Have Questions About Rollover 401(k)s? We Have Answers!

Retirement savings accounts are a fantastic way to build a nest egg for your golden years. Both Individual Retirement Accounts (IRA) and 401(k)s are tax-advantaged accounts, which allow you to keep more of the money you worked so hard to save. But what happens if you change jobs or have an opportunity to rollover your 401(k) funds? This guide sheds light on your options and other items to consider. 

Answering your rollover 401(k) FAQs

What is a rollover? 

The term “401(k) rollover” refers to taking the money out of a 401(k) and putting it into another tax-advantaged retirement account. While many people rollover their funds after leaving a job, you don’t have to be changing companies to complete a rollover. There are pros and cons if you rollover an employer-sponsored account while you’re still an employee, so be sure to consult a financial advisor to determine if it’s the right move for you.  

• Learn more about the steps to rollover funds in this quick start guide. 

What are my account options for a rollover? 

You can rollover existing 401(k) funds into a: 

• Traditional IRA 
• Roth IRA 
• New employer-sponsored retirement account, if available 

Can I rollover my 401(k) funds into a Health Savings Account (HSA)? 

Not directly! The IRS does not allow rollovers from a 401(k) into an HSA. However, you could roll the funds into an IRA, then transfer the funds from an IRA to an HSA. Note that all rollovers to an HSA must be reported on IRS Form 8889. 

If I’m at least 59 ½, can I rollover a portion of the funds from a previous 401(k) and use the remainder for home improvements? 

Yes! You can access 401(k) funds with no early withdrawal penalty if you’re at least 59 ½. What you do with the funds – whether that be roll them over or withdraw them – is up to you. If you want to pull from a pool of funds over time instead of all at once, a home equity line of credit (HELOC) may be a worthwhile alternative. You’ll have a credit limit that you can pull from multiple times over the course of renovations. Shop around for a great HELOC rate to stay on budget. 

Your situation is unique. If you have additional questions that weren’t answered above, one-on-one guidance from a financial advisor is the next step. General Electric Credit Union (GECU) members have access to a no-cost consultation with a financial advisor through Investment Services, available through CUSO Financial Services, L.P. (CFS).^* Live or work in the Tri-State? You can bank with us and take advantage of this exclusive membership perk.