401k Rollover Considerations – Does it Make Sense For you?

Written By: Ryan Rinehart

Happy Friday!

The beginning of the year is always an excellent time to evaluate all your investments, including any current or old 401(k) accounts you have out there. The majority of 401(k) plans take a hands-off approach, and often investors start out with a fund when they first contribute to the 401(k) and then never think to make changes or adjustments based on their plan and retirement goals. Sometimes this can be a good thing, but as we all know, life can change, and often the decision you make when you’re 35 is not the right decision when you’re 60. Recently, I met with someone who realized their 401(k) was invested far more conservatively than they intended it to be, and because of that, she had missed out on a lot of growth in her 401(k) over the past 10 years.

So, it’s very important to take time each year to review your 401(k) plan. For those of you who are over 59.5, already retired, or transitioning between jobs, it’s likely that your 401(k) is eligible to be rolled into an IRA. But obviously, you must first consider if that is the right decision for you and your retirement plan. In an effort to help you make the best possible decision, today I’ve put together a list of 5 important factors to consider as you decide.

  1. Convenience: Multiple 401(k) accounts from different employers can be challenging to track. Often you can simplify your retirement savings by consolidating accounts. Not only does this make things simpler, but it can also help make sure your investment strategy within your 401k, is properly in line with your over retirement strategy.
  2. Investment Options: Consider your investment options that are available in your 401(k). While 401(k) plans offer limited choices selected by your employer, IRAs provide a broader range of options. If you notice that the growth funds in your 401k are underperforming your other growth investments outside of the 401k, it may make sense to roll it out of the plan. Even your safe/conservative options may be limited in the 401k, and with today’s rate environment, you may be able to see better returns on your safe money as well.
  3. Investment Fees: One crucial aspect to weigh is investment fees. Generally, 401(k) plans offer lower fees. However, this varies depending on your plan’s size and oversight. Compare annual fees to determine the most cost-effective option.
  4. Flexibility: It’s always good to evaluate your withdrawal flexibility. IRAs often offer more control over withdrawals than 401(k) plans. Ensure your chosen plan aligns with your retirement income needs and preferences.
  5. Loans: Some 401(k) plans allow continued access to loans after leaving employment. This option can be valuable in financial emergencies. However, it’s essential to understand the terms and implications of borrowing from your retirement account. Sometimes it may make sense to keep some money in the 401(k) just for this reason, even if you roll most of the funds out of the plan.

As I’ve laid out, there are many things to consider and each of you will have different circumstances that will impact what is best for you. My recommendation is that if you’re someone that is eligible to move your 401(k) it is certainly worth discussing with your advisor to see if now makes sense. We are here to help navigate important decisions like this.

Have any questions? That’s what we’re here for! Call us at 844-227-5766 today!

Dad Joke Of the Week:

Question: What does a sprinter eat before a race?

Answer:  Nothing, they fast!

Say What?

Maybe hoping to celebrate Carnival season, a thief in New Orleans broke into a bakery and stole cash, a case of vodka, and seven king cakes. Called “Bittersweet Confections,” the bakery posted on social media that their “king cakes are just that good … but please come purchase one during our regular store hours.”

This week in history

1950 – Disney’s “Cinderella” opened in theaters. Six years in the making, Cinderella became one of Disney’s best-loved films and was one of the highest-grossing feature films of 1950.

1962 – John Glenn became the first American to orbit Earth.

1968 – The first 9-1-1 call was made in the U.S.

1972 – The Volkswagen Beetle overtook the Model T as the world’s best-selling car when the 15,007,034th Beetle came off the assembly line.

What did it cost?

1974 – The price of 1lb of sirloin steak was $1.14.

2004 – The price of 1lb of sirloin steak was $3.63

2024 – The price of 1lb of sirloin steak is $11.69

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