A 401k rollover is a process of moving retirement savings from a 401k plan to another retirement account, such as an IRA (Individual Retirement Account).
When you leave a job or retire, you typically have the option to leave your 401k savings in your former employer's plan or to transfer it to a new employer's 401k plan, if available. Alternatively, you can roll over your 401k savings into an IRA or another qualified retirement plan.
A rollover can be a smart choice for several reasons. First, it can simplify your finances by consolidating retirement savings from multiple plans into a single account. It also gives you more control over your investments and allows you to choose investments that align with your retirement goals and risk tolerance.
Another advantage of a 401k rollover is that it can potentially lower your investment costs. Many 401k plans charge higher fees than IRAs, and by moving your savings to an IRA, you may be able to access lower-cost investment options and save money over the long term.
It's important to note that rollovers can have tax implications. If you choose to do a rollover, make sure to do it correctly and follow the rules to avoid any tax penalties. It's also a good idea to consult a financial advisor or tax professional to help you understand the potential tax implications of a rollover and to determine the best course of action for your individual situation.