Rolling Over a 401(k) Balance
What To Do With The Plan Balance?
When you leave your current employer, you will need to decide what to do with your investment balance inside the company 401(k) Plan. There are some factors to be considered about whether it makes sense to leave the balance in the existing plan or to move it somewhere else.
After your employment has ended you won’t be able to make any additional contributions to the plan. Any outstanding loans from the plan balance will either need to be repaid immediately or it will be counted as a taxable distribution. Whatever the case may be, we can help provide some information on what the best choices regarding the future of your plan balance.
Items To Be Considered In A Potential Rollover
Many people have the mistaken idea that after they leave their employer the balance in the 401(k) Plan would somehow still be “managed”. In most cases this is a myth! The only management available is through an automated program of some type that can periodically modify your asset allocation back to your desired asset allocation settings. Or you may be able to do it yourself. Other than that, your plan balance will remain just as you left it. And make no mistake – you’re still going to pay an advisory fee of some kind. Our feeling is that if you are going to pay a fee for investment advice then you might as well get expert advice!
So What Are Your Options?
You have four options once you leave your employer:
Withdraw The Balance And Pay Taxes
- PRO: Funds can be used for any purpose, including paying off debt
- CON: If "traditional" style balance then withdrawal is fully taxable
- CON: If you are younger than 59 1/2 you will also pay an extra 10% penalty
- CON: Forego the benefit of tax-deferred growth going forward
- CON: Funds typically are spent on non-productive items
Keep The Balance In The Existing Plan
- PRO: No effort required to leave it as is
- PRO: Availability of Institutional-level fund shares (lower fees)
- CON: Limited selection of investment choices available to you
- CON: Your investments might not match up with your objectives
- CON: Requires more of your time to properly manage your investments
Rollover to Advisor-Managed IRA
- PRO: Advisor will invest in a way that is consistent with your objectives
- PRO: Advisor can make adjustments to your portfolio at opportune times
- PRO: Regular reports on performance and progress towards goals
- PRO: Financial planning done in conjunction with investment management
- PRO: Advisor has access to sophisticated investment management tools
- CON: Advisory fee to pay for time and expertise of the Advisor
Rollover To Self-Managed IRA
- PRO: You have complete control over the way your funds are invested
- PRO: Elimination of advisory fees
- PRO: Wider variety of investment choices available to you
- CON: Difficult to choose the right investment options
- CON: Your investments might not match up with your objectives
- CON: Requires more of your time to properly manage your investments
Larson Wealth Management can help you evaluate your choices on a more in-depth level.
Rollover Your 401(K) Balance, Get A Projection Of Your Retirement Outlook
Larson Wealth Management can help you set up a Rollover IRA so your transfer from your old employer’s 401(k) Plan will not result in a taxable withdrawal. We will also provide you with a financial plan that shows when you’ll be able to retire and what your retirement income is expected to be.
Here’s what you will get when you transfer your old 401(k) Plan balance to be managed by Larson Wealth Management:
- Experienced asset manager overseeing your portfolio
- Trend-based investments to keep your money invested in the right areas
- Ability to hedge downside risk
- Regular reporting on your performance
- Monthly market update reports
- Regular meetings with your advisor
We can provide you with a proposal that shows how we would invest your funds, the performance history, and the costs associated with rolling over your 401(k) Plan balance to an IRA managed by Larson Wealth Management.
ARE YOU READY TO ROLLOVER YOUR 401(k) BALANCE?
Getting started is easy. The first step is to let us know how we can help you. Just fill out the simple contact form below and we will be in touch with you right away – or just call us at (480) 699-5540!
