What does Dave Ramsey think about rolling over your 401k when you leave your old job? (#338)

Financial Advisors Say The Darndest Things

In this episode of Financial Advisors Say The Darndest Things, A.B. Ridgeway dives into the common dilemma of what to do with a 401k when you leave a job. With the help of a breakdown of advice from financial expert Dave Ramsey, A.B. Ridgeway explains the difference between direct and indirect rollovers, the importance of seeking professional advice, and how to avoid costly mistakes when transferring retirement funds.

Key Takeaways:

1. Understand Direct vs. Indirect Rollovers: A direct rollover transfers your 401k directly to a new retirement account without you handling the funds, avoiding taxes and penalties. An indirect rollover puts the money in your hands temporarily, with potential tax consequences if not managed properly.
2. The Importance of a Financial Advisor with a "Heart of a Teacher": It's crucial to have an advisor who can break down complex financial topics in simple terms, guiding you step by step through decisions like rolling over your 401k.
3. Beware of Tax Withholdings: If you receive a check directly from your 401k, 20% will automatically be withheld for taxes, which can lead to financial complications. Avoid this by opting for a direct transfer.

Quotes:

1. "You do not put money in things you do not understand. You've got to understand it."
2. "Find an advisor who is a teacher. I'm not trying to brag, but literally I have a podcast where I teach you about different things like 401ks, Roth IRAs, and distribution strategies."
3. "If you do a direct rollover, the whole $85,000 will go over there where you tell it to go—without any taxes withheld."

Don’t make retirement mistakes that could cost you thousands. Reach out to a qualified financial advisor or connect with A.B. Ridgeway for personalized advice on managing your retirement accounts.

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*Disclaimer: This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.

Video/Audio Credit: Dave Ramsey Solutions