Should I Roll Over My 401(k)?

Individual Retirement Accounts > Rollover IRA > Should I roll over my 401(k)?

Thinking of rolling over your employer-
sponsored retirement plan to a Rollover IRA?

Consider all your choices. You may be able to roll over to a Traditional IRA or Roth IRA, move to a new employer's plan, leave the account where it is or take a lump-sum distribution. Each has different advantages and disadvantages in terms of investments, fees, withdrawal rules, required minimum distributions, taxes and protection from creditors. As you evaluate your choices, carefully review the information provided to find the one that best fits your retirement goals.
 
Roll over to a Traditional IRA
Roll over to a Roth IRA
Move to a new employer's plan
Stay in former employer's plan
Account management and investment choices
Can you consolidate your accounts?
What is the range of investment choices?
Can you make "in kind" transfers of investments from your current plan?
Can you work with an advisor to get investment guidance?
Is there access to online tools and resources?
Yes
May offer a wider range of investment choices than an employer-sponsored plan — including stocks, bonds, ETFs and mutual funds
Varies by plan and investment type
Yes. You can work with a Merrill Edge Financial Solutions Advisors™.
Yes
Yes
May offer a wider range of investment choices than an employer-sponsored plan — including stocks, bonds, ETFs and mutual funds
Varies by plan and investment type
Yes. You can work with a Merrill Edge Financial Solutions Advisors™.
Yes
Varies by plan
Varies by plan but may be limited
Varies by plan and investment type
Varies by plan
Varies by plan
Varies by plan
Varies by plan but may be limited
Varies by plan and investment type
Varies by plan
Varies by plan
 
Taxes
Is growth tax advantaged?
Can you make new tax-advantaged contributions?
Is there special tax treatment for appreciated company stock?
Yes
Yes. If either the IRA holder or spouse is covered by an employer-retirement plan, availability to make tax-advantaged contributions may not be available or may be limited.
No
Yes1
Roth contributions are made on an after-tax basis, and the ability to contribute is subject to modified adjusted gross income limitations.
No
Yes
Yes
No
Yes
No
Certain assets may be eligible for Net Unrealized Appreciation (NUA) tax treatment when distributed from a former employer's plan. Consult your tax advisor for details.
 
Roll over to a Traditional IRA
Roll over to a Roth IRA
Move to a new employer's plan
Stay in former employer's plan
Withdrawals
Can you roll over into an employer's plan at a future date?
Can you take a loan from the account?
Is there an additional tax for early withdrawals?
Are there any exceptions to the additional tax for early withdrawals?
Can you withdraw without paying the early withdrawal tax once you are 55?
Are there required minimum distributions (RMDs) starting at 70½?
Yes, subject to employer plan rules
No
Yes, 10% before age 59½
Yes, for example, for qualifying home purchase or college expenses
No
Yes
No
No
Yes, 10% on earnings before age 59½3
Yes, for example, for qualifying home purchase or college expenses
No
Not if you are the original account holder
Yes, subject to employer plan rules
Varies by plan2
Yes, 10% before age 59½
Yes. If a plan's rules allow hardship distributions, then some forms of distribution may qualify for an exception to the early withdrawal additional tax (e.g., qualifying home purchases or college expenses).
Yes, if you have left your new job on or after attaining age 55
Generally, not if you are still working4
Yes, subject to employer plan rules
Generally, no
Yes, 10% before age 59½
Yes. If a plan's rules allow hardship distributions, then some forms of distribution may qualify for an exception to the early withdrawal additional tax (e.g., qualifying home purchases or college expenses).
Yes, if you left your old job on or after attaining age 55
Yes
 
Fees
Are there administrative and investment fees?
No annual account fee for self-directed accounts, but account closure, transaction and investment fees may apply
No annual account fee for self-directed accounts, but account closure, transaction and investment fees may apply
Varies by plan
Varies by plan
 
Other
Are assets protected from creditors?
Is there an account minimum?
In federal bankruptcies they are, but state laws vary.
No
In federal bankruptcies they are, but state laws vary.
No
Yes
Varies by plan
Yes
Varies by plan

What about a lump-sum distribution?

You may consider a lump-sum distribution from your old employer-sponsored plan if you're facing extraordinary financial circumstances, but this option comes at a high price. Pre-tax contributions and associated earnings will be taxed as ordinary income, and you may be subject to an early withdrawal tax of 10% if you are under age 59½.
Help when you want it
Turn to us for step-by-step guidance when you have questions or need help getting the most out of your investing
experience. Meet with a local Merrill Edge Financial Solutions Advisor™ to help you get on track and stay on track.
Call 24/7, 888.637.3343
Call 24/7
888.637.3343
to speak with a Merrill Edge
rollover specialist
Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

1 Earnings are generally not subject to federal income tax if a 5-year holding period requirement is met and the account owner is at least 59½ at the time such distribution is made.

2 Loans must usually be repaid within 60 days of leaving your job to avoid treatment of the loan as a distribution and subjecting it to federal income tax, and potentially a 10% early withdrawal additional tax.

3 The early withdrawal tax does not apply to withdrawals of contributions to a Roth IRA. However, there is a 10% additional tax if earnings are withdrawn before the end of a 5-year holding period even if you are over age 59½.

4 Dependent on plan terms.

Investing in securities involves risks; there is always the potential of losing money when you invest in securities.

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