Planning for the Future
Planning for the Future

Rolling Your 401(k) to a Traditional IRA

JCB can help you expand your investment opportunities by rolling over your 401k.

Anyone with a qualified retirement plan (e.g. 401(k), pension plan) who quits, retires or experiences a plan termination is allowed to rollover their old plan to a Traditional IRA.

If your plan balance is directly rolled over to an IRA, you will pay no tax or penalties and your money can continue to grow tax-deferred.

You can continue to add money to your IRA and receive an income tax deduction for the contribution (subject to limitations).

An IRA, or individual retirement account, is a tax-deferred savings account that allows any individual with earned income to make regular contributions towards their retirement.

In an IRA, you can invest in a variety of assets: CDs, stocks, bonds, mutual funds, etc.

You pay no taxes on the account until a withdrawal is made. Once a withdrawal is made, it will be taxed at your ordinary income tax rate.

If you’re under age 59 ½, then you may be subject to a 10% penalty on the amount of the withdrawal, and the amount of the withdrawal will still be taxed at your ordinary income tax rate.

You are subject to a 10% tax penalty for early withdrawal UNLESS:

  • Due to death or disability
  • SEPP based on life expectancy for a period of 5 years or until age 59 ½, whichever is later
  • Used to pay medical expenses in excess of 7.5% of AGI, health insurance if unemployed, qualified higher education expenses, or qualified costs of a first-time home buyer

For 2016, the maximum contribution allowed for an individual to a Traditional or Roth IRA is $5,500. If you are age 50 or older, you may contribute an additional “catch-up” contribution of $1,000 (subject to limitations).

There is no limit to the amount of money you can rollover to an IRA. In fact, you can also consolidate many IRAs into one IRA account.

You must begin to take Required Minimum Distributions (RMDs) at age 70 ½. These distributions are taxed at ordinary income tax rates.

Securities offered by JCB are not guaranteed, not FDIC insured, and may lose value.