1. 401(k) Rollovers
Allen R. Patin, Jr.
Financial Advisor
Wealth Management
June 2014
CRC805597
January 2014
Expires: March 2015© 2014 Morgan Stanley Smith Barney LLC. Member SIPC.

2. 2
Why Are We Here Today?
 Review the options available to you with respect to your 401(k) plan when
changing employers
 Discuss the pros and cons of the various options, including keeping assets
in your previous 401(k) plan or rolling over assets to a new plan or an IRA
 Review factors you will need to consider when initiating a 401(k) rollover

3. 3
Options When Changing Employers
 Cash out
 Leave assets in your previous employer's 401(k) plan
 Roll over to a new plan
 Roll over to an IRA

4. 4
Cash Out
 Taxes and penalties
 Loss of tax-deferral

5. 5
Cash Out – Taxes and Penalties
 20% withholding tax
 Ordinary income tax
 10% early withdrawal penalty

6. 6
Cash Out – Taxes and Penalties (cont’d)
Distribution $50,000
Federal income tax (28%) $14,000
State income tax (5%) $2,500
10% early withdrawal penalty $5,000
Net distribution $28,500

7. 7
Cash Out – Loss of Tax-Deferral
Assumptions
 $10,000 initial investment
 8% annual return
 Tax bracket of 28% during accumulation period and at time of distribution
2005 2010 2015 2020 2025 2030 2035
79,367 Tax-deferred
57,831 Taxable
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
($)

8. 8
Leave Assets in Your Previous 401(k) Plan
 No taxes or penalties
 Continued tax-deferral
 Little or no paperwork
 No need to reinvest
Benefits
Previous
401(k) Plan

9. 9
Leave Assets in Your Previous 401(k) Plan
 Plan limitations
 Limited investment options
 Fees may be higher
 Future plan changes
 Access to Funds
Considerations
Previous
401(k) Plan

10. 10
Roll Over to a New 401(k) Plan
 No taxes or penalties
 Continued tax-deferral
 Plan features
 Asset consolidation
 Loan availability
Benefits
Assets
Previous
401(k) Plan
New
401(k) Plan

11. 11
Roll Over to a New 401(k) Plan
 Waiting periods
 Limited investment options
 Plan features
 Need to reinvest
 Withdrawal limitations
 After-tax contributions
 Company stock
 Rollover process
Considerations
Assets
Previous
401(k) Plan
New
401(k) Plan

12. 12
Roll Over to an IRA
 Traditional IRA
 Roth IRA
 No penalties
 More investment options
 Greater flexibility
 Asset consolidation
Benefits
Assets
Previous
401(k) Plan
IRA
Account

13. 13
Roll Over to an IRA
 Need to reinvest
 Transaction costs
 Fees
 No loans
 Roth IRA
 Early withdrawals
 Company stock
 Rollover process
 Required Minimum Distributions
(RMDs)
Considerations
Assets
Previous
401(k) Plan
IRA
Account

14. 14
Indirect vs. Direct Rollover
New 401(k)
Plan
IRA Account
401(k) Plan
60 days
+ 20% withholding
Indirect Rollover
Less 20%
withholding

15. 15
Indirect vs. Direct Rollover
New 401(k) Plan
401(k) Plan
IRA Account
Direct Rollover

16. 16
Your Financial Advisor Team at Morgan Stanley
Our Financial Advisors can provide
 Access to intellectual strength and global resources of Morgan Stanley
 Financial solutions that address your specific needs and goals
Name
Allen R. Patin, Jr.
Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and
Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not
“fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities
described herein except as otherwise provided in a written agreement with Morgan Stanley. This material was not
intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account,
and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or
account.
 Financial Advisor
 615-269-0303
 Allen.R.Patin@morganstanley.com