401k Rollovers in Las Vegas

Reasons to roll your 401k into an IRA

Let’s start off by saying that everyone’s situation is different. There are multiple factors to consider before rolling over your 401k, 403b, 457, or any qualified plan asset into an IRA. Our purpose here is to provide insight into common scenarios surrounding a 401k-IRA rollover. If you have a unique situation that you’d like to discuss, please reach out to our office.

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Tax-Deferred Plans

For the most part, people have the majority of their retirement assets in tax-deferred plans. Tax-deferred is another way of saying: you didn’t pay tax, received the deduction for the contribution, and will have to pay tax when the money is withdrawn. Many people also have access to a ROTH option inside their 401k or qualified plan

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Now, to get into the “weeds” of why you should consider an IRA rollover…

If you are still employed with the employer who offered you the 401k plan or qualified plan, most likely you are not able to roll the money out yet. Some plans do allow for in-service (while you are employed) transfers to an IRA if you are 59.5.

Furthermore, many employer plans simply lack investment options, risk-appropriate investments, and guidance (we call it advice) within the 401k plan.

Let’s face it, the details of these investments are like a foreign language to most people. It can get very confusing looking at the different mutual funds, ETF’s, and other options within the qualified plan. Many people are very disciplined in setting aside money each paycheck to save, but have no clue on how to invest the money once inside the 401k.

If you have left a 401k or qualified plan behind, your previous employer is most likely barring a cost to hold/administer your 401k. No one has a crystal ball, but we do know that markets will go and down. So, who is managing your 401k now that you have left the company? Are the best decisions for you being made at this point?

ROTH option within a 401k

Keeping it simple, in this scenario, you don’t get a deduction for contributing. If you were able to get a match from your employer, they don’t typically match a ROTH deferral but instead match you in tax-deferred dollars. Additionally, you don’t have to pay tax upon withdrawal in retirement in the future. There are some rules to this tax-free distribution, but in general, you must have a ROTH IRA opened for at least 5 years to take advantage of this. You can also access your ROTH IRA at age 59.5 if it has not been in there for 5 years but you cannot touch the growth (principal only).

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What should I do if I have a qualified plan with a previous employer?

This is where you should consult a financial planner. Everyone’s risk objectives and time horizons are different. Being able to sit down with a financial planner to explore your options that best-fit you may be more appropriate than leaving the funds in your 401k or qualified plan.

What should I do if I have a qualified plan with a previous employer?

We can now help you manage your 401k even while you are employed. This is not available to everyone, but there are many 401k plans that allow us to use our approved strategies that could be more customized to your needs/risk objectives. Give us a call to find out if your employer plan has that capability.

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F.A.Q.

1. How has post-pandemic risk management changed financial planning?

Post-pandemic risk management has emphasized the importance of flexible and adaptive strategies. It involves reassessing financial goals, managing inflation risks, and creating robust plans that can withstand economic uncertainties and market volatility.

2. How does sustainable investment risk management benefit my portfolio?

Sustainable investment risk management focuses on balancing financial returns with environmental and social factors. This approach reduces exposure to industries or practices that could pose long-term risks, contributing to a more resilient and ethical portfolio.

3. What steps can be taken to reduce retirement risks?

Reducing retirement risks involves creating a diversified income stream, safeguarding against market downturns, and planning for long-term healthcare needs. Regularly reviewing and adjusting your retirement plan is crucial for maintaining financial security.

4. How can I avoid poor investment decisions?

Avoiding poor investment decisions requires thorough research, understanding market trends, and working with a financial advisor. It’s essential to align investments with your risk tolerance and long-term goals.

5. What can I do to protect my wealth during market crashes?

Protecting wealth during market crashes involves a proactive approach, including maintaining a diversified portfolio, having a cash reserve, and investing in stable, low-risk assets. Regular portfolio reviews and strategic adjustments can minimize potential losses.