Move your money to a new plan | American Funds

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Move your money to a new plan

Moving your retirement plan money with you when you change jobs may be an option to consider. Make sure to review your new employer’s policy on rollovers from other plans.

Benefits of rolling into a new plan

Rolling your money into a new employer’s plan gives your retirement assets the opportunity to continue growing tax-deferred. It’s also convenient to have your assets all in one place. Your new plan may provide additional benefits, such as:

  • Automatic investing. If your new plan allows employee deferrals, you can take advantage of payroll deductions to regularly contribute to your retirement account. You may be able to contribute up to $18,500 for 2018.
  • Extra contributions. If you’re age 50 or older and your plan allows employee deferrals, the plan may also allow you to make additional catch-up contributions beyond the annual limit — up to $6,000 for 2018.

Things to keep in mind

  • There may be rollover restrictions. Your new plan may not accept rollovers from certain types of plans, or it may not accept Roth or other after-tax money.
  • Consider a direct rollover. The money should go directly from your old plan’s trustee to your new plan’s trustee. Make sure the rollover funds don’t come to you, to avoid mandatory income tax withholding.

    If you have a Roth account, check with your new employer to see if your new plan accepts Roth rollovers. If the plan does not, you can roll this money into a Roth IRA.

    If you want to roll your retirement plan account with a former employer to your current employer’s American Funds plan, you will need to complete an Incoming Rollover Requestform. Learn more.

  • Indirect rollovers are subject to withholding. If you request a cash distribution, you can still initiate a rollover. However, 20% of the taxable portion of your distribution is withheld from your distribution for income taxes. You must then roll over the money into the new plan within 60 days of receiving your distribution if you want to keep the tax benefits. If you replace the withholding with your own money — you’ll get the withholding back from the IRS when you file your taxes — you can roll over your entire account value. If you don’t replace the amount withheld, it will be considered a distribution subject to taxes and possible penalties.

    Bottom line: Avoid the hassle, and work with your employer to initiate a direct rollover.

  • You may have to wait. Your new employer may require a waiting period before you can roll your money into the plan.
  • Your choices are limited. Your investment choices are limited to what is offered in your new plan.
  • You’ll have new rules. Participating in your new plan means you’re subject to new investment, exchange and withdrawal rules.
  • You can also save outside the plan. Participating in your employer’s plan isn’t the only way to save tax-deferred. If you want to put away additional money for retirement, an IRA is another great way to save.

Spend it or save it?

Measure the tax implications and penalties of staying tax-deferred and cashing out with the Spend it or save it calculator.

Take the next step

Find out how to start the rollover process to an American Funds IRA or how to initiate another transaction.

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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional or downloaded and should be read carefully before investing.


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Need Help?

Call an American
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