If you've changed jobs, retired, or are getting close to retirement, you've probably thought to yourself something like this: "What happens to my 401(k) now - and should I roll it over?" OR “My 401(k) is just sitting there. I don’t know what to do with it."
If this sounds like you, we hear this often at Sherri Banta Group - and for good reason. Your 401(k) likely represents decades of saving, and the decision about what to do with it is important. You’re not alone - and you’re not stuck. Let’s break it down.
The good news: we specialize in 401(k) rollovers, at no cost, no loss - just clean, clear rollover support that turns that old plan into a real strategy. This process is not complicated once you understand your options. This guide walks through what a rollover is, when it makes sense, how to avoid unnecessary taxes, and the questions worth asking.
What Is a 401(k) Rollover?
A 401(k) rollover is simply the process of moving money from an employer-sponsored retirement plan into another qualified retirement account. It's not a withdrawal, and it doesn't have to trigger taxes when done correctly.
When you roll over a 401(k), your money typically moves to one of the following places:
- A Traditional IRA - keeps the same tax-deferred treatment as your 401(k)
- A Roth IRA - involves converting pre-tax savings into an account that grows tax-free
When Does Rolling Over a 401(k) Make Sense?
When Employment is Terminated, or You Retire
Whether you've taken a new position, gone through a layoff, or made a career change, leaving an employer is one of the most common triggers for a rollover conversation. It's a natural checkpoint to ask whether your old plan meets your needs - or whether rolling over makes more sense.
Approaching Retirement
Many people arrive at retirement with several retirement accounts scattered across former employers. Consolidating these or those accounts makes it easier to manage withdrawals, track performance, and plan your retirement income.
What Are Your 401(k) Rollover Options?
Option 1: If You Leave the Money in Your Existing Plan
Potential drawbacks: Your investment choices remain limited to whatever the plan offers, have potential for market risk, include fees… not to mention no one is contributing to it: not you, and not your former employer.
Option 2: Roll Over to a Traditional IRA
Potential advantages: IRAs offer wider investment choices, potential for lower costs, greater control over how your money is managed, and more flexibility for estate planning purposes.
Tax treatment: A direct rollover, transferring from a 401(k) to a Traditional IRA, does not trigger current taxes. And you have 60 days before it would trigger a taxable event.
Option 3: Convert to a Roth IRA
Potential benefits: Roth IRAs are not taxable at distribution, as long as Roth’d for five years, and are not subject to Required Minimum Distributions (RMD’s)!
Common 401(k) Rollover Mistakes to Avoid
- Cashing out and paying unnecessary taxes - one of the costliest and most avoidable mistakes; if you’re under 59 ½, you'll experience an IRS penalty
- Leaving old 401(k)s at former employers, sometimes for years
- Ignoring fees - small differences in plan or fund fees can add up significantly over time
- Overlooking Roth conversion opportunities - particularly during lower-income years
- Focusing only on investments rather than income planning - growth matters, but so does how you'll turn savings into usable income
- Making decisions without considering current and future taxes
- Missing the 60-day deadline on an indirect rollover
- Cashing out a 401(k) instead of rolling it over, which will trigger taxes and IRS penalties if you’re under 59 ½
- Overlooking how a rollover provides you more control of your funds
Working With a Fiduciary Financial Planner
Retirement decisions are not just about investments - they're about taxes, income, and building a plan that supports the life you want to live.
At Sherri Banta Group, we help individuals, families, and businesses throughout the Midwest to the West Coast and everywhere in between evaluate their rollover options. We build retirement income strategies aligned with their goals. As a 100% fiduciary firm, our recommendations are designed to put your interests first - not a product, and not a commission.
If you're wondering what to do with that old 401(k) or need a second set of eyes to review your current 401(k) - even if you can’t move it yet…Sherri Banta Group is happy to review and help you plan.
We’ll Keep You Posted.
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