The 401(k) Rollover Step by Step
The fourteenth episode of our 401(k) season walks through a complete rollover in order, from the week before you request anything to the tax forms you will see the following January. John, Maria, Melissa and Steve explain why a rollover is a transfer and not a withdrawal, how pre-tax, Roth and after-tax buckets must each land in a matching home, and the five-part inventory to complete first: vested balance, tax buckets, company stock, outstanding loan, and the plan administrator contact from your own statement. The episode gives the direct rollover step by step — open and verify the receiving account first, copy the for-benefit-of payable line exactly, use the words direct rollover, confirm how payment travels, forward any mailed check untouched and the same day, then verify amount, account and rollover coding at arrival and invest the cash promptly. It works the indirect rollover trap in full: a fifty thousand dollar distribution paid to you has ten thousand dollars withheld, yet the full fifty thousand dollars must be deposited within sixty calendar days to complete the rollover, and at a hypothetical six percent for twenty-five years that fifty thousand dollars would grow to about two hundred fourteen thousand dollars. It covers the sixty-day rule and its narrow waivers, the one-indirect-rollover-per-year rule for individual retirement accounts, Forms 1099-R and 5498, partial rollovers and the after-tax split, net unrealized appreciation on company stock, plan loan offsets, required minimum distributions that can never be rolled over, rollovers into a new employer plan, timing, fees, fraud protection and the repair ladder when something goes wrong. A clearly labelled invented case study follows Daniel Reyes, a fictional quality manager in Columbus, Ohio, who moves one hundred forty-five thousand dollars in two direct rollovers, prices the road not taken, and matches his January tax forms to his November notes. Plus eight traps, a six-check audit, and a one-page timed checklist. Education only — no recommendations, no predictions.
Sources referenced (public, dated): Internal Revenue Service — guidance on rollovers of retirement plan distributions, direct rollovers, the sixty-day rollover rule and its waiver and self-certification procedures, mandatory twenty percent withholding on eligible rollover distributions paid to the participant, the one-rollover-per-year rule for individual retirement accounts, plan loan offsets, and Forms 1099-R and 5498, on irs.gov; U.S. Department of Labor, Employee Benefits Security Administration — participant education materials on retirement plan distributions and rollovers; U.S. Securities and Exchange Commission, Investor.gov — educational materials on saving and investing for retirement. Plan rules on roll-in acceptance, distribution timing, fees, spousal consent and loan treatment vary by employer and are described in general educational terms; listeners should read their own plan documents and summary plan description, which govern their own accounts. The case study and worked examples are invented and illustrative; the arithmetic examples are teaching calculations using stated hypothetical assumptions, not forecasts.
Audio format: MP3, 128 kbps CBR, 44.1 kHz, mono, -16 LUFS.
This episode is for financial education only and is not investment advice. Narration is AI-generated.
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