While you have many things on your to-do list when leaving your employer, your money is likely top of mind. But as with anything such as your 401k, determine what is best for you and how to get things done. Should you rollover your former employer’s 401k or not?
Should You Rollover Your Former Employer’s 401k?
Four reasons why you should rollover your former employer’s 401k now:
- More investment choices.
- Less expensive investment choices.
- Consolidate everything so it is all together.
- Simplify your finances.
- Get a clearer picture of your finances.
Celebrate departing your former employer with a direct rollover of your 401k to a brokerage account. Rolling your 401k directly into a brokerage firm IRA, an individual retirement account, ensures you avoid incurring taxes. Your long-term investment horizon for retirement allows you to gain the compounding advantage. Eliminating unnecessary fees and expenses enables you to further amplify your wealth by eliminating their compounding impact on your gains.
Besides saving money, rolling over your former employer’s 401Ks and consolidating your investment assets at one firm simplifies your finances. Simplifying your finances will increase the likelihood of your involvement with your money and, ultimately, more financial confidence.
Consider This Regarding Your Former Employer’s 401k
Financial Advice
Certainly, better investment choices and simplifying your finances have amazing advantages. But there are even more ways you can potentially amplify your wealth after your rollover. A financial advisor can help you make wise investment choices and ensure you have enough money for retirement. Also, your advisor can help you determine if you can benefit from a rollover into a ROTH IRA.
An IRA can be rolled into ROTH with no income limitations and offers unique advantages. Some advantages include investing for retirement and not paying taxes when making qualified withdrawals. While the ROTH advantages are significant, you pay taxes on the amount rolled over at your current income tax rate.
Careful planning is also important to help you avoid any fees or penalties.
Consult with a financial advisor before rolling over your money to ensure it is your best financial move.
Steps You Can Take Now To Rollover Your Former Employer’s 401k
You can follow these simple steps to roll over your former employer’s 401k:
- Determine where to rollover your former employer’s 401(k). If you already have your money at a brokerage firm, before rolling more money into it, look into whether they offer low-cost ETFs and Mutual Funds, charge assets under management (AUM), and see if they fit you.
- Open an account(s) as needed; a traditional IRA for rollovers of traditional 401(k)s, a ROTH IRA for ROTH 401(k)s.
- Go to the respective firm website to open your account. Contact their respective client customer service by phone to help you through the easy-to-follow steps.
- Contact your former employer’s financial institution to notify them where you want to rollover the money. Ask them what they need to make it happen. If you receive a check from your employer plan, please don’t deposit it. Rather, you can the brokerage firm that should have received the check. They will share the steps to avoid unintentional taxes and complete your intended rollover.
You did it! You have taken the steps and are ready to invest your retirement money.
Investing Your Retirement Money
Do not let uncertainty get in the way of reaching your goals. Empower yourself with a fiduciary financial advisor. Your financial advisor can create a diversified portfolio embracing your risk tolerance, goals, and time horizon to ensure you have enough money to live the life you want.
