The Traditional IRA and its offshoots (SEP, SIMPLE, rollover and Roth IRAs) play a leading role in helping millions of U.S. taxpayers invest for retirement. However, many IRA owners are unaware of the opportunity they have to consolidate their multiple IRAs by using a “Super IRA” strategy (most common is a rollover 401k). An IRA consolidation strategy can lead to reduced fees and increased buying power. I’ve had several instances where an individual has had several old retirement plans from previous employers. That has included defined benefit plans, 401k’s, TSP’s, 403b’s and Keough plans. The paperwork alone was cumbersome and consolidating has made tremendous sense. [Read more...]
The best part about a 401k rollover to an IRA is that it’s much easier than teaching your dog to do the same trick. Even better is that compared with employer-sponsored retirement accounts, a 401k rollover can provide you with the broadest range of investment options and the greatest flexibility for distribution planning at retirement. Also, a 401k rollover can typically be operated with fewer restrictions. Here’s a brief overview that highlights some of the key benefits of a rollover IRA compared with an employer-sponsored plan.
As the IRA account owner, you make the key decisions that affect management and administrative costs, overall level of service, investment direction and asset allocation. You can develop the precise mixture of investments that best reflects your own personal risk tolerance, investment philosophy and financial goals. You can create IRAs that access the investment expertise of any available fund complex, and can hire and fire your investment managers by buying or selling their funds. You also control account administration through your choice of IRA custodians.
More Benefits From 401k Rollovers
While you may look forward to a long and healthy career, life’s uncertainties may force changes. Internal Revenue Service distribution rules for IRAs generally require IRA account holders to wait until age 59½ to make penalty-free withdrawals, but there are a variety of provisions to address special circumstances. These provisions are often broader and easier to exploit than employer plan hardship rules. [Read more...]