What is a rollover?

A rollover is when money moves from a qualified retirement plan, such as an employer-sponsored 401(k) plan, to a Traditional IRA.

You may be eligible for a rollover if you've changed or are between jobs, or have retired. If you choose not to rollover your funds, you also have the option to cash out the account value.

Benefits of a rollover

  • Maintain tax-deferred status and avoid paying a 10% tax penalty. This can be done by moving money directly from a previous employer's plan to a State Farm® Traditional IRA.
  • Watch your savings continue to grow-tax deferred. This means that no amount in the IRA will be taxable until withdrawn from the IRA. Tax-deferred growth enables money to grow faster than it would in a taxable account.
  • Consolidate and manage retirement assets.

Disadvantages of rolling over an IRA

  • You may be eligible for favorable tax treatment withdrawals if your 401(k) is invested in company stock.
  • A 401(k) may provide greater protection from lawsuits and creditors.
  • You may be able to get a loan from an employer-sponsored 401(k) account, but not from an IRA.

Consolidating your accounts into a State Farm Traditional IRA can make it easier to track balances and monitor withdrawals.  With State Farm Investment Planning Services, you have access to a trained registered agent, a broad range of mutual funds and other investments, such as annuities.

Related links

Retirement planning

Risk Disclosures

A 10% tax penalty may apply for withdrawals from tax-qualified products before age 59½.

Prior to rolling over assets from an employer-sponsored retirement plan into an IRA, it's important that customers understand their options and do a full comparison on the differences in the guarantees and protections offered by each respective type of account as well as the differences in liquidity/loans, types of investments, fees, and any potential penalties.

Before investing, consider the funds' investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses which can be obtained by visiting joe-yan.net. Read it carefully. Securities distributed by State Farm VP Management Corp.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Neither State Farm® nor its agents provide tax or legal advice.

AP2024/05/0608