Smeed Financial Tips - Former 401k and IRA Rollover Opportunities

Keep your retirement dreams on track! Rollover your 401K, 403B, or 457 Plan and keep your money growing!

What are the advantages of a rollover?

When you directly rollover your 401K or other qualified employer plans, such as 403B or 457 plan, it means your employer sends your retirement plan savings directly to a new financial institution;

- Your money continues to grow tax-deferred.
- You avoid the 20% withholding of taxes by the IRS on your assets that would be enforced if the money is sent directly to you.
- You avoid an additional 10% penalty for premature distribution if you are under age 591/2.

If Money is sent directly to you and you wish to conduct a rollover:

- Your employer must forward 20% to the IRS, and if you wish to rollover the funds yourself, you must pay that 20% difference yourself and wait for the next tax filing to get reimbursed.
- If you do not make up the 20%, that amount will be subject to tax, and if you are under 591/2, an additional penalty of 10%, unless an exception applies.
- You must transfer all funds within 60 days.

What role do fixed annuities and fixed-indexed annuities play in qualified rollovers?

If you are a conservative saver or investor, interested in protecting your principal and interest, fixed and fixed-indexed annuities may be exactly what you are looking for. There are two types of fixed annuities;

- Fixed Annuities: where you know your guaranteed returns.
- Indexed Annuities: so you may be able to increase your earning potential while protecting your principal.

What are the advantages of a rollover into a tax-deferred annuity?

You can avoid the risk associated with;

- The ups and downs of the stock market
- The concentration of savings in employer stock
- The limitations of former employer plans

By rolling your 401K, 403(b), or 457 Plan into a traditional/ rollover IRA, and utilizing a tax-deferred annuity, fixed or fixed-indexed annuity, you can guarantee that not only your original principal, but that future growth will be there when you need it, when you retire.

Can I rollover my 401k while I am still employed?

If you are 60 years of age or older, and still working, you should know that most qualified plans allow "age 591/2 rollovers". If a particular plan does not, they most likely allow rollovers at age 65. Check with your plan administrator.

Working people should not wait until retirement to put together a retirement plan. Asset allocation and reposition is a necessary planning activity. An income plan should be discussed prior to retirement. As Americans approach retirement, they find themselves at a critical point, where a sudden downturn in the market could be devastating to their retirement account, as there is no real recovery time to make up potential losses.

How does a rollover translate into easier management?

If you have more than one retirement plan due to past employment, consolidating your nest egg into a single IRA can make it easier to manage. Consolidating your nest egg can simplify beneficiary designations, withdrawal requests such as systematic withdrawals of interest, 10% free withdrawals, or required minimum distributions. Consolidation can also simplify estate planning.

Prior to age 591/2 you may access money, without penalty under certain circumstances;

- Money must be in substantially equal payments.
- Money must be taken to age 591/2, or for 5 years, whichever is longer.
- You avoid the 10% federal tax penalty for premature distribution of IRA funds.
- You still retain control of your money.

American Annuity Advocates hopes the information we have provided will help you organize your retirement savings decisions. Remember that withdrawals may affect taxation; they are subject to ordinary income tax and may be subject to a 10% federal tax penalty if taken prior to age 591/2, and certain guidelines are not met. You should speak with your tax advisor about withdrawals prior to age 59 1/2.

As always, we are available for any questions or concerns you may have. So feel free to call or email us at 925-757-6018 or send me an email at


Juan Pablo Blanco, Grady Elliott and the Rest of the Smeed Financial Team
201 Sand Creek Rd. Ste. E
Brentwood, CA 94513




SMEED CPA, Inc | 201 Sand Creek Road, Suite F | Brentwood, CA 94513
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Phone: 925-634-2344 | Fax: 925-634-2346 | Cell: 925-207-6771