Ask Terry Questions 401K rollover at age 71

401K rollover at age 71

By Terry Savage on April 17, 2015 | Financial Planning / Retirement

My question: I’m 71. I attempted to roll over the balance in my employer 401K account and was told I was too old (over 70 1/2) to roll my 401K over. Is this correct? If so, will I have to pay the taxes on the full amount in my 401K? Do you have a suggestion on how/where I should move my 401K to? Thanks very much.

Terry Says:  You are NOT “too old” to do a 40l(k) rollover, and in fact you probably SHOULD do it — because you will find a more appropriate selection of mutual funds than in your 40l(k), which is designed for young workers to make their money grow.  BUT you can do only ONE rollover per year from your 40l(k).

So here’s what I suggest: Contact Fidelity at 1-800-FIDELITY, and ask them to help you do the rollover.  They will handle all the paperwork, and make sure you do not have to pay ANY taxes on the amount that is rolled.  They will also help you decide which funds to move your money into — depending on your other assets, risk tolerance and time horizon.

ALSO, very importantly, this is the year you must take your first Required Minimum Distribution– if you haven’t done so already. Do that AFTER you do the rollover.  That withdrawal will be taxable so you need to include that in the amount you set aside for taxes.  And if the amount is sizeable, you might even have to make a quarterly estimated tax payment.  Fidelity can also guide you on that issue.

And if your employer, or whoever told you that you are “too old” to do the rollover, gives you any hassle, please write back and let me know about it.

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