401(k) Plan Distributions: Rollover or Retention of Plan Proceeds (Journal Article)

Participants in 401(k) plans who are nearing retirement must decide whether to allow retirement funds to remain within the structure of the 401(k) plan sponsored by the current employer or to roll the proceeds over into a self-directed IRA. This decision is often made absent any real impartial guidance on the factors influencing this decision, and despite the fact that these account balances often represent the largest single sums most workers will receive in their lifetimes.

This paper adds to the existing literature by exploring the various rollover options as well as factors supporting and against the rollover decision. In addition, we explore the proper mechanics of accomplishing the rollover transaction and consider the current state of the regulatory environment with respect to the “rollover or retain” decision.

Author: Keith R. Fevurly, MBA, JD, LLM (Taxation), CFP, is a semiretired senior lecturer in the department of finance at Metropolitan State University of Denver (MSU Denver), where he teaches in the undergraduate finance BS degree program. He is also the author of several consumer education books, Planning Your Financial Future, now in its second edition, and The Handbook of Professionally Managed Assets, both published by Apress Publishing, a Springer Nature company.

Author: Paul L. Camp, PhD, CFP, CMFC, is the chair of the finance department at Metropolitan State University of Denver (MSU Denver), where he currently teaches personal financial planning. His research explores the link between causal attributions to events and the willingness to engage in personal financial planning behavior. Following completion of his PhD in financial counseling and planning, Dr. Camp worked as the director of research for Virginia Tech’s National Institute on Personal Finance Employee Education.