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A 401(k) rollover is when you transfer money from an old 401(k) to another 401(k) or an IRA. If you've left your job, you have numerous 401(k) rollover options. Making the correct decision could save you thousands of dollars. However, making the wrong decision could cost you thousands of dollars.
That's why hiring a professional financial advisor with knowledge of 401(k) rollover options is the best option for you.
You want more investment choices - A 401(k) often has limited investment choices. On the other hand, an IRA offers almost unlimited investment opportunities. Your investment options include individual stocks, bonds, and exchange-traded funds (EFTs). Another benefit is the ability to buy and sell holdings at any time. 401(k) plans often limit the number of times you can rebalance your portfolio each year.
You want lower fees and costs - Rolling your money into an IRA often decreases management costs and administrative fees. These expenses eat into your investments over time. In many cases, funds offered by the 401 plan might be more expensive than their norm for the asset class. Of course, IRAs aren't free of fees either, but you can reduce your fees with the right IRA.
You want more money in one place - If you have retirement accounts in multiple locations—which many people do—rollovers give you the option of moving them into fewer accounts. As a result, you'll make managing and tracking your investments easier. Rolling your accounts over also decreases the paper trail left by following up with previous employees. If you have $5,000 in an account, employers will hold your money in their retirement plan regardless of whether you leave the company.
You want better investment guidance - Your company may not be giving you the best advice to make informed decisions on your 401(k). When you do an IRA rollover with a professional financial advisor, you'll get expert guidance on your 401(k) plan and your 401(k) rollover options.
You want to preserve your current tax bracket - Many people decide to take a retirement plan distribution instead of rolling it over. If you do, the extra money may push you into a higher tax bracket. A financial advisor could help you preserve your current tax bracket with an IRA rollover.
There is no limit on the amount you can roll over to a new 401(k). Furthermore, there is no limit on the number of 401(k) rollovers you can do. You can do a 401(k) rollover to another 401(k) or an IRA multiple times per year without breaking the once-a-year IRS rules.
You don't need to navigate the challenging process of a 401(k) rollover by yourself. We have advised clients on 401(k) rollovers since 1984, so you can expect high-quality service and personalized advice.