How to Roll Over Your 401(k) into an IRA: A Step-by-Step Guide
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A 401(k) plan is an excellent tool for saving for retirement while employed. But what happens when you change jobs? One option is to roll your 401(k) into an Individual Retirement Account (IRA).
A Fixed Rate: While many IRAs offer a broader range of investment options from the stock market to mutual funds and more, an IRA with Lutheran Church Extension Fund (LCEF) provides you with a fixed rate over the life of the term.
LCEF IRA rates are based on LCEF’s current term note offers, which can range from six months to five years. At the end of the term, you can select a new term.
Potential Cost Savings: IRAs with LCEF can be more cost-effective than 401(k) plans and other IRAs. They have no administrative fees, which can add up to significant savings over time.
Consolidation: Managing multiple 401(k) accounts from past employers can be cumbersome. Rolling them into a single IRA with LCEF simplifies your finances, making it easier to track your investments.
Consolidation also helps ensure your investment approach remains aligned with your retirement goals and personal goals, such as supporting Lutheran Church—Missouri Synod ministries.
Tax Benefits: Choosing between a Traditional or Roth IRA can provide different tax advantages. A Traditional IRA may offer tax-deferred growth, potentially reducing your taxable income now. In contrast, a Roth IRA is after-tax dollars and can provide tax-free growth and withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later.
Understand the Tax Implications: The type of IRA you choose (Traditional or Roth) will have different tax considerations. Be sure to consult a tax professional to understand the tax implications for your specific situation.
Consider Fees and Costs: Be aware of any potential fees for the 401(k) plan and the IRA.
- Choose the Right IRA for You
Decide between a Traditional IRA and a Roth IRA based on your tax situation and retirement plans. Consult a tax professional to determine the best option for your situation. - Open Your IRA Account
At LCEF, you can start the application process online at https://lcef.org/retirement-account/ or contact our team at 800-843-5233 Monday through Friday, 7 a.m. to 5 p.m. (CST). - Initiate the Rollover
– Contact the financial institution where your 401(k) is held and request a “direct rollover.”
– This method ensures the funds are transferred directly to your IRA without being taxed as a distribution. A direct rollover is a reportable event to the Internal Revenue Service (IRS).
– If a direct rollover isn’t possible, the financial institution will likely send you a check for the amount in your 401(k). This check must be deposited in an IRA within 60 days to avoid taxes and penalties. - Monitor Your IRA
– Monitor your IRA with annual statements from LCEF.
– As the end of the term approaches completion, LCEF will contact you to discuss next steps.
Direct Rollover: The most straightforward method is a direct rollover from your 401(k) to your IRA. The funds move directly without you ever possessing them, avoiding a taxable event.
60-Day Rollover: If a direct rollover isn’t possible, ensure you deposit the funds into your IRA within 60 days to avoid taxes and penalties.
Set Up Automatic Contributions: To continue growing your retirement savings, consider setting up regular contributions to your new IRA. Contact LCEF at 800-843-5233 Monday through Friday, 7 a.m. to 5 p.m. (CST) to learn how to set up recurring deposits.
Understand RMDs: If you’re rolling over into a Traditional IRA, remember that Required Minimum Distributions (RMD) will apply starting at age 73.
With LCEF, you’re not just rolling funds; you’re paving the way for a future that supports both your retirement dreams and Lutheran Church—Missouri Synod (LCMS) ministries.
Take control of your retirement planning today with LCEF’s IRA options. Ready to start? Visit https://lcef.org/retirement-account/ or call our Customer Relations team at 800-843-5222 Monday through Friday 7 a.m. to 5 p.m. (CT) and let’s align your retirement with your faith.
This page is informational and educational in nature. It is not offering professional tax, legal, or accounting advice. For specific advice about your tax or financial situation or with your estate, please consult a qualified professional advisor.
LCEF is a nonprofit religious organization; therefore, LCEF investments are not FDIC-insured bank deposit accounts. This is not an offer to sell investments, nor a solicitation to buy. LCEF will offer and sell its securities only in states where authorized. The offer is made solely by LCEF’s Offering Circular. Investors should carefully read the Offering Circular, which more fully describes associated risks. Neither LCEF nor its representatives give legal, accounting or tax advice. Consult your tax advisor as to the applicability of this information to your own situation. UMB Bank n.a. serves as the custodian for the LCEF IRA program.
