In this post we are going to discuss the reasons to do a 401k rollover to IRA rollover account. In this process all we are doing is transferring your retirement funds from your past employer to an individual retirement account. This will allow you greater control over your funds as well as much more flexibility with how they can be invested.
The 401k to IRA transition will often occur when there has been a job change, either due to a new job, retirement, or job loss. It is not required that you make the retirement fund transition immediately after the job change, but the longer you wait the more confusing it can be to locate and consolidate all of your funds, especially if there are several different 401k accounts from previous employers.
Protecting the tax deferred status of your retirement money and getting them reinvested quickly, should be your two priorities when changing from a 401k to IRA. Make sure to have the funds transferred directly from the 401k to IRA rollover account to avoid the “60 day rule”. Immediately, get the funds in your new IRA account invested, so that you lose as little time as possible in letting your money grow and compound.
The following is a short list of reasons for doing a 401k rollover. If you have more than one 401k account floating around from old jobs, it is especially important to read ahead.
- When the time comes to retire, you need all of your accounts consolidated and within easy reach. Waiting until after retirement to do this can put you at a great disadvantage if you need access to those funds quickly.
- It is less secure to leave your retirement savings with your previous employers. At any time they might undergo a merger, suffer a financial loss and close down, or somehow mishandle your funds. To avoid these scenarios, it is important that you conduct your 401k rollover to an IRA.
- By moving to a Rollover IRA you gain flexibility with your future investments, so that you can make sure you are getting the best returns. From the Rollover IRA your funds have the possibility of being moved to a new employer’s IRA, split into several different IRA’s if you decide to pursue various investment strategies, or they can be left as they are, consolidated in that single account.
This concludes our 401k rollover to IRA information for today. We hope this has helped and that you will read our other posts that will aid you in your future IRA rollover or 401k rollover.