Ask Terry Questions Rolling over retirement funds.

Rolling over retirement funds.

By Terry Savage on August 05, 2017 | Financial Planning / Retirement

Rolling over an ira from my old job into my new job's deferred comp, I was asked if I wanted the funds liquefied then into a check to my new job. My question, wouldn't that have to be taxed and why would they suggest that.

Terry Says

It is never a good idea to roll over retirement funds into a "deferred comp" account.  That can bring up too many tax issues.  Instead you should roll it to an IRA rollover account at a mutual fund company like Vanguard or Fidelity. Is this money already in an IRA, or in a previous employer's retirement plan?  Is your new employer offering "deferred comp" -- or is it a 40l(k) plan that will accept transfers from previous employers?  Be careful about what you're actually doing. I suspect this is just a question of words they chose.  They were likely asking if you wanted the stocks in your account to be sold and the money transferred DIRECTLY to the new custodian.  Or if you wanted the actual positions transferred.  Since this is supposed to be a direct transfer from one retirement account to another, there is no tax consideration. And it will be a lot more efficient to transfer cash than stocks.  Just don't touch the check!

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