At the end of a contract, or at the termination of employment, there is always the question of what should be done with your 401(k) balance. This question is more important when it has to do with the retirement of an individual. You are left with the options of cashing out your account,  rolling it over to your new company’s 401(k), rolling it over to an IRA or leaving it in your previous employers 401(k).
Cashing out your 401(k) sound really nice, but remember there is an income tax to be paid along the line. Leaving your 401(k) with your previous employer may seem like the easy thing to do, since moving it over yourself can be confusing. While you may not want to deal with the hassle of rolling over your 401(k) consulting with a financial advisor is highly recommended. Though this does not happen often, it is possible that if you leave your 401(k) in your employers account, then your assets can be frozen if the company ever filed for bankruptcy.
Control
Rolling over your 401(k) gives you control over your investment. Your control over your 401(k) is restricted to you just paying a particular percentage into the 401(k). When you roll to an IRA package, you can actually decide to put your money in an other areas and diversity your portfolio. With a rollover, there are lots of low-cost investment options one can leverage on unlike the 401(k) which leaves you with just the the funds and stock options provided to you through your company.
Seen and unseen charges
There are always fees when speaking about a 401(k) or IRA such as an expense ratio; they might be hidden or unhidden. Rolling over your 401(k) to an IRA may come with some annual management charges or no charges at all depending on the broker you go through. The 401(k) may not charge an annual management fee but may tends to have higher expense ratios compared to an IRA.
Tax-free rollover
People that want to rollover their 401(k) usually tend to have questions about how they will be affected come tax season. Yes, rolling over is taxed but that is when you fail to follow the very simple steps needed to roll over. Having control over your funds, having numerous investment opportunities and lesser charges are just some of the benefits of rolling over your 401(k).
Email us or give us a call today to see what those steps are. Depending on your situation there may be different options for you. Our financial advisors can help you roll over your 401(k).
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