What options do you have when you are ready to do your 401k rollover or IRA rollover? Here we’ll talk about a few of those options to get you started. Read them over and decide what method will work best for you.
First, you don’t have to do anything. If you want, you can always leave your retirement account just like it is without ever making any changes until you actually retire. The difficulty with this scenario is that by the end of your working career you could potentially have multiple 401k accounts with all of your past employers, which creates a headache when you are ready to begin living off your retirement funds and even be disastrous if you need quick access to the money.
Second, you could consolidate all of your previous 401k accounts and IRAs into a single Rollover IRA. This gives you simplicity of knowing the location of all of your funds, as well as leaving them flexible because the Rollover IRA will allow you to move the funds again in the future if your needs change.
Third, the different accounts can be rolled over into separate IRA accounts that each pursues different investing strategies. This is perfect if you want some of your funds in a more hands on self directed IRA, while other IRA is invested in the world market, and yet another in a more stable US bond market.
Fourth, your 401k or Rollover IRA money can be transferred into a new employer’s 401k program. This is great if the employer offers company matching and has set up good investment options with low management fees.
Lastly, you can always take the money out and spend it. This is the worst option you can choose as you will be hit by large taxes from the IRS as well as steep penalties for early withdrawals.
Now that you know a few options for your 401k rollover and IRA rollover, it’s up to you to decide what the best method is for you. If you still have more questions, check out our other posts on IRA rollovers and 401k rollovers.