntelliVest Wealth Management to assist with the process of transfer and can help properly manage your assets.

Keeping the Current 401(k) Plan


Sometimes your old employer will allow you to hold your 401(k) plan with them even after you have left the company. There is typically no management fee to stay in the plan because no one is managing the money. This can lead to problems down the line.


Since no one is managing your money, how do you know what you are invested in is best for you? Sure you may have had good performance while you were at that company, but past performance is no guarantee of future performance.


Leaving your money at your previous employer also means that you are subject to their whims of changing the investment options inside the 401(k) and the 401(k) plan entirely. Meaning you cannot take advantage of other opportunities in the market place as you could with a Traditional or Roth IRA.

If you are no longer with your old employer, why is your money?

Moving Your Assets to Your New Employer


Similar to keeping your money at your old employer, moving your assets to your new employer will be met with some of the same negatives. Having limited investment opportunities and no manager personally advising you. In addition, if the new employer does not have a matching program for their 401(k), this decision may not be right for you at all.

It is your money, you should control how it is invested.

Cashing out Your 401(k)


First and foremost this is usually not a great decision. The money you cash out from your 401(k) will be taxed at your current tax rate. Typically you need to be over 59 1/2 years old to avoid an additional 10% penalty. (Please consult your tax advisor)

Cashing out should be treated as a last resort because you will lose a ton of money in the beginning. Not to mention you will further delay your own retirement.

Are Financial Advisors Worth it?


“Vanguard, one of the world’s largest investment companies, has been examining this question for 15 years. Based on research, analysis, and testing, Vanguard has concluded that , yes, there is a quantifiable increase in return from working with a financial advisor. Vanguard calls this advantage the Advisor’s Alpha. When certain best practices are followed, the result can be an Alpha in the 3 percent per year range.”

IntelliVest Wealth Management can assist in helping you decide which option is best for you and your current financial situation.


Do you have more questions about how to rollover your 401(k)? Reach out at (864) 598-0000 or contact us for a free consultation.

Dislcosure: IntelliVest Wealth Management is a Registered Investment Advisor in the states of North and South Carolina. This article does not represent the views of IntelliVest Wealth Management. The views and opinions made are that of the author and should be treated as such. Please seek advice from your financial representative to discus your financial situation.