Growing up is tough enough without the worries of your financial future, so Money101 is here for you. E-mail your questions to Money101@FOXBusiness.com, and let us take off some of the pressure.

Dear Money101:
I have a 401(k) that I need to move from a previous employer. My initial plan was to roll over the 401(k) to an IRA, thus giving me more investment options that what I currently have. I was alsopresented with the option of rolling my 401(k) to an Index Annuity with a Guaranteed Lifetime Income Rider. What are your thoughts on the best strategy for 401(k) rollovers? 
-Ron

Ron,

When changing employers, you have a couple options for your 401(k) including: cashing it out,keeping the money with your former employer (if allowed), or rolling it over into an IRA or annuity.

Cashing out your 401(k) should be your last resort, experts warned since you will be taxed on the withdrawal (what you invested plus any returns), and be hit with a 10% early withdrawal penalty if you’re younger than 59 ½ years old. You could lose 30-40% of your nest egg this way.

If your employer sends a check for the amount accrued in your 401(k) plan be sure to move that money into an IRA account quickly, experts advised.

“If you do get that check directly, you have 60 days upon receipt to get that deposited into an IRA,” said Jeff Rose, a certified financial planner and author of Good Financial Cents blog. “After 60 days, then you will pay the 20% income tax plus the 10% penalty if you’re under 59 1/2. You want to make sure you don’t procrastinate.”

A 401(k) rollover allows you to move funds into another retirement account without being subjected to penalties.

Depending on your situation, rolling your 401(k) into an IRA may give you more investment options. “The menu of investment products is infinitely larger inside of an IRA, compared to the usual corporate 401(k),” said Moshe Milevsky, author of Your Money Milestones.

Annuities

Annuities are another popular retirement strategy for investors looking to receive a steady income stream in retirement. With an annuity, you make an investment, which then sends you payments either monthly, quarterly annually or even a lump payment if you chose.

However, if you decide to exit an annuity you will be fined a percentage of the money you have already paid. 

There are different types of annuities including an “index annuity.” An Equity Index Annuity, or EIA, is a variable annuity that earns interest depending on the performance of an equity index such as Standard & Poor’s 500 Composite Stock Price Index.

While EIAs can earn a substantial amount of interest in a bull market, Wall Street can be volatile.

An Equity Indexed Annuity with a Guaranteed Lifetime Income Rider (GLIR) allows you to withdraw a guaranteed amount of money every year, without penalties or fees.

EIA vs. IRA

One benefit of rolling your 401(k) into an EIA is the tax deferral--you won’t pay taxes on any gains or interest until retirement. However, if you rolled the money into an IRA, you would have the tax deferral and more options to invest in other vehicles, said Rose. 

Moving your 401(k) funds into an annuity might be more expensive, but could give investors more peace of mind. “If you go in this direction, you will pay more and you won’t see it, versus doing a diversified mutual fund or ETF portfolio,” says Rose. “The one thing that this does for you is the guarantee that you can’t get anywhere else. For some people, they don’t care how much they have to pay--they want a guarantee.”

When looking into an EIA be sure to read the fine print. “The buyer must ensure they understand the liquidity provisions – [and]how easy or hard it is to get access to you money – before they invest in the EIA,” says Milevsky.

To check out more columns from Money101: CLICK HERE

E-mail your questions to Money101@FOXBusiness.com, and let us take off some of the pressure.