You may have accumulated a sizable amount of money in this plan over the years. The 401(k) plan’s investments may be performing well overall.

But does this mean that you should just leave your money in your 401(k) plan with your old employer? What else can you do with it? Here we will examine the different alternatives that you can choose from when it comes to managing your retirement plan at an old employer.

401(k) Plan Alternatives

There are four basic options for your 401(k) money that you can choose from when you leave your job, which are:

• Leave your 401(k) plan with your older employer
• Roll your 401(k) over to an IRA
• Roll it over to your new employer plan (if new job)
• Cash it out

Leave Your 401(k) Plan with Your Employer

This is probably the easiest of the four choices. It requires no time or effort, and if your plan has grown substantially over the years, then you might just leave it be. Of course, there are pros and cons to this, which your financial professional can go over with you.

If you choose this route, it’s good to make sure that you are taking the right amount of risk in your plan. The investment allocations that you made 15 years ago may not be right for you at this point.

Talk with your plan sponsor to see whether you need to make any changes. It’s also prudent to get a rundown from your plan sponsor on the costs and fees that the plan is charging you.

Roll Your 401(k) Plan Over into an IRA

This is often the path that financial advisors will recommend that you take. Rolling your plan into an IRA gives you more control of your money. You also can have a far bigger range of financial options from which to choose.

If you would like certain investments but your previous employer didn’t offer those in their plan, then you can roll your plan into an IRA and invest in them with fewer limits. IRAs also usually charge fewer administrative fees than employer-sponsored retirement plans do.

Should this option appeal to you, you can ask your financial professional about ways to turn your IRA assets into retirement income streams. One big criticism of 401(k) plans by various retirement and financial experts is that it puts the burden of retirement income planning on people individually, who may not be familiar with the options at their disposal.

Your financial professional will have more latitude in terms of helping you by moving the money over to an IRA. That being said, every decision has pros and cons. Be sure to ask your financial professional about what those might be for you.

Roll Your 401(k) into Your New Employer’s Retirement Plan

If the investments in your new employer’s retirement plan look appealing, then rolling your old plan over into the new one may be a good idea. Just make sure that the new plan offers competitive choices and charges reasonable fees.

You should know that your new employer won’t make any matching contributions to any amount you roll into their plan. Another step is to find out your new plan sponsor’s policy on plan loans and in-service withdrawals. Should you roll your plan into your new employer’s plan and it doesn’t allow these, then you won’t have access to your money until you leave your new employer.

Cash Your Plan Out

The vast majority of financial advisors will strongly recommend that you not do this unless you absolutely must. Cashing out your plan will deprive you of years of future investment growth and income, and you may run out of money during retirement as a result.

You may also pay more in taxes than you would if you were to stretch out your withdrawals over a long period of time. For example, if you have half a million dollars in your plan and you decide to cash it out, you will land in the highest tax bracket for that year. And that is even if you are over age 59.5 and won’t have to pay an early withdrawal penalty.

In contrast, if you took out money over time – say at a 3% annual withdrawal rate – then your tax burden would be lesser per year and the tax hits spread out across that timespan.

One-Stop Investing

If you have worked for several different employers, you can simplify matters by moving all your leftover plans into a single IRA. You can also make annual contributions into your IRA each year on top of your employer-sponsored retirement plan contributions.

However, you may not be able to deduct all your IRA contributions if you are now participating in your new employer’s plan. There is an income phase-out schedule that applies to IRA contributions if your adjusted gross income exceeds a certain amount.

An annuity may be a good idea if you are looking to generate guaranteed income with your money. Annuities can provide a stream of income that will last for as long as you live, even if you exhaust all the money in the contract. You can stretch your retirement dollars further along in this way.

The Roth Factor

If you ever made any Roth contributions into your retirement plan, then moving your money into a Roth IRA may be a good idea. Of course, you will pay taxes on all the pre-tax contributions that you made into your plan, so you may want to spread your rollover out over enough years to keep you in your current tax bracket.

But moving all your retirement money into a Roth IRA will allow you to avoid having to make required minimum distributions later. You also won’t have to worry about your Roth IRA withdrawals affecting the question of taxes on your Social Security payouts.

The Net Unrealized Appreciation (NUA) Rule

If you have invested any portion of your 401(k) money into shares of your employer’s stock, then there is a special rule that applies when you go to sell those shares. You can spin those shares off and sell them in a single bloc and receive long-term capital gain treatment on the sale.

There are some specific rules and conditions that must be met in order to do this. You can ask your plan sponsor what you need to do to be eligible for this tax break.

Final Thoughts

There are several possible disadvantages to leaving your retirement plan with your former employer. For example, your plan custodian may no longer have your best interests in mind since you are no longer working there.

You may also start to forget to monitor your plan since you are no longer receiving regular communications from your former employer. Keep this in mind when you are considering different options of what to do with an old 401(k) plan.

Conclusion

The right choice for what to do with your retirement money will ultimately depend upon a number of factors. Those include your current risk tolerance, financial goals, timeline for investing, financial situation, and monetary needs.

Consult your financial advisor for more information on what you should do with your retirement plan after you part company with your employer. If you are looking for a financial professional, for convenience many independent financial professionals are available here at SafeMoney.com.

Get started by using our “Find a Financial Professional” section and connect with someone directly. You can request an initial appointment to discuss your situation and explore a potential working relationship. Should you need a personal referral, call us at 877.476.9723.

The post What Happens to My 401(k) When I Leave My Job? first appeared on SafeMoney.com.

Having reached this point, you may now want to explore options outside of your plan. If you are past your late 50s, you might have an opportunity with an in-service withdrawal. Many people with 401(k) accounts assume that their funds are locked tight until they retire.

What they don’t know is that they might be able to access their funds while still working at their employer. This mechanism is formally called an in-service withdrawal.

But what exactly is an 401(k) in-service withdrawal, under what conditions can you take one, and what consequences are there for doing so?

What is an In-Service Withdrawal?

In the language of 401(k) plans, there are certain life events that are categorized as “triggering” events. During an approved triggering event, you are permitted to roll funds out of your 401(k) without facing a 10% early withdrawal tax penalty. Generally, however, you will have to pay taxes on the withdrawn amount.

On the other hand, an in-service withdrawal is an option that arises when you reach age 59.5. This process doesn’t need an approved triggering event, such as a leave from your workplace or retirement.

You still work for your employer, and once you turn 59.5, you can take a withdrawal from your 401(k) plan. From there, you would have a period of 60 days to move your funds into an IRA. If the 60-day deadline isn’t met, there would be consequences.

As a plan participant, you might be subject to any taxes that accompany a withdrawal.

Not the Same as Hardship Provisions

It’s good to acknowledge that this kind of in-service withdrawal is “non-hardship.” In other words, the withdrawal won’t be used for any “immediate and heavy” financial need as defined by the IRS.  

That said, some 401(k) plans do come with hardship provisions, including for unreimbursed medical expenses, education costs, or purchase of a principal residence. In the event of a hardship, a 401(k) plan may permit penalty-free withdrawals so long as certain conditions are met.

However, not all 401(k) plans carry hardship provisions. Be sure to review your plan documents for the details of your options.

In-Service Withdrawal Not Available with All Plans

To be clear, not all employers offer an in-service withdrawal feature within their 401(k) plans. Each plan is different and has its own rules.

You can tell if your 401(k) plan does by reviewing your plan documents. What’s more, your plan documents will spell out any potential limits or conditions that may apply to an in-service withdrawal.

The good news is many 401(k) plans do come with this feature. A 2016 survey by the Profit Sharing Council of America found that more than 70% of 401(k) plans allow in-service withdrawals.

What are the Approved Triggering Events?

As we talk about the ins-and-outs of an in-service withdrawal, you may wonder about what the approved “triggering” events are. Some of these include:

• Having your job terminated
• Becoming disabled
• Retiring
• Passing away

Beyond triggering or hardship events there are reasons employees take in-service withdrawals. Yet many employees have no idea this type of withdrawal can even be an option for them.

Reasons for Non-Hardship In-Service Withdrawals

Many retirement savers opt for an in-service withdrawal for a number of reasons. Some may want to preserve their wealth. Some plan participants might worry about holding onto or protecting what they accumulated. Others may want to ensure their retirement income will last as long as possible.

And as for others? They may simply want more options and flexibility. An in-service withdrawal may give them a greater range of potential strategies and financial choices than they currently have in their 401(k) plan.

For example, those who wish to maximize or protect their retirement income may want to purchase an annuity. Currently, annuities lie outside of most 401(k) plans.

A 401(k) has an average of 27 options in its investment line-up, according to the Brightscope and Investment Company Institute.

Other Potential Reasons for an In-Service Withdrawal

Market volatility, like that we have experienced of late, can motivate some plan participants to want to “take the reins” on their funds. They may want to look beyond their plan’s offerings.

Plan fees may be another concern for 401(k) participants who are concerned about their returns. However, the majority of employees could be in the dark when it comes to knowing about plan fees.

“Sixty percent of people don’t know they’re paying any fees at all in their 401(k) plan,” says Laurie Rowley, president of the nonprofit National Association of Retirement Plan Participants.

According to an analysis of 401(k) plans by Brightscope, large plans have an average fee below 1%. Smaller plans have fees averaging between 1.5% and 2% of the account balance. But other plans can be up to 3.5% or more per year.

And there are different types of 401(k) plan fees being charged: administrative fees, investment fees and service charges, assessed, for example, when you take a loan from your plan.

By design 401(k) plans have a structure that allows for minimal individuality. You may get to choose a category of funds. However, options for more advanced planning options, such as a stretch IRA, typically aren’t available within an employer-sponsored retirement plan.

The Drawback to In-Service Withdrawals

Of course nothing comes without disadvantages. An in-service withdrawal is no exception. So, what are some downsides to potentially opting for a 401(k) non-hardship, in-service withdrawal?

Technically, IRAs don’t let you take out loans. On the other hand, you can take out a loan from your 401(k). Taking a 401(k) loan isn’t a decision that should be made in haste, though. With that said, you can use your IRA funds for certain purposes.

The IRS does permit penalty-free distributions from your IRA for qualifying education costs and first-time home purchases, for example. These situations follow strict rules. Not only that, all potential advantages and downsides should be thoroughly evaluated with professional financial and tax guidance before any decision.

Other Potential Downsides

Even though a large number of 401(k) plans may offer an in-service withdrawal feature, not all do. Be sure to check your plan documents if this is possible for you. If you don’t have plan documents, ask your HR department for them.

As mentioned previously, withdrawals may be subject to taxation if they don’t meet the 60-day rollover deadline. The amount paid in taxes would reduce the balance that is withdrawn. In other words, you wouldn’t have the whole amount withdrawn to work with.

Another possibility? When you withdraw funds, you might pay an “opportunity cost.” That could be a missed opportunity of having that balance potentially growing with any investment growth in the 401(k) portfolio.

In light of recent U.S. Supreme Court rulings, 401(k)s are thought to have high-level protection against creditors seeking repayment of debts you may owe. IRAs and pension plans are also protected, but there are many qualifying rules making this protection less ironclad.

If your creditor is the government or any government organization, there is no protection at any level from the long arm of Uncle Sam.

Need Help Exploring Your Options?

For 401(k) plan participants who want to be able to withdraw their money from their company-sponsored plan—while they are still working there—in-service withdrawals offer a potential solution to filling that need. Of course, an in-service withdrawal is only a means to an end. And it should be carefully considered before you commit to one. Think about seeking professional financial and tax guidance as you consider your options.

As you get closer to retirement, it’s important to start planning your retirement income strategy. Or you may need a refined or updated income plan that helps you achieve your specific retirement goals. If you would like assistance with exploring options (potentially outside of your 401(k) plan), assessing your current strategy, and taking steps to meet your goals, a financial professional can help you.

Use our “Find a Financial Professional” section to connect with someone directly. You can request a no-obligation appointment or phone meeting to discuss your goals. Should you need a personal referral, call us at 877.476.9723.

The post Is a 401(k) In-Service Withdrawal Right for Your Situation? first appeared on SafeMoney.com.

For one, the IRS permits pre-tax employee contributions of up to $22,500 (2023 contribution limit). Plan participants aged 50 and up are able to make pre-tax, “catch-up” contributions of an additional $7,500. Many 401(k)s also come with an employer match, providing a powerful savings incentive for U.S. workers.

Yet while the 401(k) is a valuable retirement savings vehicle, it has its downsides. One negative is the presence of high cumulative fees within some 401(k) plans and their in-plan investment menu. Over time, costly high fees can dwindle away earnings, which also siphons off money that would grow with compounding.

So there is also the opportunity cost of the money investors could have earned if those funds remained within their 401(k). It could be a difference of thousands, if not tens of thousands of lost dollars in potential retirement income.

9 Out of 10 Americans Fail to Pay Attention to Fees

Unfortunately, many people struggle in their knowledge of their 401(k) plans and investmentsy. This trend also applies to the public awareness of fees in 401(k)s. Many people underestimate what they pay, or don’t even know much about it.

This may be an issue for many people participating in 401(k) plans, unfortunately. In one study by NerdWallet, over 90% of Americans were found to have no idea of what their 401(k) fees were.

In another survey by Cerulli Associates, 45% of U.S. households reported a belief that they receive financial advice at no cost, or an uncertainty of whether they even pay for it.

What Effects can High Fees Have?

The average 401(k) plan’s fees tend to add up to roughly 1% of assets under management. All 401(k) plans have management and administrative fees, which are there to cover the costs of plan maintenance. Where other fees can add up are in the expenses tied to the investment funds you chose in your plan. For one, depending on whether a fund is passively managed or actively managed, the expense ratio of a fund can vary greatly. In turn, that determines how much investment operating expenses can impact someone’s 401(k) balance over time.

Take, for instance, some research on the historical impact of lifetime plan fees from the Center for American Progress. Say a worker has the option of investing in a mutual fund with a total expense ratio of 25 basis points – or 0.25% — and another mutual fund with a total expense ratio of 100 basis points – or 1%. Let’s see what the difference of .75% in annual fees can do over time.

Going back to the Center for American Progress’s illustration, assume our worker is 25 years old. Other important variables:

• She will save 5% of her annual salary in her 401(k) plan
• She has a 10% employer match
• Her yearly income is $30,502, the median income for workers within this age group
• She plans to stick with her savings goals for her working lifetime

With just the 0.25% fee of the low-cost mutual fund, her total lifetime fees would amount to $42,309. And as for the amount paid in lifetime fees for the higher-cost mutual fund? $166,420 – an over $120,000 difference!

Graph created by associates at SafeMoney.com. Source: “Fixing the Drain on American Retirement Savings,” Center for American Progress, Jennifer Erickson and David Madland.

According to Deloitte and the Investment Company Institute, investment operating expenses and fees typically represent 82% of all-in plan fees. Recordkeeping, administrative, and financial advice fees generally make up 18% of all-in plan fees, Deloitte and ICI also report. Some plans do account for recordkeeping and participant service expenses in the investment fees, though.

The Deloitte/Investment Company Institute study also found on average, plan participants pay 87% of total plan fees. With these figures, it’s not hard to see how costly high plan fees can erode retirement wealth. It could mean more years of working to make up for the financial shortfall, or even having to scale back retirement expectations.

Working Towards an End of Financial Illiteracy

401(k) owners can learn more about these fees in the plan literature, particularly the summary plan description and annual report. Much of the impact of high fees can be traced back to 401(k) plan participants’ lack of knowledge and neglect in paying attention to them.

Apart from careful review of plan literature, Americans would do well to boost their financial awareness in general.

Jim Chilton, of the Society for Financial Awareness, says the general effects of financial illiteracy are costly. When emotionalism drives our financial behavior, it ultimately leads to setbacks.

“Our behavior is our individual foundation of our financial identity. We want to look, act, and come across prosperous to all who know us – to do that, we are in a constant “hamster wheel mentality” of attempting to keep up with the folks we’re around: family, friends, neighbors, coworkers, church members, and so on,” he writes in the San Diego Union-Tribune. “This perpetual chase is quite damaging. Thus:

• Divorces are ascending to 60 percent.
• School loans have now surpassed auto loans and credit card debt combined.
• College graduates are coming out of school to a plethora of low paying or part-time employment.
• Prescription medications for anxiety and depression are at an all-time high”

Ultimately, financial demises can be reversed or avoided with a change in behavior, leading to self-discipline. It begins with saying “no,” as Chilton asserts.

Get Financial Help Now

Do you have a 401(k) plan? Will it be part of the bedrock which you depend on for retirement income? Do you have questions or concerns about how you can create an income plan that helps ensure your money lasts as long as you do? If you could benefit from personal guidance, a financial professional from SafeMoney.com can assist you.

Should you be ready to see if you are on track with your retirement financial and income goals, a SafeMoney.com financial professional can help you.

Use our Find a Financial Professional section to connect directly with an independent financial professional and request a personal strategy session to discuss your needs and goals. Should you want a personal referral, please call us at 877.476.9723.

The post How can High 401(k) Fees Affect Your Retirement Success? first appeared on SafeMoney.com.

As retirement nears for many Americans, it brings up an important question: How will their 401(k) plan prepare them to enjoy a comfortable, meaningful post-work lifestyle?

Even with these benefits, some Americans are dissatisfied with their 401(k) because they perceive shortfalls in other areas. Personal perceptions of there being limited investment options, “low” access to personal financial guidance with some plans, and a lack of money control are just a few investor frustrations.

There is also the issue of subpar financial knowledge. Surveys indicate many people don’t understand 401(k)s, even though these plans dominate the workplace savings landscape.

According to the Investment Company Institute, as of December 31, 2016 Americans held $7 trillion in all employer-based defined-contribution plans. Of this, $4 trillion was in 401(k) plans – or 57.1% of total defined-contribution plan assets.

Lack of Financial Literacy Takes Its Toll

In some ways, investor frustrations with 401(k)s may be traceable to a lack of knowledge. Take, for instance, the findings of the “Wellness in the Workplace” survey from KRC Research. In the study, 88% of Americans understood topics like employer matching.

But in other areas they showed an incredible knowledge gap about their 401(k) plans:

• About 71% of workers failed a basic quiz on 401(k)s and retirement planning, with workers missing at least three out of nine questions
• 76% of workers could not define what a mutual fund is
• 57% of respondents didn’t know what percentage of their salary they had to put away so they could meet their retirement goals
• 66% of Americans could not name the provider managing their retirement plan
• Amazingly, nearly 4 out of 5 workers in small-business settings failed to pass the 401(k)/retirement planning quiz

In turn, the survey suggests this knowledge gap translates into a lack of financial confidence:

• 50% of Americans report they don’t receive any one-on-one help from their 401(k) provider, but an overwhelming majority wishes they did
• 69% are not comfortable with making 401(k) investment choices
• Over 40% worry they will be unable to achieve their retirement goals
• About 25% of those surveyed failed to remember the process they used to select their 401(k) investments

Interestingly, just 16% of workers regularly monitor their 401(k) accounts, and only 12% devote time to retirement planning.

Why are 401(k)s so Dominant?

As mentioned earlier, 401(k) assets accounted for 57.1% of total defined-contribution plan assets at year-end of 2016. So why are 401(k) accounts the most dominant savings vehicle, in spite of the lack of retirement saver awareness of them? One primary reason is the employer-matching incentive tied to many 401(k) plans.

In a 2016 Plan Sponsors Council of America survey, 95.6% of employer-sponsored defined-contribution plans made employer contributions. The survey covered 592 plans, of which 263 were 401(k) only, and 324 had a combined 401(k) and profit sharing structure.

Confidence Begins with Education and Knowing Your Options

It’s clear that Americans are undereducated about their personal finances, including 401(k)s. Alleviating this knowledge gap begins with proper learning and taking time to understand your retirement planning options.

If you are ready to learn more, consider working with a financial professional who understands the unique challenges of retirement — specifically, the money matters of those who are retired or not quite there yet.

You Can Unlock Your 401(k) without Penalty before Age 59.5

Say you are one of the many investors who are dissatisfied with their 401(k). If you are considering a 401(k) rollover, always consider all of your options carefully. In many cases, a rollover decision is irreversible, so it’s important to make sure you take the right course of action – especially with guidance from qualified tax and legal professionals.

With that said, if you are interested in 401(k) rollover options, you may believe you can’t fully access your 401(k) money, penalty-free, until age 59.5. Actually, you can – there are ways to unlock your current 401(k) at any age, with any amount, without any penalty. If it is appropriate for your situation – and we stress that it should be appropriate for your needs, goals, and other conditions – this may be an advanced strategy to consider for your retirement future.

Request a Free Financial Review

At SafeMoney.com, we can connect you with qualified financial professionals who have advanced training in this strategy.Or consider working with a financial professional who can help you prepare for retirement with more financial confidence. They can help you put together your own personal retirement income strategy. Or if you have an existing strategy, a second opinion can help you determine if you can take anymore steps toward your goals.

Use our Find a Financial Professional section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. Should you have any questions or concerns, call 877.476.9723.

The post Will Your 401(k) Help You Meet Your Retirement Goals? first appeared on SafeMoney.com.

The good news is Americans typically have six options for moving 401(k) assets around or leaving them alone. But not all of these possibilities may be appropriate, depending on the merits and downsides of a particular rollover option for your personal situation.

It’s also not unusual for an investor to have the lion’s share, or even a large bulk, of their retirement assets in a 401(k) plan account. So, whatever they do with these retirement assets, it’s a decision that will have tremendous implications for the future.

If you are mulling over 401(k) rollover options, be sure whoever you work with understands all the ins-and-outs of different rollover outcomes. Your financial professional should clearly explain the positives, negatives, and details of each rollover option to you. They should go over how it may help or hurt your personal situation.

Weighing 401(k) Rollover Options Carefully

After all, this is your future at stake – one mistake can be costly, and once made, some 401(k) rollover errors are irreversible. Make sure you choose wisely and you are well-informed of each possibility before you decide.

In the meantime, if the question of “what are my 401(k) rollover options?” is a pressing matter for you, here’s a quick post which goes over some important factors to consider.

Read on for some 401(k) rollover basics to start with making an informed decision. And as we emphasized before, make sure to work with a qualified professional for any 401(k) rollover considerations.

What are Some Reasons for 401(k) Rollover?

Before discussing the various 401(k) rollover options, let’s go over some of the reasons why people explore 401(k) rollover options. It’s never prudent to pull up stakes in haste. What are some reasons that folks may think about this route?

According to different surveys, some of the reasons that working and retired Americans opt for 401(k) rollovers include:

• Concerns about market volatility risk
• Fees within a 401(k) plan
• A perceived lack of personal financial guidance
• Perception of too few or too many options in a 401(k) investment menu
• Limited money access options
• Potentially more options outside of current plan

On the other hand, sometimes people choose to leave money within their 401(k) accounts. These motivators may be for: continuing to receive “free money” from an employer match, being able to make lifetime contributions, or having shelter from creditors.

It’s also important to recognize that, even though it’s no longer in effect, the DOL fiduciary rule had an impact on the 401(k) rollover landscape. Now rollovers are subject to higher scrutiny.Ed Slott, nationally recognized as an IRA expert, has on his website some helpful insights on pre-DOL rollover advice conditions and, now, how things have changed.

What are 401(k) Rollover Options for Working Americans?

Now, let’s get more into what makes up your 401(k) rollover options. Generally speaking, there are six rollover possibilities at your disposal:

• Rolling over 401(k) funds into an IRA – the most commonly used option
• Keeping the funds in your existing company plan
• Moving your 401(k) money to a new or alternative company plan (usually when you embark in a new job)
• Opting for an in-plan Roth conversion
• Converting 401(k)-held retirement savings to a Roth IRA
• Taking a lump-sum distribution from your 401(k) account

Before your financial professional makes a recommendation for any 401(k) rollover, they should walk through your options, going over each one and all that is involved with each possibility. They shoud carefully go over the advantages and drawbacks of all individual rollover options, and explain how each one can impact your retirement situation and future.

401(k) Rollovers: Merits and Drawbacks

Your financial professional will need to clearly communicate the merits and drawbacks of each option. That way you understand all rollover scenarios well and can decide accordingly.

According to experts, there may be a variety of reasons for why a particular 401(k) rollover option may be in your “best interest” – say it’s an IRA rollover. For example, rolling over funds to an IRA can offer many upsides including:

• More simplicity with an IRA than a 401(k), generally speaking
• Possibly more access to your money over a 401(k) account
• Possibly higher-quality estate planning options
• More control over your money versus what a 401(k) offers
• Possibly a greater diversity of investment and financial options
• Ability to buy an annuity for greater retirement income certainty or other retirement objectives

However, an IRA rollover also presents disadvantages. Slott points out two potential downsides:

• You may run into creditor protection troubles – 401(k) plan accounts tend to be protected by federal law guidelines (Employment Retirement Income Security Act, or ERISA protection), whereas IRAs tend to be protected by state laws.
• You may be stuck with plan life insurance with your existing 401(k) company plan – if you switch your funds over to an IRA, you will not have the ability to get life insurance within the boundaries of your IRA.
• You are age 55 or older and need access to your money, which can be done within the auspices of a 401(k) plan account. If you pull money out of an IRA before age 59.5, you may incur a 10% tax penalty on top of the income tax you will be required to pay on your withdrawn amount.

Much like with any financial decision, there is no one-size-fits-all solution for all consumer situations. Carefully go through the merits and downsides of each rollover option with a qualified professional, weigh each option accordingly, and then it’s a matter of deciding which is best for you.

What Factors Should be Considered with 401(k) Rollover Options?

Ed Slott’s staff recommends that financial professionals consider how a rollover recommendation (or a recommendation to not complete a rollover) may affect the following variables:

• Available investment options
• Fees
• Tax implications – for example, the 10% early withdrawal penalty
• Creditor protection
• Required minimum distributions (which start at age 70.5)
• Services given
• Simplicity or convenience
• Estate planning implications

As can be seen, there are many variables to consider with any rollover decision. Educate yourself, understand your options, and work with a qualified professional who can clearly walk you through all 401(k) rollover possibilities. Decide wisely, and you will have taken an important step toward financial security and peace of mind in your retirement years.

Get Help with Your Financial Retirement Planning

When it comes to retirement planning, two important benchmarks to plan for are monthly income and preservation of accumulated assets. You can receive personal help with planning for these markers in your post-work lifestyle. We invite you to connect with a retirement planning strategist and request a no-obligation, one-on-one meeting to discuss your specific retirement needs and objectives.

Use our Find a Financial Professional section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Ed Slott Article Source:

Copyright © 2017 Ed Slott and Company, LLC
Reprinted from The Slott Report, April 16, 2016, with permission.
https://www.irahelp.com/slottreport/what-advisors-need-know-about-new-fiduciary-rule

The post What are My 401(k) Rollover Options? Read This for Some Need-to-Know Facts first appeared on SafeMoney.com.