Do You Need an IRA Rollover?



This webinar is available for residents of the United States, is for informational purposes only, and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned in this webinar may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced within this webinar are available in every state, jurisdiction or from every person listed.

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through PFG Advisors. Copper State Wealth Management, Copper State Credit Union, Securities America, and PFG Advisors are separate entities. Securities America and its representatives do not provide tax or legal advice. Investments are Not NCUA Insured • No Credit Union Guarantee • May Lose Value


 Looking for 2022 tax brackets, deadlines and other info about filing in 2021? Click here.




Christina, Host
Hello everyone! We are here this afternoon to talk about IRA rollovers – when and if you should do one, what are they, and other important info. I want to start by introducing Copper State Wealth Management's Tony D'Astice.
Tony’s been in the financial world for 25 years and with the credit union for 17 of those years. His pass is in providing that dependable and professional advice for Copper State Credit Union members. His areas of expertise are really in retirement planning and 401k rollover strategies.
And now for more of a fun fact – if you could have one superpower, what would it be?

Tony, Financial Advisor with Copper State Wealth Management:
Well, I am a big Marvel fan, so I think one super power I'd want to be is able to fly, probably because I can go anywhere I want, do anything I wanted, and I wouldn't have to go through TSA, and take my shoes off.

Christina, Host
So fun!

I do want everyone to be aware that securities are offered through Securities America Incorporated, Member Financial Industry Regulatory Authority and Securities Investor Protection Corporation. Advisory services are offered through PFG Advisors. Copper State Wealth Management, Copper State Credit Union, Securities America, and PFG Advisors are separate entities. Securities America and its representatives do not provide tax or legal advice.

Poll: The average person in the US changes jobs about how many times during their lifetime?

According to a article, the average person changes jobs 12 times. And even if only half of these people were actively saving for retirement in a 401k, that is a lot of retirement accounts out there floating around! Knowing what your options are for handling those funds is key.



What’s the problem with having multiple retirement accounts?



Christina, Host
So Tony, given this pretty incredible statistic, what is the problem that you are noticing people running into when it comes to having several retirement accounts?


Tony, Financial Advisor with Copper State Wealth Management
I think the biggest issue is people forget what they have and where they have it. You get so distracted with life events going on, and you don't remember what you did with it and how to get in contact with the appropriate parties, login info, etc.
You get disconnected from your old employer, and life goes on. Sometimes you move and you forget to change the address with that old account. Companies can change their sponsors and who’s providing that retirement plan. Sometimes your investments are reallocated and if you don’t have current contact info, your money could just end up in a cash account not making you any money. And if even if you don’t have it moved, if you leave it in the same place for 10 or 20 years, chances are your investment strategies are going to be different than they were 10 or 20 years ago, so you’re not taking the time to optimize that investment. It may be either too conservative or too aggressive for your current needs now.



Why can’t I just do a bank transfer for my IRA?



Christina, Host
That makes sense. So you talked about several of the problems with this scenario, but what I’ve always wondered is why can't I just do a bank transfer? Why can't I take my old employer's 401k or whatever it is and just transfer the money over to my new one? Why is it not that simple?

Tony, Financial Advisor with Copper State Wealth Management
Well, since it is a retirement account and it's a tax deferred account, meaning you don't get any taxes on it, you have to follow the rules and set up an appropriate rollover with the same tax setup. Uncle Sam and the IRS are going to come calling and you may owe some taxes on a transfer or a movement that you did if you didn't do it properly.

Christina, Host
Got it. And probably, I know there's contribution rules and distribution rules that come with those types of accounts, depending on what age you are and stuff. So that probably impacts it as well.

Tony, Financial Advisor with Copper State Wealth Management
Yeah. If you were under retirement age, you could potentially end up with big tax hit and extra penalties.



How Do I Know If I Need an IRA rollover? What are my 4 options for handling previous IRAs?



1. Keep it in the previous plan


If you meet a certain threshold, you can usually leave funds in the plan. There are good and bad things about doing this. If you leave it in the previous plan, nothing's changing. You're going to continue to keep the tax deferral. So you've been putting money in there, most likely pre-tax dollars. That will continue that tax deferral on that. You do get the protection from creditors since it’s in a retirement plan.

If you’re still working and you are past retirement age, you're at 72, you're now taking a required distribution out and it may benefit you to just leave the funds there – could be a low cost option. But then you don’t have much control or choice on what’s happening until you officially retire.

But keep in mind it will be hard to keep in touch with this plan as time goes on. And you can’t keep contributing to the plan after you leave that employer.
And then what compounds that issue, if you've forgotten what you have, as I said before, you may be invested too aggressively or too conservatively. You started this plan when you were in your 40s, and you there, and you left it there, and you didn't change how it was invested and how you're at retirement age years later, it won’t be meeting your needs.


2. Roll over to an individual IRA


This is a tax-free transfer option. You’ll fill out forms and make a few phone calls indicating you want a rollover and go from there. Since it's your own account, you have the world of investment choices, whether it being conservative, aggressive, or anywhere in the middle.

And since it's an IRA account, the retirement account, you're going to continue the tax deferral that you've had. So you're not paying taxes on it. So you can roll it over from the 401k at the old employer to an individual IRA that allows you not to pay the taxes on that.

You're in charge. You can put it wherever you want as long as it falls under that IRA rules, whether it's mutual fund, a CE, an annuity, stocks, bonds, real estate, multitude of things with that you can put that in. If you've had those four retirement accounts that you have left, you can now consolidate them all into one. With this freedom, you’ll likely pay more in fees than an employer plan, which is worth considering. Fees for management, investment charges, etc.

Your financial advisor could be managing this for you, which is helpful. For example, "Based upon your age, your risk, this is what you should be doing." So you have someone to work with and a resource in there. Some negatives then is if there was something special you loved about your old 401k. Obviously, you left there, you don't have that choice anymore.



3. Roll it over to your new employer


So if you started with a new company, and you want to consolidate things at the new company, you're free to do so as long as that company allows it. And again, its forms and steps that you have to follow, do that the right way to keep tax benefits. Again, you keep that tax deferral like you have, because it's under a retirement account. All of the first 3 options you keep the tax deferral. You’re subject to the new employer’s plan and policies, but it likely has some benefits as well, sometimes with matching contributions etc.
Again, if you're still working and your past retirement age of up to 72, you're not taking your required distributions out because you're still employed there. You potentially have some low cost investment options because it’s employer-sponsored. You still get protection from creditors.

Contact Copper State Wealth Management

4. Take a Cash Out Distribution


And the last option is to take a cash out distribution and take the money, and spend it, and be taxed on it, and pay potentially penalties and holdings on that later on.
This option gives you the most liquidity because now you have access to your cash to spend it. But, to use it before age 59.5, you're going to have some tax penalties.
If it's been a pre-tax investment in there and you've taken it out, now you're going to have just regular normal income taxes on that.

Christina, Host
So that's not the same as the penalty? You've got the penalty and regular income tax?

Tony, Financial Advisor with Copper State Wealth Management
Correct. At whatever tax bracket you tend to fall in. Normally, when you take a distribution out of your retirement account early and take it in cash, they're automatically going to pull 20%, and pay that to the IRS right away. That may be what you owe. It may be more, maybe less. It depends on your situation, but they're going to take that off the top and grab some taxes right away on that for you there.

Plus – if you use the money early, now that's less money you're going to have for your retirement.
If you need it for an emergency, maybe seek some advice from your financial advisor and tax advisor because you are in a situation here that it could be because you lots of penalties of taxes later on with that.

Christina, Host
What’s your best piece of advice for people to walk away with today?

Tony, Financial Advisor with Copper State Wealth Management
I think all the four choices that you have with an IRA rollover, there's not one right answer for everyone. Everyone has a different situation for what's going on in their life and at that point in their life. Just get some professional advice.
Your retirement account is most likely your biggest asset outside of your house. So you want to do it right, because you're depending on it for your retirement years. If you want to be able to retire at the age and lifestyle you want, a mistake here can cost you in the long run.

Christina, Host
You could have to work for five more years because of a choice you're making in this stage! It's a rough thing to think about, but also, I'm glad I'm hearing it and being aware of that before I were to make that decision. And obviously, I think all of us should have a professional that we're working with. We can't all be experts at everything! And Tony and Anthony and Ryan are experts at this. So I definitely encourage you to check them out.

We're offering a free risk analysis infographic for everyone who attended today or watched the video after the live event. Make sure to click and get your free Risk Analysis Infographic download after taking the survey! Thanks everyone for joining us today!



Take the Survey + Get My Free Download!


Copper State Wealth Management

Financial Advisor Contact Information




Contact Copper State Wealth Management

Don't have time to watch now? Send the link to your inbox:

This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.