Determine whether to roll over a 401(k) or leave it be.
Q I will be taking a new job soon. Should I roll over my 401(k) account into my IRA or leave it with my employer?
A: In most cases it's in your best interest to do a rollover. Some employers require participants to withdraw from the employer-based plan within a specified period from the date of separation. In that case, you should arrange a trustee-to-trustee transfer and not take a distribution. If the plan requires you to take a distribution, you can avoid recognizing this taxable event by rolling the distribution into an individual retirement account (IRA) within 60 days of receipt. You will receive a 1099 tax form, and you will need to document the redeposit of this amount on your tax returns.
If you are married, you should be aware that you cannot complete such a rollover without written consent from your spouse, since under the Employee Retirement Income Security Act your spouse is the legally designated beneficiary.
Send your money management questions to firstname.lastname@example.org Answers to our readers’ questions were provided by Richard J. St. John, president, St. John & Associates, Inc., Roswell, Georgia.