If you have money in a 401(k) or other retirement plan with a former employer, then you have a decision to make. Do you leave your money in the company plan, take some or all of the money, or roll the balance over to an IRA?
For the vast majority of clients I have worked with, rolling into an IRA is the best option. It gives you more investment flexibility, establishes individual IRA ownership, and allows for easier distributions. But before you decide to roll over, you'll need to evaluate a variety of factors some of which make it more advantageous to keep the money in the former employer's plan and some of which make it better to roll the money to an IRA. Previously, far too many Advisors failed to assess these considerations, leading the Department of Labor to pass regulations requiring that Advisors must act in the best interest of their clients when it comes to rollover recommendations.
Rollover considerations generally fall into 5 issues:
Once again, for most clients rolling a 401(k) balance to an IRA is the right call however, it is important to know there are considerations and tradeoffs to this decision. We are always available to discuss what's right for you.
Dean S. Mailhes, CFA