401(k) & IRA Rollover Services
How Do You Rollover a 401(k) to an IRA?
If you've changed jobs, are preparing for retirement, or have retirement assets from a former employer, you may be wondering what to do with your old 401(k). Rolling your retirement assets into an IRA can be one option to consider, depending on your circumstances and financial goals.
At Prosperity Wealth Advisors, we help individuals evaluate their 401(k) rollover options, understand the potential benefits and costs, and develop a retirement investment strategy based on their goals, risk tolerance, and time horizon.
When you work with us, we can help with the rollover process, including:
- Contacting your former plan administrator
- Opening a rollover IRA
- Completing and reviewing the necessary paperwork
- Helping coordinate the transfer of your retirement assets
- Developing an investment strategy for your rollover IRA
Guidance
We begin with a review of your existing 401(k), including your investments, fees, and available options. From there, we'll help you compare your choices and determine whether an IRA rollover makes sense for your situation.
If you decide to move forward with a rollover, we'll help you develop an investment strategy designed around your retirement goals, risk tolerance, and time frame.
Service
A 401(k) rollover can involve paperwork, coordination with your former employer, and decisions about how your retirement assets should be invested. We help guide you through the process and keep track of the rollover from start to finish.
Our goal is to make the process straightforward while giving you a clear understanding of your options.
Investment Choice
An IRA may provide access to a broader range of investment options than some employer-sponsored retirement plans. Depending on the account and investments selected, options may include stocks, bonds, mutual funds, CDs, Treasuries, and other investments.
We'll help you evaluate your investment choices and build a portfolio that aligns with your financial goals and risk tolerance.
Consolidation
If you have retirement accounts with multiple former employers, consolidating eligible assets into an IRA may make it easier to keep track of your retirement savings and investment strategy.
However, consolidation isn't always the right choice. We'll help you compare the potential advantages and disadvantages before making a decision.
Benefits and Considerations of a Rollover IRA
Potential benefits of rolling a 401(k) into an IRA may include:
- Keeping eligible retirement assets in a tax-advantaged account
- Avoiding current taxes and penalties when the rollover is completed properly
- Access to a broader range of investment options
- Professional investment and retirement planning guidance
- The ability to consolidate certain retirement accounts
There are also potential disadvantages to consider:
- An IRA generally does not allow you to borrow against the account like some employer retirement plans may
- IRA fees and investment expenses may be higher or lower than those in your employer plan
- Some employer plans may offer investment options or institutional pricing that aren't available in an IRA
- Employer plans and IRAs can have different distribution, creditor protection, and tax rules
What Are Your 401(k) Rollover Options?
Rolling your 401(k) into an IRA isn't your only option. Depending on your circumstances and your former employer's plan, you may be able to:
Leave Your Money in Your Former Employer's Plan
If permitted by the plan, you may be able to leave your retirement savings in your former employer's 401(k).
Potential benefits:
- You may be able to keep the investments available through the plan
- You may have access to potentially lower-cost institutional investments
- The account can remain tax-advantaged
Considerations:
- You are limited to the plan's investment options
- The plan may charge administrative fees
- You may have limited access to personalized investment advice
Roll Your 401(k) Into a New Employer's Plan
If your new employer offers a retirement plan that accepts rollovers, you may be able to transfer your former 401(k) into the new plan.
Potential benefits:
- Consolidates retirement savings into one employer plan
- May provide access to certain plan features, including loans if permitted
- Keeps retirement assets in a tax-advantaged account
Considerations:
- You are limited to the new plan's investment options
- Fees and expenses vary by plan
- Not every employer plan accepts incoming rollovers
Roll Your 401(k) Into an IRA
A rollover IRA can provide access to a broader range of investment choices and the ability to work with a financial advisor on your retirement investment strategy.
Considerations:
- IRA fees and investment expenses vary
- You may give up certain features available through an employer plan
- Investment options, services, and costs should be compared before making a decision
Cash Out Your 401(k)
You can generally choose to take a distribution from your retirement account, although doing so may result in income taxes and, depending on your age and circumstances, an additional 10% early-withdrawal tax.
Cash distributions also remove those assets from your tax-advantaged retirement account and may reduce the amount available for future retirement income.
Compare Your Options Before You Rollover
A 401(k) rollover is an important financial decision, and an IRA isn't automatically the best choice for everyone. Your options may include leaving the money in your former employer's plan, moving it to a new employer's plan, rolling it into an IRA, or taking a distribution.
Important factors to consider include investment options, fees and expenses, available services, tax considerations, creditor protections, and distribution rules.
At Prosperity Wealth Advisors, we can help you understand your options and determine which approach best fits your financial situation and retirement goals.
If you're considering a 401(k) rollover, we're here to help you take the next step with a clear understanding of your choices.