September 13, 2023
If you've switched jobs, rolling your 401(k) over into an IRA can help you maintain control over the account and continue its growth.
- More Investment Options: IRAs often offer a broader range of investment options compared to 401(k) plans, which are limited to the investment choices selected by the employer. Rolling over into an IRA can provide access to a wider variety of stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other investments.
- Consolidation and Control: Combine retirement savings from previous employers, making it easier to manage investments and track performance. It can provide more control over the investment strategy and allow for personalized asset allocation based on individual risk tolerance and goals.
- Estate Planning: IRAs often offer more flexibility, including the ability to name beneficiaries and set up inheritance strategies that align with your wishes. This can be especially important if you want to pass on your retirement savings to your heirs efficiently.
- Access to Roth IRAs: You can roll over your traditional 401(k) into a Roth IRA, which allows tax-free withdrawals in retirement. While you'll have to pay taxes on the rollover amount, this could be a strategic move if you anticipate being in a higher tax bracket during retirement. Besides the tax-free withdrawals, Roth IRAs do not have required minimum distributions (RMDs) during the owner's lifetime, unlike traditional IRAs and 401(k)s, which require you to start taking distributions after a certain age. This can offer more flexibility in managing your retirement income and potentially leave more assets to grow tax-free.
It’s important that you work with a financial advisor to develop a comprehensive financial strategy that aligns with your unique situation and goals. Email me at firstname.lastname@example.org and I’ll be delighted to set up a time for us to get together and discuss how rolling over your 401(k) can benefit you. Talk to you soon!