In 1978, Congress decided that Americans needed a bit of encouragement to save more money for retirement. They thought that if they gave people a way to save for retirement while at the same time lowering their state and federal taxes, they might just take advantage of it. The Tax Reform Act was passed. Part of it authorized the creation of a tax-deferred savings plan for employees. The plan got its name from its section number and paragraph in the Internal Revenue Code -- section 401, paragraph (k).

From Roth 401(k) to IRA
If the rollover is to a Roth IRA instead, the holding period within the Roth 401(k) does not carry over. That is, if the client has an existing Roth IRA, once the Roth 401(k) distribution is in the account, it has the same holding period as the Roth IRA funds. For example, let's assume that the Roth IRA was opened in 2000. You worked at your employer from 2006-2009 and were then let go or quit. Because the Roth IRA that you are rolling the funds into has been in existence for more than five years, the full distribution rolled into the Roth IRA meets the five-year rule for qualified distributions. On the other hand, if you did not have an existing Roth IRA and had to establish one for purposes of the rollover, the five-year period begins the year the Roth IRA was opened, regardless of how long you have been contributing to the Roth 401(k).

Rolling over a Roth 401(k) into a Roth IRA is usually the optimal thing to do particularly because the options within an IRA are typically significantly greater and better than within a 401(k) plan. Although it is usually not advisable to tap retirement funds, in desperate times the unthinkable may become the only option. The need for these retirement funds should be considered prior to rolling the money into an IRA, particularly if there is not one already in place, as this would begin the five-year holding period anew. 

Our goal is to put you in position to have liquidity, use and control of your money. Find money you are losing unknowingly and unnecessary and increase your accumulated assets without costing you one more dime you are currently spending. Sharing strategies that will enhanced your current benefits and offer sound solutions for future tax savings and securing your retirement to leave a financial legacy for your love ones.

​​​​​401K FALLOUT

The past financial collapse has devastated this retirement resource. Older workers are hardest hit, as their financial futures may now be at risk. Retirement dreams may disappear with 401(k)s. Older Americans’ 401(k)s have plummeted; fear they will never get to retire. This is why I recommend different types of annuities from deferred annuities to equity indexed annuities and use the benefits of annuities for retirement income. When you compare annuities vs mutual funds in safety of principal and can guarantee lifetime income without the risk of market losses has been a viable choice for many retirees.

Annuities For Retirement


With a 401K you are basically deferring paying today's low tax rates for whatever the future's tax rates are. I don't have a crystal ball, but if taxes are low now and we have health care and social security problems in the future, I would suspect they'd be on the rise.