Slow Down that Rollover!! The IRS is watching.

Quick: What is the best thing to do with your 401k or pension?  Most folks would say “roll it over into an IRA.” But is a rollover really the BEST option?  Not so quick.  You have homework to do.

Retirement Gifts   If you’ve participated in a pension, profit sharing or 401k plan, Uncle Sam has given you a great retirement gift – an account filled with tax-deferred dollars. But, when you unwrap that gift and start

spending; taxes deferred become taxes due. When, and how, you take those distributions has HUGE tax impacts, and the IRS is watching.  Regulations and scrutiny have been on the increase. IRS Publication 590, Individual Retirement Plans, is expanding into two publications in 2014. Earlier this year, tax courts clarified tax codes regarding rollovers – rules which the IRS hadn’t (until now) fully enforced. The initial clarification came at a big cost for a tax-payer who simply followed a common understanding of the 60-day rollover rules. Tax understandings and tax codes are very different things. 

Blood in the Water A  report from Cerulli Assoc. indicates that over $350 BILLION of rollovers occurred in 2013, with expectations for that number to keep rising. That’s a huge number, and the financial service industry knows it. Banter with a banker, and they have the perfect CD. Inquire with your insurance agent, and they have the ultimate annuity. Ask your broker, and beware the front-load mutual fund. It’s not a question of good products verses bad. It’s an issue of products verses advice. It’s the issue of understanding all the options.

Ask and Listen   I recently met a retiree who, fortunately, had queried his company about detailed options for his pension. What he learned went way beyond his expectations of lump-sum verse annuity.

And Ask Again  When considering a rollover to an IRA, make sure that the person on the other side of the desk has had recent IRA training, not just IRA SALES training. Ask them to show you their favorite dog-earred book on IRA distributions, and what they can tell you about recent IRA tax law. Don’t settle for a quick quip of an answer, or a response that “I can’t give tax advice.” You need guidance for this nestegg that took an entire working career to amass. Products you can buy online, face-to-face advice is what you need. Quick: What’s the best move for that pension or 401k? Exactly. There is no Quick, about it.


OSBORN Wealth Management is a fee only advisory firm dedicated to providing conservative asset management, experienced retirement planning and unbiased financial advice. Blog posts are intended for informational and educational purposes, only, and are not an offer to sell. As individual's circumstances are always unique, please consult a professional before embarking on any changes to your investment, planning, tax or legal situation. For questions on this Blog post, or general inquiries about our professional advisory services, please give us a call at 219-362-8567 or email me at

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