When To Take A 401k Rollover Choosing whether to leave your 401(k) money in your old employer’s plan or roll it over to an IRA is a tough decision that is often rushed when changing jobs or retiring. Most people know that cashing out is their worst option, but what should you do with your retirement funds if you do keep them invested? Unfortunately, there is no universal answer that is best for each individual’s situation, but there are several basic guidelines for everyone to consider. Leaving your money in the employer’s 401(k) or rolling it to a new employer’s plan will provide more protection for your funds, but with more restrictions on withdrawals and investments. Federal law prevents creditors from accessing funds in a 401(k) plan, but there is no such protection for IRAs. Some states have passed their own laws to protect IRAs, so check the laws where you live if this is a concern. When it comes to financial retirement plans, the sad truth is that far too few people actually have a plan.
It is estimated that somewhere in the neighborhood of 30% of employees who are offered a 401(k) through their employers fail to sign up for them. There have been instances in the past when unscrupulous administrators have taken advantage of the temptation that having access to those funds provided as well as many, many cases where the worst enemy when it came to 401(k) investing was the investor.
The truth of the matter is that no matter what, chances are very slim that social security will provide any sort of security for those that are retiring and relying on this as their ‘golden’ years. There have been mistakes along the way and will continue to be. Not only do the administrators of these plans make the mistakes but also by those receiving the benefit of these plans, which can be so very important when, it comes to establishing some degree of security for your financial retirement planning.
This is your retirement after all and the new rules regarding your 401(k) are putting you in the driver’s seat so to speak. Don’t let yourself and your investment down by not doing the necessary research. If you plan to invest in stocks make sure that you are diversifying your stock holdings and that you have thoroughly researched the stocks in which you are investing. Don’t be afraid to actually make the investments you feel are necessary in order to maximize the potential of your 401(k).
Take your time to research the differences in a traditional 401(k) and a Roth 401(k) and see which one you feel will best suit your needs as a consumer and as an investor. There are marked advantages and disadvantages associated with each and ultimately which is better comes down to a matter of preference as there really is no absolute right or wrong answer to this question.
We strongly encourage you to seek the services of a competent financial planner in order to help you properly diversify your portfolio for long-term investing with maximum potential. We believe you will be amazed at the miracles that the right financial mind can work when it comes to your funds.
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