401 K plan

First, who needs to rollover their 401k? If you are someone who has recently changed jobs, decided to retire, or take your career plan to a different path, you have a unique opportunity. In these circumstances, it would be wise to take advantage of rolling over your 401k.

Why would you want to rollover your 401k? Well, there are 3 reasons we would recommend you to rollover.

  1. If you have left an employer, why would you want to keep your hard earned savings somewhere you may have reduced access to the people responsible for administering your account?
  2. Leaving money in an old 401k can be an expensive way to invest your money. The limited investment options may have high expense ratios and you may be charged a separate and ongoing participation fee. If you have the opportunity to rollover your money you should consider the  advantage of reducing those expenses.
  3. If you hire an advisor you would have a professional to guide you through the investment and retirement planning process.
  4. Investment options are limited and generic within employer retirement plans. Rolling over those funds to an IRA can open your investment universe to thousands of great investment mutual funds and other alternatives.

What are your options?

  1. Roll your old 401k into an IRA. You will have to open both a ROTH and a Rollover IRA. You can’t mix ROTH with pre-taxed money.
  2. Roll your old 401k into a new employer 401k* This is not recommended based on previous reasons listed above. 

How to rollover your 401k?

  1. Open an IRA and Roth IRA with the custodian of your choice.
  2. Call your old 401k provider and ask for their process to rollover funds. Every company’s process is different.
  3. Once you find out the process, you need to complete the necessary paperwork or electronic submission. Just a heads up, this process can be easy or it can be a pain. It just depends on your old employer’s rollover process.

You can do this yourself, or you can hire a professional to help. As an investment advisory firm, of course we recommend you hire a professional in order to have clear guidance on what investments to choose. If you are well educated in finance and have a good understanding of what you want to invest in, then by all means do it yourself. We don’t want to dissuade you from what you think is best, we just want to offer our help if you are uncertain on what investment options would be best for you and your family.

At Goodwin Investment Advisory we love when our clients tell us that we have given them confidence in their investments and financial future. If you are interested in scheduling an intro call with us to see how we can help guide you, please click on the schedule link to have a brief intro call.

By Published On: June 26th, 2021

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About the Author: Tara Bruce

Tara Bruce
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