00:00 Speaker A
Ladies, one of the questions that we got from listeners was around rolling their 401K into a checking account.
00:09 Speaker A
Thoughts?
00:11 Jean
A checking account?
00:13 Speaker A
Well, that’s the question, Jean.
00:15 Jean
All right. So, I think
00:16 Speaker C
I think that’s very dangerous.
00:18 Jean
Well, I think it’s very dangerous and I think when you roll it into something other than a qualified account, if you don’t roll it into an IRA, you’re going to face a lot of taxes
00:29 Speaker A
And
00:30 Jean
potentially penalties depending on your age, right? So, the rollover decision is a really, really important one. It is not a bad idea to roll over in any real situation, but you want to make sure that you’re picking the place that you roll to carefully and that you don’t take the money out of the tax deferred account because then you lose all of this good work that you’ve probably been doing for decades.
00:43 Speaker C
And I I think about human behavior. I think it’s really important that folks are disciplined and their money is in environments that are not completely easy easy easy accessible, so that’s what makes me nervous about that.
01:00 Speaker A
So we don’t know the reason why they want to roll the money over. It could be emergency, in which case, maybe you take a loan out, or maybe you can take an emergency distribution from your 401K. But if it’s just to roll it over for the sake of getting access to your money, taxes and penalties.
01:14 Jean
Maybe not.
01:15 Jean
May Well, taxes and penalties, and you should be planning your withdrawals over that long period of your retirement so that you get the tax consequences right, so that you give the money more time to grow, right? It can it can grow tax deferred for decades longer. You just want to max that.
01:37 Speaker A
Yeah. So one thing that may save someone from making a bad decision is not all plans allow you to take distributions, right? So you have to check your summary plan write document, your SPD to find out even if you can even do this before like take an in-plan distribution.
01:54 Speaker C
You got to do your homework and really research and not assume that one size fits all, right? Every product is different, when you put it in, your age, it all matters.