What is a Rollover?
A rollover is when money moves from a qualified retirement plan, such as an employer-sponsored 401(k) plan, to a Traditional IRA. You may be eligible for a rollover if you've changed or are between jobs, or have retired.
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Benefits of a Rollover
- Avoid paying current federal income taxes and a 10% tax penalty. This can be done by moving money directly from a previous employer's plan to a State Farm® Traditional IRA.
- Watch your savings continue to grow-tax deferred. This means that no amount in the IRA will be taxable until withdrawn from the IRA. Tax-deferred growth enables money to grow faster than it would in a taxable account.
- Consolidate and manage retirement assets. Consolidating your accounts into a State Farm Traditional IRA can make it easier to track balances and monitor withdrawals.
- Expand investment selection. With State Farm Mutual Funds®, you have access to 15 funds options and an investment team who is dedicated to making each of our mutual funds a highly competitive and rewarding long-term investment for our shareholders.
Disadvantages of rolling over an IRA
- You may be eligible for favorable tax treatment withdrawals if your 401(k) is invested in company stock.
- A 401(k) may provide greater protection from lawsuits and creditor.
- You may be able to get a loan from an employer-sponsored 401(k) account, but not from an IRA.
Your State Farm agent can help you make the rollover process easier by:
- Creating a retirement plan that meets your needs;
- Opening an IRA account, if you don't already have one;
- Contacting your current account manager for requirements;
- Completing any required paperwork;
- Following up on the status of your State Farm IRA.
Now is a great time to speak with a registered State Farm agent to find out if a 401(k) rollover is the right option for you. Call, click, or stop by an agent's office.
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Investing involves risk, including potential for loss.
A 10% tax penalty may apply for withdrawals from tax-qualified products before age 59½.
Prior to rolling over assets from an employer-sponsored retirement plan into an IRA, it's important that customers understand their options and do a full comparison on the differences in the guarantees and protections offered by each respective type of account as well as the differences in liquidity/loans, types of investments, fees, and any potential penalties.
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- May Lose Value