Considerations for staying in the employer plan
Remaining in a plan may retain access to its existing investment menu, services and administrative arrangements. An available brokerage window may also provide additional choices without moving assets out of the plan.
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Remaining may be less suitable if the plan's available investments, distribution methods or services do not address your needs. Confirm that the plan permits your account to remain and review its current materials rather than relying on a prior employer's general description.
- Compare the plan's investment and administrative costs.
- Review available investment options and any brokerage window.
- Ask about ongoing access, distribution flexibility and applicable protections.
Considerations for an eligible rollover
A receiving IRA or eligible employer plan may offer different investments, services or account-management arrangements. Consolidation may simplify administration for some people, but it can also change costs, investment access and applicable rules.
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A rollover may mean giving up plan-specific features or other benefits. Creditor protections and distribution rules can differ between arrangements. Review the receiving account's disclosures and discuss relevant legal and tax questions with qualified professionals.
- Compare total receiving-account costs and services with the current plan.
- Identify features or investments that would no longer be available.
- Check eligibility, tax treatment and how the transaction would be processed.
Review implementation before requesting money
Not every distribution is eligible for rollover treatment. A direct rollover and a payment made to you can have different withholding and procedural consequences. Confirm the applicable process before requesting a distribution.
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Changing the tax character of an account can have tax consequences even when a transfer is permitted. Use the IRS rollover guidance and obtain advice specific to your circumstances. Do not treat a rollover recommendation as a substitute for comparing staying in the plan.
Frequently asked questions
Is a rollover always the better choice?
No. The appropriate choice depends on the current plan, the proposed receiving account and your circumstances. Compare costs, services, investment access, distribution rules and relevant protections.
Can an SDBA be an alternative to a rollover?
Where a workplace plan offers a brokerage window, it may provide additional investment choices while assets remain in the plan. Availability, advisor access, costs and restrictions must be confirmed.
Are all plan distributions eligible for rollover?
No. The IRS identifies distributions that cannot receive rollover treatment. Review the official guidance and the plan's distribution notice before requesting a transaction.
Why does the method of moving the money matter?
A direct rollover and a payment made to you can have different withholding and procedural requirements. Confirm the correct process with the plan, the receiving institution and a qualified tax professional.
What should I request before deciding?
Request current plan disclosures, receiving-account disclosures, a description of proposed services and a written comparison of relevant costs and features. Consider what you would retain and what you would give up.
Sources and further reading
- IRS: Rollovers from Retirement Plans(opens in a new tab)
- Department of Labor: Understanding Retirement Plan Fees and Expenses(opens in a new tab)
- ERISA Advisory Council: Understanding Brokerage Windows in Self-Directed Retirement Plans(opens in a new tab)
Hosted by the Department of Labor. This Advisory Council report is background research; its contents do not represent the position of the Secretary or the Department of Labor.
- Department of Labor: Taking the Mystery Out of Retirement Planning(opens in a new tab)
- IRS: Designated Roth Accounts(opens in a new tab)