401(k) Rollovers, 403(b) Rollovers, Moving Money to IRA
When people change jobs or retire, one of the biggest challenges is deciding if it’s smart to rollover your 401(k)-type plan to an IRA. The “roll 401(k) into IRA” process is fast and easy. Making the best choice can be very complex.
Get it right, and your retirement can be very bright indeed.
But make the wrong choice, and you face some big risks. These include running out of money, not being able to afford health care, and leaving a surviving spouse below the poverty line.
This page will give you some smart tips on deciding how to make the roll 401k decision.
While 401(k)s are very common, the important decision applies even if your employer retirement plan goes by a different name. If any of the below apply to you, keep reading!
How do you choose the best rollover option?
The best decision on your 401(k) rollover or other plan may not be obvious, but could not be more important. It’s a real fork in the road.
Getting the 401k IRA choice right can lead to a luxurious retirement.
Getting it wrong can lead to hard choices and misery.
Using an advisor to guide the choice can a great help, but be careful. Many advisors offer to transfer a 401(k) to IRA or give other 401(k) advice, but may not be fiduciaries required to act in your best interest. Others may not have enough training to help you make the best decisions for a secure and comfortable retirement.
Finding an objective and qualified advisor can be hard, but worth it.
Even if you think you want professional guidance, moving money from your 401(k) to IRA may not be the best advice. Besides simply “moving 401(k) to IRA” you may want to consider options, such as:
In-the-know advisors like Camarda can actually manage your 401(k) right in the old plan, without needing to do a rollover. Ditto for 403(b), FRS, or other employer retirement plans. This can avoid the need for rolling over, transferring, or moving money from your new or old 401(k) to an IRA.
This can be done with virtually any plan, but it takes some research to figure it out. Many advisors are not set up to do this, but Camarda is.
Is a 401k IRA rollover the best thing for you? Should you leave it in the old plan? Should you do a rollover to a new plan? Take our quick assessment to find out!
401k Rollover to IRA Should you transfer your 401k, FRS, 403b, DROP, TSP, or 457? Pros and Cons
Roll 401k to IRA Decision Guide Deciding if and how to roll your 401k is a very important decision. There are many factors to consider, which are summarized below. To get complimentary professional guidance, click to checkout our free assessment.
Reasons to Consider Rollover, Transfer or Move Your 401k or Other Plan
Poor advice, high costs, and limited choices can stall profits
You may make more with the right rollover choice
Many plans limit your investment options
This can restrict diversification, increase risk, and hinder returns
The right rollover can give you better investment choices
Most plans don’t offer fiduciary investment advice or financial planning
The right fiduciary advisor can help make better choices to grow wealth
Fees can be hard to spot. If you’re not sure, click on the free assessment to apply for a no-charge analysis
In many cases, rolling a 401k to IRA can actually reduce costs or produce higher levels of financial planning advice for similar cost
Transferring your 401k to IRA can offer more control and access
401ks can be cumbersome even before you leave, and worse after
The right rollover can simplify your life
Reasons to Consider NOT doing a Rollover, Transfer or Moving Your 401k or Other Plan
Besides moving your 401(k) to IRA or other direct rollover or transfer o 401(k), what are my other retirement plan options?
Here’s an overview of common choices besides a rollover or transfer of your 401k. It also applies to rollover of 403b, FRS, TSP, 457, DROP, and other employer retirement plans.
Should You Use a Financial Advisor to Help with the 401(k) Rollover to IRA Decision?
Finding a good, objective financial advisor can help you make better decisions and improve your wealth outcomes.
All advisors are not created equal, so be careful.
Many advisors may offer to transfer a 401(k) to IRA or give other 401(k) advice, but often are not fiduciaries required to act in your best interest.
Others may not have enough training or resources to help you best.
Quality advice can be important to help you make the best decisions for a secure and comfortable retirement.
For instance, doing an indirect rollover instead of a direct transfer – a common mistake – can cost thousands in needless tax. It can also create a cash crunch when you can afford it least. Unsophisticated advisors can inadvertently trigger problems like this.
Some may offer only a robo advisor experience. This may not make for one of the best places to rollover your 401k. Many don’t offer hands-on managed account. This can leave you with only a self directed account or self directed IRA.
Remember – getting the 401k IRA choice right can lead to a luxurious retirement. Getting it wrong can lead to hard choices and even misery.
A skilled, objective advisor can speed you there, but the wrong advisor can set you back a lot.
Tips on Selecting an Advisor to Help with the 401(k) Rollover to IRA Decision
Here are some boxes to check in shopping for an exceptional advisor:
- ure fee-only/no commission fiduciary advisors can be hard to find
- Most advisors are commission based or fee + commission (“fee-based”)
- This can be dangerous but hard to spot (to learn how to tell, ask for instructions in the free assessment link)
- Basic investment licenses can be acquired in only weeks with no background
- Even financial planning designations like CFP don’t mean investment expert
- Knowledge is power – look for advanced finance or financial planning degrees
- Look for a CFA® for deep investments expertise
- For tax expertise, look for the IRS-admitted credentials of CPA or EA
- Look for someone who’s been through multiple bear markets over 15+ years
- Advisors can get bonuses by moving clients to new employers
- Bonuses are often tied to commissions generated from moved clientsJob-hopping can indicate a compensation focus or other flags
- What’s their business model and succession plan?
- Could they sell out, changing everything, when you’re in retirement?
- Detailed retirement income modeling and stress testing
- Can you retire now and live how you want?
- What expenses will you have through the stages of retirement?
- What is the probability confidence level you won’t run out of money?
- Estate and trust planning
- Tax preparation & control
- Non-commission insurance advice
- Asset protection planning
- Protection from financial predators and losing assets to lawsuits
- Kids’ inheritance divorce and other protection
- Such recognition can indicate “in the know” institutions have scored the advisor exceptional
- In a world were all advisors can look similar to consumers, recognition can provide important information to guide more informed decisions