Smeed Financial Tips -
Former 401k and IRA
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
- 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
- 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
- You must transfer all funds within 60 days.
What role do
fixed annuities and fixed-indexed annuities play in qualified
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: 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
- Money must be in substantially equal payments.
- Money must be taken to age 591/2, or for 5 years, whichever is
- You avoid the 10% federal tax penalty for premature distribution
- 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
Juan Pablo Blanco, Grady Elliott and the Rest of the
Smeed Financial Team
201 Sand Creek Rd. Ste. E
Brentwood, CA 94513