Select 401(k) Services

1. How do I roll over my plan?

• You will need to call your former employer's 401(k) sponsor and request the necessary forms.

• If you have both pre-tax and Roth contributions in 401(k), 403(b), or 457(b) governmental plans, you should open both a Traditional and Roth IRA. You need to keep the funds separate to preserve the associated tax benefits.

• You will need an account number and provide them instructions on whom to make the check payable to.

• At Select 401(k) Services, we help you take the confusion out of this process. We will assist you with each of these steps to help make it easy and simple.

2. When can I take money out of my retirement plan at work?

You may be able to take money out of your retirement plan at work while you still work for the company. But typically, you are only able to take money out when you reach normal retirement age, leave the company, become disabled, or if your employer terminates the plan.

Check with your company to find out when you can take money out of your plan.

3. I have money in a retirement plan where I used to work. What choices do I have?

There are typically four choices available to you:

• Roll your money over to an IRA where it can continue its tax-advantaged status and grow for retirement. An IRA will allow you to consolidate all of your IRA balances, making it easier to manage your investments.

• Transfer the money to your new employer’s retirement plan, where it can continue its tax-advantaged status and grow for retirement. Your new employer’s plan may not allow you to transfer money in, so you need to check the plan’s rules.

• Leave your money in your former employer’s retirement plan where it can continue its tax-advantaged status and grow for retirement. If you have less than $5,000 in the plan, this option may not be allowed.

• Take your money out of the retirement plan, pay IRS taxes and possible penalties, and keep the balance for yourself. You could lose 50% or more to taxes and penalties with this option.

4. What if I need to use some of the money?

You may be able to take a portion of your money out of your plan at work and leave the rest in, but not all plans allow this. If you are required to take all of your money out of the plan, you can roll it all over to an IRA, then take the portion that you need out of the IRA.

Depending on what you need the money for, you may qualify for a waiver of the penalty tax if you take the money from an IRA rather than directly from your plan at work. If you have access to other money, you may want to avoid taking money out of the plan. Even a small withdrawal can have a drastic effect on the growth of your retirement savings

5. What happens if I have a loan from my retirement plan at work?

Check with your company to find out if the plan will allow you to continue making payments after you leave the company, or whether you are required to repay the balance of your plan before you can roll over the remainder.

If you decide to take your money out of the plan and don’t repay the loan before doing so, the amount of the unpaid loan is added to your income for the year (which may be taxable) and may also be subject to IRS penalties, depending on your age.

6. Can I take the money out of my plan and then decide what to do?

You can, but it’s a good idea to consider the impacts of each option to make a decision before taking any money out of the plan.

• When you take money out of the plan in a check payable directly to you, 20% of the original balance will be withheld for federal income taxes before you get the check, so you won’t have the full amount to roll over.

• You can still deposit the money into an IRA or your new company plan, but you must do this within 60 days.

• If you don’t deposit the withheld amount to the new IRA or company plan, it will be added to your ordinary income (which may be taxable) and may also be subject to IRS penalties.

• The 20% that is withheld for taxes is considered normal income tax withholding — just like what happens with your paychecks. If you overpay taxes for the year, you may get some of it back in a refund when you file your tax return.

7. Can I invest in the same types of investments that I have in my company plan?

In many cases, your IRA may be invested in the same or similar types of investments you had in your company plan. Select 401(k) Services has available a variety of investment choices — including mutual funds, stocks, bonds, REIT’s, Private Placements, FDIC-insured CDs, and more.

8. Can I combine my rollover and annual contributions in one IRA?

Yes, you can combine rollovers and contributions in the same account. However, you are required to keep Traditional IRA and Roth IRA money in separate accounts.

9. Can I roll my plan at work over to a Roth IRA?

If your plan at work is a Roth 401(k) or Roth 403(b), then you can roll your Roth money directly into a Roth IRA. If your plan is not a Roth plan, you may roll it to a Traditional IRA, and then you may be eligible to convert it from a Traditional IRA to a Roth IRA.

• First, you’ll need to determine if you’re eligible to convert your Traditional IRA to a Roth IRA based on your current income.

• Second, you should determine if a conversion makes sense based on your tax situation. A conversion is taxable now, but may save you taxes later. Beginning in 2008, if you are eligible (based on income), you will be able to convert your retirement plan directly to a Roth IRA and avoid the step of opening a Traditional IRA. Even with this streamlined rollover/conversion process however, the conversion will be taxable in the year performed.

Have other questions?

Securities and Advisory Services Are Offered Through VSR Financial Services, Inc., a Registered Investment Adviser and Member FINRA and SIPC. Michael Sylkatis is independent of VSR. A Registered Representative may only transact business in states where they are registered, or exempt from registration. Currently we have Representatives registered in TX, CA, IL, IA, KS, LA, MA, MN, NE, and OK. If your resident state is not listed, please contact us at 972-346-3046. Under normal circumstances, securities licensing procedures for additional states may take 24-72 hours. We will not effect or attempt to effect securities transactions, or provide personalized investment advice to, or communicate directly with residents in a state in which a Representative is not registered.