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There are several 401k rollover options available which you will generally consider if you are shifting jobs or probably planning for an early retirement. There are several 401k rollover options available in case you have left the job or if the employer is offering you the 401k retirement plan. The 401k rollover options depend on your age whether you are below 591/2 or above.

Firstly you may take a lump sum distribution which is your account value less 20% federal tax which is mandatory by the IRS. This applies if you are above 591/2 and below 701/2. If the tax amount is less than $5000 it will be distributed to you irrespective of your age. The other 401k rollover option would be directly transferred to another IRA or 401k rollover annuity.

If your new employer has a new 401k plan first check the benefits and details about the plan and then initiate a 401k rollover. In case you are not satisfied with the new plan another 401k rollover option would be to transfer to an IRA. If you are truly interested in retiring peacefully and have sufficient funds in hand initialize a 401k rollover. This allows your earnings to continue to grow tax deferred and you can have complete control over allocation of assets. You can initialize a 401 k rollover only once in 12 months as per IRS rules.

In case you are below 591/2 years of age, the tax amount of 20% will be deducted and you will also have to pay a 10% penalty for withdrawing the funds early if you take a lump sum distribution. Again a good 401k rollover option would be to directly rollover and transfer the funds to another IRA account within 60 days so that you do not incur any charges.

Always remember that your savings are growing tax deferred and being compounded at an exponential rate. So it is sensible to look at a 401k rollover option rather than withdraw all the funds. You may first withdraw and then deposit within 60 days as mentioned above. Or you may request your previous employer to do a direct transfer. Either way you do not lose much. So if you already do not have an IRA, you may try to open one before doing the transfer. Always keep in mind the 401 k rules regarding the percentage of taxes and penalties applied.

To conclude, there are several 401k rollover options and you may opt for the one that seems perfect for your requirement.

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