When it comes to the question of rolling over a 401K or 403B to an IRA, many people fear making mistakes. It’s true, that retirement account mistakes can be costly.
On this episode, we’ll explore the options you have, the factors to consider, and the reasons you should and the reasons you shouldn’t roll over your employer-sponsored retirement account.
What kind of retirement savings tools do you have available?
Do you remember the old 80s TV show, MacGyver? It seemed like MacGyver was always up against ticking time bombs. Then he had to think quickly and survey the area to figure out the tools he could use to get out of the situation he was in.
Retirement planning can feel like it has its own ticking time bombs, but we would like to give you the tools that you can use to diffuse the situation.
When you break ties with your current employer there are six options that you could explore with your employer-sponsored retirement plan.
- You could roll it into an IRA.
- You can leave it where it is now.
- You can roll it into your new company’s retirement plan.
- You could take a lump sum distribution.
- You could convert it into a Roth IRA
- Or you could do an in-plan Roth conversion.
Questions you should consider when making this decision
Sometimes people make the hasty decision to roll their account over into an IRA without thinking through their decision. It is important to consider whether someone is guiding you toward this choice because they might profit from the rollover.
Carefully consider your options.
- What are the investment options?
- Are there limitations?
- Would you have more options elsewhere?
- What are the fees?
- What are the expense ratios?
- Do you need protection from creditors?
- What about the tax implications?
Keeping these questions in mind can help you carefully think through your options.
There are several reasons you may want to roll over your account into an IRA and several reasons that you may not want to. Listen in to hear the pros and cons of each option.
Outline of This Episode
- [3:15] The 6 options you have when you separate service
- [8:01] Factors to consider
- [13:54] Reasons to roll over
- [20:45] Reasons not to roll over
Resources & People Mentioned
- BOOK – Making Numbers Count by Chip Heath
- Episode 85 – Unlocking the Secrets to a Successful 401k Rollover
- Episode 170 – Choose Your Own Retirement Adventure – The 4 Types of Retirement Journeys
- Episode 182 – How Changes to the Secure Act 2.0 Could Affect You
- Episode 196 – Are You Making These IRA Beneficiary Mistakes?
- Morningstar – What to Do With Your 401k When you Retire?