August 25, 2017

The Top 5 Benefits of Rolling Over Your 401(k)

When transitioning into a new job or on the brink of retirement, most people don’t do anything with the money in their 401(k) plans. The logic goes: If I leave my plan as it is, then it will be easier to handle my financial situation.

While that may be true, not rolling your 401(k) into an IRA (individual retirement account) can hurt you in the long run.

Here are just some of the benefits of a 401k rollover.

● More Investment Options

A basic 401(k) plan offers only about 20 funds, but with an IRA, you have access to multiple investment options, from stock and mutual funds to exchange-traded funds (ETFs).

● Better Flexibility and Control

With a standard 401(k) plan, transitioning to other investment options when those you have aren’t very profitable can be quite challenging. On the other hand, a 401k rollover provides the needed flexibility to adjust your retirement account so that it meets your investment goals.

● Estate Planning Benefits

No one likes to think about their mortality, but it’s a crucial responsibility if you want to ensure proper wealth distribution after your death. In most cases, a 401(k) will be paid in one lump sum to the beneficiary upon your passing. The problem with this scenario is that they will have to pay a hefty tax bill to benefit from the inheritance.

An IRA provides more payout options than the basic plan, considerably reducing the value of the estate tax.

● It’s Easier to Manage

Data shows that the average American stays in the same job for less than five years. During your career, you might have seven different jobs, with most of your employers offering 401(k) plans.

Rolling over to an IRA really makes sense from an administrative perspective. Trying to manage small amounts of money from different accounts can be more challenging and time-consuming than keeping your retirement funds in just one place.

When it comes to finances, there’s no one-size-fits-all solution. What worked for others may not be suitable for your particular situation. That’s why you should always seek expert advice.

At Exemplify Financial Retirement, we can help you plan for retirement and help you reach your financial goals.

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