When leaving an employer, an oft-overlooked decision during the process of a job change is what to do about the 401k. You can certainly leave it percolating as it is; but, rolling it over into an IRA is another option (and it’s not even that hard, especially if you already have a financial advisor to help you with the process). Here are four reasons you may want to roll over your 401k.
The plan isn’t in line with your financial goals
A 401k kind of is what it is; there isn’t a lot of control on your part. Maybe the fund is riskier, or not risky enough, for your retirement goals. If you roll over your 401k into an IRA account, you can have a little more control over the level of risk (and, in theory, your level of reward) in investing your money.
As mentioned above, a 401k has limited options. Rolling over to an IRA expands your options to different types of stocks, bonds and mutual funds. There are also some less traditional options, such as investing in precious metals or mortgages. It’s best to consult with a financial professional before deciding what to do with the money once you’ve rolled it over into an IRA, however, as the landscape of financial markets wax and wane, it’s nice to have more options.
In a lot of cases, the fees associated with 401k accounts are a lot higher than those on IRA accounts. The management fees on your 401k account have more to do with your former employer’s contract with the firm. Rolling over to an IRA could save you hundreds to thousands in annual management fees.
You want to cut ties with the company
Maybe you’re making a bitter departure. The more likely case, however, is that perhaps the company you’re leaving has seen better days. Many companies still require that a portion of all their 401ks into company stock. If the company you’re leaving isn’t doing so well, this could create an added risk to your retirement fund.
Whether you don’t want to deal with your old company in any way shape or form or find the 401k you have with them unnecessarily risky, rolling everything over into an IRA creates a clean slate since someone else entirely will be managing your new retirement fund.
If you’re switching employers, don’t forget to address your 401k. Even if you have a 401k from an employer you’ve left long ago, it’s never too late to think about rollovers to widen your options, save on fees and cut all ties with a former company. For more information on getting help with 401k rollovers in Frisco, TX, call Jason Graziani today at (972) 992-1920.
Jason Graziani | 972-992-1920 | Rollovers Frisco TX