401K ROLLOVER

The 401)k) Plan Rollover process is made simple and hassle free because we handle all of the paperwork and correspondence for you.

In order to assist you in the rollover of your 401(k), please complete the form below and click SUBMIT.  We will contact you within 24 hours.

All information will be kept strictly confidential.
 

To learn more about our practice, click here.

Frequently Asked Questions (FAQs)

What are my options? (There are five, be sure to read all five)

What portion of my distribution is eligible to be rolled over?

I'm a participant receiving an eligible rollover distribution from my company retirement plan.  What choices do I have?

What is a "direct rollover" and why would I want to do one?

Once my distribution is rolled over into an IRA, will I be subject to the 20% withholding if I take it out?

Can I have my eligible rollover distribution paid out directly to me?

If I take my eligible rollover distribution in cash, and subsequently roll it over to an IRA or another qualified plan within 60 days, am I still subject to mandatory 20% federal income tax withholding?

Part or all of my distribution contains shares of company stock.  Should I elect to roll over my shares into an IRA?

Can I roll over my eligible rollover distribution from a qualified retirement plan into a Roth IRA?

I'm under age 59 1/2.  Will I have to pay additional taxes on my eligible rollover distribution?

I'm under age 59 1/2 and between jobs.  Can I start receiving income from my IRA without having to pay premature distribution penalties?

My eligible rollover distribution is a lump sum distribution from a qualified retirement plan.  Is it eligible for any special tax treatment if I take my distribution?

Do I lose the benefit of special tax averaging if I directly roll over my distribution to an IRA?

How can the MetLife companies help with my retirement planning?

What is the importance of weighing my options?

Next steps.

Rollover Opportunities!

On June 7, 2001, President Bush signed H.R. 1836, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Included in the many components of this law were expanded opportunities in the area of retirement planning. For instance, it is now easier to roll over balances between various types of retirement plans. For example, amounts from plans maintained by state or local governments can be rolled into an IRA. That makes it easier for you to consolidate your retirement assets and gives you more choices for, and greater control over, those assets!

These FAQs describe various changes made by the above law. These changes, which were originally scheduled to expire at the end of 2010, have been made permanent.

OPTION 1:  Leave Your Money in Your Employer’s Plan

Let’s take a look at the lump sum distribution options available to you.

YOU MAY WANT TO CONSIDER THIS OPTION IF YOU:

• Are satisfied with the plan’s investment options, past performance, and service
• Know that a future distribution may qualify for special tax treatment
• Need more time to review other options

OPTION 2:  Take Your Retirement Savings as a Lump Sum Distribution and Pay Taxes

Many people are surprised at the amount of money they have accumulated in their retirement plan, and the urge to spend the distribution is tempting. However, there is a cost for giving in to this urge: thousands of dollars in current taxes and perhaps not reaching your retirement goals.

• You may be in a better position to pay your taxes on these assets now instead of later, and this option will cause you to do so. All taxes are paid up front, and should you reinvest the money, you will owe taxes only on the earnings.
• Use your money for current needs.
• Invest your money any way you like.

• Mandatory 20 percent tax withholding.
• May be subject to a 10 percent premature distribution penalty.
• Immediate taxes generally due on the full amount of your distribution (even if you reinvest it), and future earnings may be taxed annually.
• Lose benefits of tax deferral, which may result in reduced growth or income potential because of paying taxes annually.

YOU MAY WANT TO CONSIDER THIS OPTION IF YOU:

• Need the money for current expenses
• Want to invest money for purposes other than retirement
• Want to pay the taxes now rather than later

Generally, paying current income taxes is not the best option. When you defer taxes, you continue to invest the monies that would have been used to pay taxes, and these monies generate additional earnings. Even if you are retiring, taking all of your retirement assets in one lump sum may not be the best option.

Let’s look at an example. Mark, age 50, leaves his employer and elects to receive a $100,000 eligible rollover distribution from his qualified plan. He does not elect to roll over any portion of the distribution to an eligible recipient plan (including an IRA). Due to the mandatory withholding, $20,000 is withheld for federal income tax purposes. In some states, state income tax withholding may also apply. The $100,000 is subject to current income tax and, since Mark is under age 59 1/2, the 10 percent federal premature distribution penalty may also apply.

You may be eligible for the ten-year special tax averaging option as explained here. Consult your tax advisor before considering this option.

OPTION 3:  Have Your Retirement Savings Check Made Payable to You and Roll it Over to an IRA or Other Retirement Plan Within 60 Days

Time can go quickly! If you do not roll over your distribution within 60 days, the entire amount will generally be considered taxable income.

• Maintain tax deferral
• 60 days to decide
• Partial rollovers are allowed
• Planning flexibility

• Mandatory 20 percent tax withholding
• Amount withheld may become a taxable distribution
• Possible 10 percent premature distribution penalty on amounts not rolled over
• 60-day deadline
• Forego any special ten-year tax averaging if rolled into an IRA

YOU MAY WANT TO CONSIDER THIS OPTION IF YOU:

• Plan to reinvest only a portion of your eligible rollover distribution
• Need more time to consider options
• Need short-term, temporary access to your retirement assets

After receiving your lump sum distribution, you must be careful how you complete the rollover. If you choose this option, be aware that the plan administrator is required to withhold 20 percent for federal income tax purposes. Therefore, if you do not replace the 20 percent withheld with out-of-pocket money, the 20 percent will be included in your income and subject to income tax. If you are under 59 ½ and if you do not replace this 20 percent, it may be subject to the 10 percent federal premature distribution penalty.

Let’s look again at Mark’s distribution, but this time the check is made payable to him and he then opens a rollover IRA within 60 days.

In the first example, Mark chose to take his $100,000 in one lump sum and lost $43,000 to taxes and penalties. In this example, again due to mandatory withholding, $20,000 is withheld for federal income tax purposes (the entire $100,000 is subject to current income tax). Then Mark rolls over the $80,000 within 60 days from receipt. If Mark does not come up with an additional $20,000 from his own funds to enable him to roll over the entire $100,000, the $20,000 that was withheld is taxable at his ordinary income tax rate. Assuming he is in a 33 percent combined federal/state tax bracket and subject to the 10 percent federal premature distribution penalty, he will pay $8,600 in current taxes and penalties.

OPTION 4:  Directly Roll Over Your Retirement Savings to an IRA or Other Qualified Deferred Retirement Plan

You can avoid current income taxes, the penalty tax, and the mandatory withholding by directly rolling over your money into an IRA or another employer’s qualified retirement plan. A direct rollover will keep your savings on its tax-deferred course, since no taxes are due until you withdraw your money.

It’s easy! All you have to do is instruct your company to directly transfer your retirement money to the financial institution where you established your IRA or to your new employer’s retirement plan.

• Maintain tax deferral
• Avoid mandatory 20 percent tax withholding
• No current taxes or penalties
• Partial direct rollovers allowed
• Wide range of investment choices if rolled into an IRA
• Opportunity to rebalance retirement portfolio
• After death spouse beneficiary option: spouse can continue IRA in his or her name
• Ability to continue contributions and add “catch-up” contributions if age 50 or older, depending on earned income

• Loans are not available from an IRA (an option in some employer-sponsored plans)
• Forego any special ten-year tax averaging if rolled into an IRA
• Potentially limited investment choices if deposited into an employer’s plan

YOU MAY WANT TO CONSIDER THIS OPTION IF YOU:

• Do not need the money immediately
• Want to avoid current taxes and penalties
• Want to consolidate your retirement assets

If you’re considering using lump sum distribution assets to fund a Roth IRA, keep in mind that you must first roll over your distribution to a traditional IRA and then convert that traditional IRA to a Roth IRA.

With a direct rollover, the full amount is rolled over and continues to grow tax deferred. Rolling your distribution into an IRA or other qualified retirement plan allows your money to continue to grow tax deferred. The benefits of tax-deferred growth can be powerful. Even if you are currently retired and make partial withdrawals, the money you keep tax deferred may grow at a faster rate than it would in a currently taxable account.

Keeping Your Retirement Plan Money On Its Tax-Deferred Course: The Benefit
Mark has opened an IRA with a financial institution that will accept the direct rollover. He then completes an authorization form that instructs the plan trustee to directly roll over his eligible distribution to his IRA. By electing a direct rollover into an IRA, Mark accomplishes the following:

• He avoids the mandatory 20 percent federal income tax withholding.
• He does not incur any current federal income taxes, and perhaps does not incur current state income taxes.
• His assets continue to grow tax deferred.
• He avoids the additional federal tax penalty of 10 percent for premature distributions.

OPTION 5:  Directly Roll Over Your Retirement Savings to an Immediate IRA Annuity (Fixed or Variable) and Begin Receiving Payments

If you have reached retirement age, immediate annuities offer a unique feature that other retirement plans may not – the opportunity to provide an income you cannot outlive. There are two types of immediate annuities. Fixed immediate annuities provide a fixed, guaranteed rate of return. Variable immediate annuities allow you to invest all or a portion of your retirement savings in variable funding options such as securities that can offer more growth potential, but expose your retirement assets to greater risk. You can choose either type of immediate annuity, depending on your retirement needs and the level of risk you are comfortable with.

As the name implies, you generally start to receive payments immediately (typically within 30 days after rolling your assets into the immediate annuity). However, you have the control to choose how frequently and how long you receive your money. There are a number of available payment options:

• You determine whether you want to receive your payments monthly, quarterly, semi-annually or annually.
• You also decide how long your income will last. You can choose income for your lifetime, your lifetime and that of another person, or income for a certain period of time, or for a particular amount. Combinations of these options may also be available.

In all cases, the minimum distribution requirements of the tax law must be met.

• Receive immediate income payments
• Control over length of income payments
• Control over frequency of income payments
• Avoid mandatory 20 percent tax withholding
• Continue tax deferral until income payments are received
• With a variable annuity, income payments can increase to help offset the effects of inflation

• Payout term is fixed at the beginning and cannot be changed over the life of the contract
• With a fixed annuity, income amount is vulnerable to inflation
• With a variable annuity, income payments can decrease if investment performance declines

YOU MAY WANT TO CONSIDER THE FIXED IMMEDIATE ANNUITY OPTION IF YOU:

• Want a steady, constant income stream not subject to market fluctuations
• Have other retirement assets invested in non-fixed rate vehicles
• Are comfortable with the fact that this part of your income is vulnerable to inflation

YOU MAY WANT TO CONSIDER THE VARIABLE IMMEDIATE ANNUITY OPTION IF YOU:

• Are comfortable with possible fluctuations in your payout amounts
• Want choices and control over your underlying investment mix
• Are willing to risk declines in income payments against a desire to have your investment grow and produce additional income
• Want a hedge against inflation

Are you under age 59 ½ but need some income right now? A section of the Internal Revenue Code known as “72(t)” allows you to receive an income stream from your IRA without having to pay the early distribution tax penalty. (Click here for more information.)

Q. What portion of my distribution is eligible to be rolled over?

A. An “eligible rollover distribution” is generally any distribution made to an employee of all or a portion of an employee’s balance in a qualified retirement plan. Exceptions include:

• Required minimum distributions
• Series of substantially equal periodic payments over your life or a period of ten years or more
• Hardship distribution

Your plan administrator should be able to tell you what portion of your payment is an eligible rollover distribution. After-tax contributions you made on your own can be rolled over to an IRA and may, under certain conditions, be rolled over to another employer’s qualified plan. These contributions will not be taxed when they are later paid to you.

Q. I’m a participant receiving an eligible rollover distribution from my company retirement plan. What choices do I have?

• Elect a direct rollover of all or any portion of the eligible rollover distribution to an IRA or, under appropriate conditions, another employer-qualified retirement plan and pay no current taxes on the amount rolled over.
• Take your money (less 20 percent for mandatory federal income tax withholding) and roll over all or any part to an eligible IRA (or another employer retirement plan that is eligible to accept this rollover contribution) within 60 days from the date you receive this distribution. If you want to roll over the entire distribution, you will have to come up with 20 percent of the amount from your other assets to make up for the mandatory federal income tax withholding.
• Take your money and pay the taxes (and penalties, if applicable).
• Leave your money in your current employer’s plan (if allowed).

Q. What is a “direct rollover” and why would I want to do one?

A. In a direct rollover, the eligible rollover distribution is paid directly from the plan you are leaving into an IRA or another employer retirement plan that is eligible to accept such rollovers. To the extent amounts are directly rolled over to an IRA or eligible retirement plan, you are now currently taxed on the amount rolled over until you withdraw your money from the IRA or the employer plan. If you elect a direct rollover, the distribution directly rolled over will not be subject to the mandatory 20 percent federal income tax withholding.

Q. Once my distribution is rolled over into an IRA, will I be subject to the 20 percent withholding if I take it out?

A. No. The 20 percent withholding does not apply to distributions from IRAs. Amounts withdrawn from an IRA, however, are subject to withholding unless you are eligible to, and do, elect otherwise. Also, the taxable amount will be subject to federal income tax unless transferred in an eligible rollover within 60 days, and may incur an additional 10 percent federal premature distribution penalty if you are under age 59 ½.

Q. Can I have my eligible rollover distribution paid out directly to me?

A. Yes. However, you could stand to lose a significant portion of your retirement investment and lose the benefits of tax deferral by receiving the money in cash now. You will generally have to pay ordinary income tax on the taxable amount distributed, and may incur a 10 percent premature distribution penalty tax if you have not reached age 59 ½. (An exception to this penalty applies where the distribution is made from an employer plan after separation from service after attaining age 55.) Special tax rules apply if you are eligible for ten-year averaging (click here to find out more).
Also, 20 percent of your taxable distribution will be withheld to pay federal income taxes. The distribution is taxed in the year you receive it unless, within 60 days from the date of receipt, you roll it into an IRA or another plan that will accept your rollover. (See next question.)

Q. If I take my eligible rollover distribution in cash, and subsequently roll it over to an IRA or another qualified plan within 60 days, am I still subject to mandatory 20 percent federal income tax withholding?

A. Yes, and unless you roll over 100 percent of the distribution (replacing the 20 percent that was withheld by your employer) to your IRA or qualified plan within the 60-day period, you will pay current taxes and possibly an additional 10 percent penalty tax on that 20 percent that was withheld and not rolled over.

Q. Part or all of my distribution contains shares of company stock. Should I elect to roll over my shares into an IRA?

A. Electing a direct rollover of a stock distribution from a qualified plan can be your best option. However, because company stock may be eligible for special tax treatment, you may benefit from not rolling the stock into an IRA. Your decision will depend on various factors including if your stock appreciated in value, your federal income tax bracket, and your estate planning needs. Consult your tax advisor before making your distribution election.

Q. Can I roll over my eligible rollover distribution from a qualified retirement plan into a Roth IRA?

A. No. However, if you have determined that a conversion to a Roth IRA is right for you, and you meet the eligibility requirements, you can roll over your distribution into a traditional IRA and subsequently convert that IRA into a Roth IRA. Keep in mind that you will have to pay income taxes on the converted amount (excluding any non-deductible contributions).

Q. I’m under age 59 ½. Will I have to pay additional taxes on my eligible rollover distribution?

A. In some cases, yes. If you receive a payment from your qualified retirement plan before you reach age 59 ½ and you do not roll it over to an eligible recipient plan or IRA, then in addition to paying ordinary income tax, you may have to pay a federal premature distribution penalty tax equal to 10 percent of the taxable portion of the payment. The additional 10 percent tax does not apply to various types of payments including those which are:

• Paid to you from your employer’s plan because you sever employment with your employer in the year in which you reach age 55
• Paid to you because you became totally and permanently disabled
• Paid to you as equal (or substantially equal) payments over your life or life expectancy (or your and your beneficiary’s lives or life expectancies)
• Used to pay certain medical expenses

Q. I’m under age 59 ½ and between jobs. Can I start receiving income from my IRA without having to pay premature distribution penalties?

A. Yes. Section 72(t) of the Internal Revenue Code could allow you to receive an income stream from your IRA assets without incurring the premature distribution penalty if the payments are:

• Part of a series of substantially equal payments made on a regular basis (at least annually) over your life or life expectancy
• Not modified for five years or until you reach age 59 ½, whichever is longer, and
• Calculated in accordance with the principles of one of three IRS-approved safe harbor methods.

Q. My eligible rollover distribution is a lump sum distribution from a qualified retirement plan. Is it eligible for any special tax treatment if I take my distribution?

A. Maybe. If you take your entire distribution you may be eligible for the following special tax treatment if the distribution qualifies as a lump sum distribution under the tax rules. (You must have been a participant in your employer’s plan for at least five years before the year of the distribution.)

Ten-Year Averaging: If you receive a lump sum distribution and you were born before January 1, 1936, you can make a one-time election to figure the tax payment by using ten-year averaging (which uses the 1986 income tax rates). Ten-year averaging often reduces the tax you owe.

In addition, you may elect to have the part of your payment that is attributable to your pre-1974 participation in the plan (if any) taxed as a long-term capital gain at a rate of 20 percent.

Q. Do I lose the benefit of special tax averaging if I directly roll over my distribution to an IRA?

A. Yes. However, keep in mind that by electing special tax averaging, you would have to pay taxes immediately and you would lose the advantages of future tax-deferred earnings.

Q. How can the MetLife companies help with my retirement planning?

A. With the MetLife companies, you get personal attention from qualified financial services representatives who can help you to assess and evaluate your financial needs and retirement planning. We offer you a wide range of financial products and investment options that provide you with:

• Professional service from a qualified professional, your financial services representative
• A full range of products and services that include mutual funds, mutual fund brokerage accounts and annuities to provide customized solutions to your retirement income needs based on your objectives, risk tolerance and investment style

• Investment management with over 50 fund families across a broad diversified range of asset classes
• Asset Allocation Services
• Customized investment portfolio design
• Minimum Distribution Services
• Flexible beneficiary arrangements that help you take advantage of estate planning concepts, such as “stretch IRA”
• Systematic withdrawal options

Q. What is the importance of weighing my options?

A. Most people underestimate the amount of money they will need for retirement. A suggested level of income to retire with, one that should yield a comfortable retirement, is about 70 to 80 percent of your final salary. Social Security and employer plans may not provide you with enough income. Statistics show that for most retirees, Social Security and employer plans only account for a little over half of their income in retirement (Social Security Administration, January 2005).

As you weigh your options, think of the future. It is possible you may spend as many years in retirement as you did working. As you evaluate the lump sum distribution options outlined above, you should consider the option that will not only provide the income you may need now, but also the one that will carry you most comfortably through retirement.

Next Steps

How you handle your distribution can have a major impact on the value of your retirement assets and the future well-being of you and your family. Here is a checklist of the steps you need to take regardless of which option you choose:

• Find out how much money you have in your current plan.
• Determine when you need to make a decision about your distribution.
• Ask your employer to explain the distribution options available to you under your current plan.
• Examine all your options carefully before you instruct your employer on how to make your distribution.
• Review how your treatment of this lump sum distribution fits in with your overall retirement plan.
• Consult a financial professional or tax advisor before taking any final action.

Remember, the choice you make today can impact your financial security in your retirement years.