Customer Testimonials
401k Rollover
A common question asked by boomers getting ready to retire is "should I roll my 401k into an IRA Rollover account?" This question can be answered by looking at the 401k investment options, expenses, and estate plan.
While working, investing money into a company 401k plan can be an exceptional option to defer income and save taxes. We usually recommend that working clients save the maximum amount possible through a retirement plan prior to investing in alternate vehicles such as a brokerage account or other investments. This advice is recommended for income tax reduction and tax deferred growth on the retirement dollars. Why pay capital gains tax or ordinary income tax on money you won't need until the future?
When retiring investors should realize most 401k plans have limited investment options specific to mutual funds or variable annuities. This restricts the ability to strategically diversify and insure/hedge your hard saved dollars inside the 401k. A limited amount of investments may greatly reduce your chances of investment success inside the 401k.
You do not have to and in most cases should not retain your 401k after you retire. Specifically, you may elect to roll over your 401k directly into an IRA without any tax ramifications. This can give you unlimited investment options with a much lower expense than the previous 401k.
Further, your 401k may force a taxable distribution to a spousal beneficiary upon death of the 401k owner. This is not the case with IRAs. We have reviewed numerous cases where the 401k plan forced the spouse to either take a taxable lump sum or a 5 year taxable distribution. This can and should be avoided. The same may apply to non spousal beneficiaries.
By simply rolling your 401k into an IRA, you may reduce your investment expenses, increase your investment options, and better prepare an estate plan for those dollars. Hence you have many additional options to benefit you and your family; options most 401k accounts do not offer.
While working, investing money into a company 401k plan can be an exceptional option to defer income and save taxes. We usually recommend that working clients save the maximum amount possible through a retirement plan prior to investing in alternate vehicles such as a brokerage account or other investments. This advice is recommended for income tax reduction and tax deferred growth on the retirement dollars. Why pay capital gains tax or ordinary income tax on money you won't need until the future?
When retiring investors should realize most 401k plans have limited investment options specific to mutual funds or variable annuities. This restricts the ability to strategically diversify and insure/hedge your hard saved dollars inside the 401k. A limited amount of investments may greatly reduce your chances of investment success inside the 401k.
You do not have to and in most cases should not retain your 401k after you retire. Specifically, you may elect to roll over your 401k directly into an IRA without any tax ramifications. This can give you unlimited investment options with a much lower expense than the previous 401k.
Further, your 401k may force a taxable distribution to a spousal beneficiary upon death of the 401k owner. This is not the case with IRAs. We have reviewed numerous cases where the 401k plan forced the spouse to either take a taxable lump sum or a 5 year taxable distribution. This can and should be avoided. The same may apply to non spousal beneficiaries.
By simply rolling your 401k into an IRA, you may reduce your investment expenses, increase your investment options, and better prepare an estate plan for those dollars. Hence you have many additional options to benefit you and your family; options most 401k accounts do not offer.