Besides being a big life change, a new job means you must consider a 401(k) rollover. What you do with your retirement savings will significantly impact your assets and future potential worth, so you want to avoid common missteps that can hinder the rollover process. Here's how you can make the most of your money and avoid financial trouble.

What 401(k) Rollover Mistakes Should You Avoid? 

1. Missing the 60-Day Deadline 

After leaving a job and pulling out your old 401(k), you have 60 days to move your assets into a new retirement account. If you miss this window, the IRS assumes you've cashed out the funds. As a result, you'll receive a 10% early withdrawal penalty if you're under the age of 59½. Also, cashing out your savings instead of rolling them over typically requires an automatic withholding of 20% for taxes. To avoid these types of retribution, open a new IRA or 401(k) as soon as possible. 

2. Choosing the Wrong Rollover Account 

Before beginning a 401(k) rollover, you must consider where to move the savings. That's because not all accounts will be eligible to accept the funds. For example, a traditional IRA can be transferred to a Roth IRA, but not the other way around.

In addition, each retirement savings account carries fees associated with the rollover transaction and ongoing maintenance. These elements will likely influence your decision on where to transfer the money.

3. Rolling Over at the Wrong Time 

When you're 55, there are different rules for taking assets out of a 401(k). Leaving your job and keeping your retirement account with the same employer means you can still take distributions without the 10% early withdrawal fee. However, this is no longer an option if you roll it over to an IRA or another comparable plan. 

Waiting too long to move your assets also affects rollover eligibility and negatively impacts your tax bill. Once you are six months into your 70th year, some plans will require you to take minimum distributions. At that time, if you have not rolled your account over, you won't be able to.

If you need help with a 401(k) rollover, trust Scarecrow Advisors in Savage, MN, for expert financial solutions. Using their extensive knowledge, the team at this family-owned and -operated company will review your financial position, objectives, and potential risks to develop a customized plan to manage your assets. Call (952) 250-7463 to speak with a financial advisor today.