In other segments Will Caywood, a financial advisor with the Fehrman Investment Group has discussed the options you have for your 401k when leaving a company. This weekend he discussed seven reasons why rolling retirement plan assets like a 401k or 403b to an IRA may be a good strategy for you:
1. PROFESSIONAL ADVICE
-You get to choose who you work with instead of whoever is appointed by the company you worked for.
-An advisor can help you customize your asset allocation strategy that aligns with your overall portfolio
-An independent financial advisor helps clients take the emotion out of investing
2. FLEXIBILITY AND CHOICE
-You can usually invest in the same investments outside of a retirement plan in an IRA as you can within one. The difference is in an IRA, you have the ability to change your allocations into an expanded list of investment options.
-Most plans offer 10-20 funds or options, in IRA's, there are thousands of investments to choose from including individual stocks, bonds, CD's, REIT's and other types of funds.
3. CONTROL FEES AND EXPENSES
-Some 401k plans charge higher maintenance fees on former employees than current employees.
-You don't control the fees or options you have in a 401k, the company you worked for does.
-Consolidating retirement assets can eliminate redundant maintenance and management fees, so more of your money stays invested.
-Many 401k plans place restrictions on when and how you may conduct distributions.
-This may limit your access to your assets, potentially when you need it the most.
-IRA's are more flexible and access to your assets is made simpler.
-There is no tax implication to you for directly rolling money over from a 401k or 403b plan to an IRA.
-Your earnings will continue to grow tax-deferred until you withdraw it
6. PROTECTING YOUR HEIRS
-You have more flexibility in who you name as a beneficiary
-401k's usually require your spouse to be the beneficiary if you're married.
-You can be creative with your beneficiary choices allowing the IRA to continue to be invested and helping to minimize the income taxes owed.
-It's easier to manage 1 account than several
-It's simpler to allocate assets, review statements, and receive tax information in one account rather than many.
If you have any questions on this topic or have ideas that you'd like for us to discuss on future commentaries, feel free to contact the Fehrman Investment Group here.
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