IRA Rollovers

If you’re not at your old job, why is your 401(k)?

Rolling your 401(k) into an IRA at Union Bank gives you greater control over your investments, along with tax advantages.

Changing jobs: your 401(k) options

Leave it there

Your tax-deferred growth will continue, but you’ll no longer be able to make contributions to your account. If your previous employer changes 401(k) providers, it may be more difficult to track down your funds when you retire.

Take a cash distribution

This is not recommended. You’ll pay ordinary income tax on these funds, you’ll be subject to a 10% early withdrawal penalty if you are under the age of 59 ½, and this reduces your retirement nest egg.

Roll the old 401(k) to your new 401(k)

If your new employer allows it, you may be able to roll over your previous retirement savings. This will allow your money to continue growing on a tax-deferred basis and keeps your accounts consolidated.

Roll the old 401(k) into an IRA

This is the most-used option for several reasons — see our “Why roll your funds from an old 401(k) into an IRA?” feature below.

Why roll your funds from an old 401(k) into an IRA?

More investment options

Your 401(k) was likely limited to a relatively short menu of investments. An IRA allows you to find funds that better fit your goals and timeline.

Consolidate your accounts

If you’ve held jobs with several employers, you may have several old 401(k)s out there. Bringing them all together clarifies your financial picture.

Get greater control

Employer plans may have rules restricting changing investments, making withdrawals, etc. An IRA gives you control over these decisions.

Investment products: Not FDIC Insured — No Bank Guarantee — May Lose Value.


The information provided by Union Bank & Trust is educational only and is not investment or tax advice.