Asset Protection: 401K Rollovers
As you begin to contemplate retirement from your current job, you have the opportunity to take funds from your 401K account and transfer it into a better vehicle. Use an Annuity to transfer your money into a better, less restrictive, and more flexible plan.
What are the Advantages of rolling your 401k into an Annuity?
- Premium Protection
Secure your assets by avoiding market fluctuation by moving to an annuity that will give you all the gains but no losses, thereby protecting your assets. Only accruing the gains on interest and not losing the premiums if the market goes down. Your premium and interest earned are protected with index-based strategies. Your money will have a potential growth based on the performance of one or more market indices when it inclines. And you will not lose your premium if or when the market declines, thereby saving your hard-earned money/assets.
Rolling over a 401(k) or traditional IRA into a new annuity is tax deferred. You don’t pay income taxes or have any tax implications until you withdraw money. The annuity works the same as your retirement account, so the rollover is not counted as a withdrawal. You can do a direct rollover, requesting your old 401(k) plan administrator to forward your money directly to your new annuity. This is a simple and straightforward process with no taxes or penalties involved.
- Guaranteed Lifetime Income
Presumably, you have a generous amount on your retirement savings or your 401k account, and you are nearing retirement. How can you ensure that you will be able to acquire a sustained income for your retirement years? What if you outlive your money? And how can you create the funds in your 401k more like a pension? Rolling over some or all of the funds to purchase an annuity will eventually secure you with a guaranteed lifetime income that will be paid to you monthly, quarterly, or yearly. It is a great option and surely an assurance to your worries and questions of not being able to create an income that will last a lifetime.
On top of a secured income for life, waived surrender charges are often added to access your retirement plan in case you need to be admitted to a nursing home or diagnosed with a terminal illness. Also, there is no annual contribution limit to an annuity.
- Death Benefit Provision
Setting up your contract, you can customize it by stating the payout and beneficiary options. In the event of the annuitant’s death, the insurance company issues the remaining payments to the beneficiaries either in a lump sum, which is paid in full in one distribution, or periodic payments. It is a significant move to include a beneficiary in the annuity contract so the accumulated money will not be surrendered to a financial institution once the annuitant dies.
When you roll your 401K into an Annuity:
- Always check with your company before making a rollover to see if they offer a higher payout than you could get from insurance companies.
- Once you roll over your 401k, you can not roll it back.
- If your employer does not offer to annuitize your 401k, you can take a lump sum payout from your 401k and use the funds to purchase an annuity contract.
- Just be sure and do so within 60 days of the 401k distribution to avoid any taxes, and be sure the check is made out to the new custodian FBO (for the benefit of) you so the IRS will not deduct 20%.
Take time to study the options. You should reach out to a Retirement & Insurance expert to determine the type of annuity that best works for you and whether you should include riders in your contract to accommodate your needs.