CNBC: “Here’s the right way to avoid tax pitfalls and roll your 401(k) assets to an IRA”

CNBC, November 16, 2020 — In today’s issue of CNBC, reporter Sarah O’Brien writes: “It’s not uncommon to want to move money from a workplace savings plan to an individual retirement account when you leave the company. Yet if you’re not careful while doing that rollover, you can make costly errors or lock yourself into something that can’t be easily undone. The key is to avoid any tax pitfalls.”

For insight, she turned to Certified Financial Planner Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. “People think it’s straightforward: They retired, or they left their job, so they think they should do a rollover. But there are mistakes that can happen.”

KEY POINTS
  • The rollover process itself must be done properly or it could be considered a distribution, subject to taxation and possibly an early-withdrawal penalty.
  • Before you move your assets, make sure you know the rules that differ between 401(k) plans and IRAs.
  • If you have company stock in your 401(k) plan, you may want to handle the rollover differently.

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