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May 26, 2020

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Rollover or play dead?

Why rollover? Here's some reasons

By Gary Reese
Faith Investment Services
Bluffton, 419-358-4207

Excerpted from 8 Reasons to Roll Over Your 401(k) to an IRA
on Investopedia, edited

Whenever you change jobs, assuming you have a 401(k) in your current position, you have the option of moving your account into your new employer’s 401(k) or into an individual retirement account (IRA). Retirement is another time when you can make the switchover from your 401(k) to an IRA. Or, in some cases, you can leave it where it is.  Some companies allow for an in-service distribution, which gives you partial control of your 401(k).

Why rollover?

  1. There Are More Investment Options - Your 401(k) is limited to a small sampling of the investment options that are available; in all likelihood, you had the choice of a few mutual funds. However, with an IRA, most types of investment are available to you, including not just mutual funds, but also individual stocks and exchange-traded funds (ETFs), to name just two. Having more options can help you develop a better long-term strategy for your retirement savings.
  2. You can invest according to your values – Because more fund choices are generally available in an IRA, you can have your investments screened to see what moral impact they have.Socially Responsible Investing SRI and Biblically Responsible Investing BRI are two available options.
  3. You Can Contribute to Both - You don’t have to roll all of your money into an IRA. Some of your balance can remain in your former company's 401(k) if you’re happy with the returns you’re receiving and your former employer allows you to leave your money there. (Or you can move it to your new employer's 401(k), if that's permitted.) After you've done your rollover, you can contribute to both your new company's 401(k) and an IRA (Roth versions, too) as long as you don’t go over your annual contribution limit.
  4. There Are Far Fewer Rules - Understanding your 401(k) is no easy task because each company has a lot of leeway in how they set up the plan. IRAs are standardized by the IRS. An IRA with one broker follows most of the same rules as with any other broker.
  5. You Have Estate Planning Advantages - Upon your death, there’s a good chance that your 401(k) will be paid in one lump sum to your beneficiary. IRAs have many more payout options.
  6. The Rollover Is Free - You don’t have to pay a fee to roll your 401(k) into an IRA. But that doesn’t mean there aren’t costs to consider.

It is always good to get advice from a trusted adviser. Having a conversation opens up thoughts and possibilities that silence never does.  Feel free to call today to schedule a no-obligation conversation.

Advisory Services are offered through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. Faith Investment Services is independently owned and not controlled by the CFD Companies.