Remember Your 401(k): What You Need to Know About Rollovers Before Retirement

Brokerage. Savings. 401(k)s from three jobs ago. These accounts all tell the story of your career: the companies you helped grow, the milestones you reached, the choices you made. As retirement nears, your financial life deserves more than just maintenance — it needs integration. It’s time for your accounts to work together toward one clear purpose: funding the next chapter.

As your focus shifts from building wealth to protecting it, from growing assets to using them with intention, one of the most overlooked, yet powerful, moves you can make is a 401(k) rollover. Here’s what to consider, and how your financial advisor can help you get it right.

What is a 401(k) rollover? Why should you consider it?

A 401(k) rollover is the process of moving your retirement savings from an old employer’s plan into another qualified retirement account, like an individual retirement account (IRA) or a new employer’s 401(k).

Most people consider a rollover for two specific reasons. One is that they’ve changed jobs over the years and now have several 401(k)s scattered across different plans. The second is that they are planning to retire soon and want more control over how their savings are invested and accessed.

Rollovers can be a strategic move for several reasons:

• Simplification: Fewer accounts equal more simplicity, making it easier to track your overall investment strategy.
• More investment choices: IRAs often offer a broader range of options than employer plans.
• Potential cost savings: You may be able to reduce account and fund fees.
• Tax strategy opportunities: Consolidation can make tax planning easier as you prepare for distributions, including required minimum distributions (RMDs).

Types of 401(k) rollovers

Not all rollovers are the same and how you execute one can have lasting consequences for your taxes, investment flexibility, and retirement income plan.

A direct rollover (also called a trustee-to-trustee transfer) moves funds from a 401(k) into another qualified retirement account, typically an IRA. As no money ever comes out of an account, there’s no tax withholding, no penalties, and no risk of missed deadlines. This method is preferred for retirees because it’s clean, efficient, and keeps your savings fully invested.

With an indirect rollover, you receive the funds directly, typically via check that must be deposited into another retirement account within 60 days. Missing that deadline can trigger taxes and potential penalties, as the IRS treats the amount as a distribution. Due to the administrative burden and higher risk of error, this approach is generally considered less favorable than a direct rollover.

For many retirees, rolling a 401(k) into an IRA offers the greatest flexibility and control. Compared to keeping funds in a former employer’s plan, an IRA typically provides:

• More investment options, beyond the limited menu of mutual funds in most 401(k)s
• Potentially lower fees, especially when working with an advisor who can access institutional pricing
• Greater control over distributions, including timing and tax planning around RMDs
• Easier coordination with your broader retirement strategy, including other IRAs, brokerage accounts, and income sources

That said, there are reasons you might choose to leave assets in a former employer’s 401(k), such as access to low-cost investment options, stronger creditor protections in some states, or the ability to delay RMDs if you’re still working past age 73 and meet certain conditions.

The right path depends on your goals, tax situation, and how each option fits into your overall retirement plan. A financial advisor can help you weigh the trade-offs and make the most informed choice for your individual situation.

Feature	401(k)	IRA
Investment options	Limited to plan menu (often mutual funds)	Broad range: stocks, bonds, ETFs, mutual funds, etc.
Fees	Varies by plan; may include administrative fees	Potentially lower, especially with low-cost providers
Access to funds	Generally age 59½+; subject to plan rules	More flexibility with distribution options
Required Minimum Distributions (RMDs)	Begin at age 73 (unless still working for that employer)	Begin at age 73
Creditor protection	Stronger under federal law	Varies by state; generally less robust
Loan availability	Sometimes available while employed	Not available
Withdrawal flexibility	May have limited distribution options or payout schedules	Full control over timing and amount
Tax withholding on distributions	20% mandatory on some plan distributions	None required; you choose how much to withhold
Ease of consolidation	Often requires managing multiple plans	Easier to combine retirement assets into one account

How a financial advisor can help

Rolling over a 401(k) is generally straightforward, but it is still a strategic decision, and it’s important to get it right. When IMA Private Wealth supports clients through this process, we generally think about:

• Unifying your strategy: We help ensure your retirement accounts, brokerage investments, and savings work together in one cohesive plan.
• Tax-efficient planning: We evaluate the best time and method to roll over funds to help minimize taxes and position you for long-term efficiency.
• Tailored investment guidance: We help you choose an appropriate asset mix based on your timeline, goals, and risk tolerance.
• Risk management: We guide you through shifting from accumulation to preservation and distribution.
• Ongoing support: As your needs evolve, so does our guidance. We’re here to monitor, adjust, and fine-tune your retirement plan every step of the way.

Before initiating a rollover, ask yourself (and your advisor):

• What fees do I pay now, and how do they compare to other options?
• How do my investment options differ between plans?
• What are the tax implications, now and later?
• How does this rollover support my overall retirement income strategy?

Rolling over for control

A 401(k) rollover isn’t just about tidying up old accounts— it presents a powerful opportunity to take command of your financial future. When done with intention, it can simplify your retirement income strategy, reduce friction, and position your savings to actively support your goals.

At IMA Private Wealth, we view rollovers as pivotal moments to realign your wealth with the life you envision. If you’re considering a rollover, we’re here to help you weigh your options and navigate the process with confidence.