Boeing 401(k) Rollover Guide: Steps, Tips, and FAQs
As a Boeing employee, you have access to the company’s excellent 401(k) program, also known as the Voluntary Investment Plan. Depending on your needs, rolling over your 401(k) funds could help you save more for retirement. But when is it the right time to roll over your savings — and what options do you have?
Here’s what you need to know.
Key Takeaways
Boeing employees can roll over funds from their Boeing 401(k) to another retirement account.
Options for a rollover include a traditional IRA, a Roth IRA, or another employer’s 401(k) plan.
Rolling over your Boeing 401(k) could provide financial benefits and help you optimize your retirement strategy.
Understanding Your Boeing 401(k)
The Boeing 401(k) is a retirement savings plan designed to help Boeing employees save for their future. It offers a variety of investment options and benefits, including employer matching contributions, tax-deferred growth, and the flexibility to choose how your funds are invested.
Another benefit of your Boeing 401(k) is the ability to roll over your funds into a new account. This might mean an account within Boeing or outside the company entirely.
When to Roll Over Your 401(k)
Let’s take a deeper look at when rolling over might be beneficial.
Retirement
When you retire, rolling over your 401(k) to an individual retirement account (IRA) can offer several advantages:
Investment flexibility: IRAs often provide a broader range of investment options compared to employer-sponsored 401(k) plans.
Control over funds: You gain more control over how your retirement funds are managed and accessed.
Job Change
If you change jobs, rolling over your 401(k) can help you maintain control over your retirement savings and avoid leaving your funds with a former employer. This will simplify your finances by consolidating multiple retirement accounts into one. It also allows you to maintain a more consistent investment strategy and management approach.
Major Life Changes
Significant life events such as marriage, divorce, or the birth of a child can change your retirement strategy. For example, combining your assets with a new spouse could overhaul your finances. In that case, rolling over to a new retirement account might open the door to new benefits.
Economic and Market Conditions
Changing economic conditions or market performance may influence your decision to roll over. During periods of market volatility, moving to a more stable or diversified account can help protect your retirement savings.
Changes in interest rates can also affect the performance of certain investments within your 401(k), prompting a rollover to more favorable options. For example, IRAs typically offer more investment options than employer-sponsored plans.
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Boeing 401(k) Rollover Options: Direct vs. Indirect
There are two main types of 401(k) rollovers: direct and indirect.
Direct rollover: Your 401(k) funds are transferred directly from your current plan to your new account. This method is straightforward and avoids immediate tax implications.
Indirect rollover: You receive a check for your 401(k) funds and must deposit it into your new account within 60 days to avoid taxes and penalties. This option requires careful handling to ensure compliance with IRS rules.
In most cases, a direct rollover is the best choice. This process is straightforward and avoids any immediate tax implications.
Choosing the Right Account for Your Rollover
Choosing the right account for your 401(k) rollover is crucial for optimizing your retirement savings. Here are the main types of accounts you might consider.
Traditional IRA
A traditional individual retirement account (IRA) is a popular choice for rolling over a 401(k) due to its tax-deferred growth and potential tax benefits.
Advantages:
Tax-deferred growth: Investments grow tax-free until withdrawals are made, usually after age 59½.
Flexible contributions: You can contribute to a traditional IRA alongside your rollover.
Broad investment options: Access to a broad range of investment choices, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
Considerations:
Most IRAs have required minimum distributions (RMDs). This means you must start making certain withdrawals starting at age 73.
Withdrawals from an IRA are taxed as ordinary income.
Roth IRA
A Roth IRA is another popular retirement account option.
Advantages:
Tax-free withdrawals: Contributions are made with after-tax dollars, and qualified withdrawals are tax-free.
No RMDs: Roth IRAs do not require minimum distributions during the account holder’s lifetime, providing more flexibility.
Broad investment options: Similar to traditional IRAs, Roth IRAs offer diverse investment choices.
Considerations:
Tax impact of conversion: Rolling over from a pre-tax 401(k) to a Roth IRA involves paying taxes on the converted amount.
Income limits: To contribute to a Roth IRA, your income must be below the limits set by the IRS.
PRO TIP: The Boeing Mega Backdoor Roth program is a great way to invest your savings in a Roth IRA. Check out this guide to learn more: The Boeing Mega Backdoor Roth: Retire with More.
New Employer’s 401(k)
If you are moving to a new job, rolling over your 401(k) into your new employer’s 401(k) plan can be a practical option.
Advantages:
Simplicity: Consolidating retirement accounts simplifies management and tracking.
Loan options: Some 401(k) plans offer loan provisions not available with IRAs.
Continued tax-deferred growth: Your investments will continue to grow tax-deferred in your new employer’s 401(k) program.
Considerations:
Investment choices: The new 401(k) plan’s investment options might be more limited compared to IRAs.
Fees: Your new employer could have higher fees than your current plan.
Factors to Consider When Choosing a New Account
When deciding which account to roll your 401(k) into, consider the following factors:
Investment options: Evaluate the range of investment choices available in each account type.
Fees and expenses: Compare the fees associated with managing and maintaining each account.
Tax implications: Understand the tax consequences of each rollover option, especially if considering a Roth conversion.
Flexibility and accessibility: Assess the flexibility of withdrawals and the availability of loan options if needed.
Picking the ideal retirement account for you can be complicated. A financial advisor can give you personalized guidance based on your unique needs and goals.
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Steps to Roll Over Your 401(k)
1. Research and Choose Your New Account
First, decide whether to roll over into a traditional IRA, Roth IRA, or a new employer’s 401(k). Look for factors like investment options, fees, and other benefits. Better yet, get personalized advice from a qualified financial advisor to make the best choice for your financial goals.
2. Contact Your Current Plan Administrator
Inform your current 401(k) plan administrator about your decision to roll over your funds. Request the required rollover forms and any specific instructions they might have.
3. Complete the Rollover Paperwork
Carefully complete all the required forms with accurate information. Provide details of your new account where the funds will be transferred.
4. Transfer the Funds
For a Direct Rollover:
If you opt for a direct rollover (usually the best choice), the plan administrator will directly transfer the funds to your new account. Make sure they send you confirmation that the transfer has been initiated and completed.
For an Indirect Rollover:
If you’ve chosen an indirect rollover instead, you will receive a check for the total balance of your 401(k). Deposit the full amount into your new retirement account within 60 days to avoid taxes and penalties. (If federal taxes were withheld, ensure you deposit the gross amount to avoid penalties.)
5. Monitor the Transfer
Check with the receiving institution to confirm that the funds have arrived and been properly allocated. Check your account statements to ensure that the rollover is reflected there.
Common 401(k) Rollover Mistakes (and How to Avoid Them)
Rolling over your Boeing 401(k) can be a complex process with several potential pitfalls. Here’s a detailed look at some common mistakes to avoid.
Missing the 60-Day Deadline
For indirect rollovers, the IRS requires that you deposit the funds into your new retirement account within 60 days of receiving the distribution. Missing this deadline can result in taxes and penalties.
How to Avoid:
Plan ahead: Ensure you have a clear timeline and all necessary documents ready before initiating the rollover.
Prompt action: Deposit the funds as soon as possible to avoid any last-minute issues.
Direct rollover: Opt for a direct rollover whenever possible to eliminate the risk of missing the deadline.
Insufficient Funds Deposited
When performing an indirect rollover, the plan administrator may withhold 20% for taxes. You need to deposit the entire amount, including the withheld portion, to avoid penalties.
How to Avoid:
Cover the withholding: Make sure you have additional funds available to cover the 20% withholding when you deposit the check.
Consult a financial advisor: Get reliable financial advice on managing the tax implications and ensuring the full amount is deposited.
Incorrect Paperwork
Errors in the paperwork can delay the rollover process and potentially result in funds not being properly transferred.
How to Avoid:
Double-check details: Carefully review all forms for accuracy, including account numbers, names, and addresses.
Get help: If unsure, consult with a financial advisor or the plan administrator to ensure all paperwork is completed correctly.
Overlooking Fees and Costs
Different accounts have varying fee structures, which can impact your overall returns.
How to Avoid:
Compare fees: Before rolling over, compare the fees associated with your current 401(k) and the new account options.
Read the fine print: Understand all costs involved, including management fees, transaction fees, and any hidden charges.
Not Considering Tax Implications
Certain rollovers, such as converting to a Roth IRA, can have significant tax implications.
How to Avoid:
Understand tax consequences: Be aware of how your rollover will affect your tax situation. Converting to a Roth IRA, for example, requires you to pay taxes on the converted amount.
Tax planning: Work with a tax advisor to develop a strategy that minimizes your tax liability and maximizes your retirement savings.
Not Considering RMDs
If you are approaching the age for required minimum distributions (RMDs), it’s important to plan accordingly.
How to Avoid:
Understand RMD rules: Be aware of when RMDs start and how they apply to your accounts.
Plan ahead: Incorporate RMDs into your overall retirement planning strategy to avoid penalties and ensure a smooth distribution process.
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Boeing 401(k) Rollover FAQs
1. Can I roll over only a portion of my Boeing 401(k)?
Yes, partial rollovers are allowed. You can choose to roll over a specific portion of your funds while keeping the rest in your current 401(k).
2. Can I roll over my Boeing 401(k) into multiple accounts?
Yes, you can split your rollover into multiple IRAs or other retirement accounts as long as the total amount is properly accounted for and transferred.
3. What happens to my Boeing 401(k) loan if I roll over my account?
If you have an outstanding loan from your Boeing 401(k), it must be repaid before the rollover. Otherwise, the loan amount will be considered a distribution and subject to taxes and penalties.
4. How long does the rollover process typically take?
The rollover process can take anywhere from a few days to several weeks, depending on the institutions involved and how quickly they process the transfer.
5. Will I have to pay a fee to roll over my 401(k)?
Some plans may charge fees for processing a rollover. It’s important to check with your current plan administrator and the receiving institution to understand any potential costs.
6. Can I roll over my 401(k) if I’m still employed with Boeing?
Typically, you can only roll over your 401(k) after leaving the company. However, some plans may allow in-service rollovers under specific conditions, such as reaching a certain age.
7. Can I continue contributing to my Boeing 401(k) if I leave the company?
No, once you leave Boeing, you cannot make further contributions to your Boeing 401(k) plan. However, you can roll over the funds to a new account and continue contributions there.
8. Will a rollover affect my credit score?
No, rolling over your 401(k) is not a credit transaction and will not impact your credit score.
9. How does a rollover affect my 401(k) investment strategy?
A rollover may give you access to a wider range of investment options and tailor your investment strategy more closely to your retirement goals.
10. Can I reverse a rollover if I change my mind?
No, once a rollover is complete, it cannot be reversed. Carefully consider your decision and consult with a financial advisor before proceeding.
Still Have Questions? We Have the Answers!
Rolling over your Boeing 401(k) can be challenging. If you still have questions, we can give you the answers.
At TrueWealth Financial Partners, we offer personalized financial planning services tailored to Boeing employees. Our experienced advisors will help you:
Choose the right rollover option
Optimize your investment strategy
Minimize your taxes
From start to finish, we provide comprehensive guidance to ensure your retirement savings are managed effectively to align with your financial goals.
Ready to take control of your retirement planning? Contact TrueWealth Financial Partners today for a free consultation!