401(k) Benefits. 401(k)s offer workers a lot of benefits, including tax breaks, employer matches, high contribution limits, contribution potential at an older age, and shelter from creditors.

A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. Elective salary deferrals are excluded from the employee's taxable income (except for designated Roth deferrals).

If you are working for Paychex and wish to complete a rollover, you will need to fill out paperwork, and may need to communicate with your providers. You have several options for transferring funds from the old provider to the new one, but direct rollover is your best option.

The simplest way to start a 401(k) plan is through your employer. Many companies offer 401(k) plans and some will match part of an employee's contributions. In this case, your 401(k) paperwork and payments will be handled by the company during onboarding.

age 59½ The IRS allows penalty-free withdrawals from retirement accounts after age 59½ and requires withdrawals after age 72. (These are called required minimum distributions, or RMDs). There are some exceptions to these rules for 401(k) plans and other qualified plans.

Money in a 401(k) plan grows tax-deferred with compounding interest. For example, if you contribute $100 from each paycheck to your plan, you do not pay income taxes on that money or the interest it earns during the tax year. Instead, the interest is reinvested - essentially allowing your interest to earn interest.

This is called a direct 401(k) rollover, and it frees you from having to worry about tax consequences or early withdrawal penalties. Speak with your new plan provider about getting an account number, then provide the information to your current 401(k) administrator. They'll take care of the rest.

You can check your 401(k) balance online, through the account statements you receive, through your employer, or by calling your 401(k) service provider.

Compare Best Solo 401(k) Companies

Cash out your 401(k) The last option you have for an old 401(k) account is cashing it out, but that may come at a high cost. You can ask your former employer for a check, but as with the indirect rollover, your former employer may withhold 20% to pay Uncle Sam for your distribution.

This means you can close your existing account, roll funds over into a different retirement account, or withdraw the money. If your 401(k) is not rolled over correct and you are not eligible to make distributions from these funds, you will be subject to Federal taxes and the 10% penalty.

How much will my 401k pay me per month? The monthly money you receive from a 401k annuity depends on various factors. These include your account balance, annuity rates, age, and life expectancy. Typically, annuities offer a monthly payout between 5% and 6% of the initial account balance.