Once you leave a job, you can no longer contribute to your former employer-provided 401(k). Though you don’t have to move it, many people choose to move it into their own account, where they have more visibility and control over their retirement investments. Rolling the money into an Individual Retirement Account is a popular option. The team at Jacobs Financial wants you to have the information you need to make an informed choice.
What Is a Rollover IRA?
A Rollover IRA is the name for the funds transferred from a 401(k) to a personal retirement account. A rollover shouldn’t be confused with a withdrawal, which would incur taxes. Because you aren’t taking the money out for your use but instead are reinvesting it in a qualified retirement account, the transaction remains tax-free.
Advantages of a 401k to IRA Rollover
You have many investment options when choosing to contribute to a Rollover IRA. Our highly experienced and knowledgeable financial advisors will help you understand the best ones for your risk tolerance, such as mutual funds, stocks, bonds, ETFs, and CDs. A traditional IRA, like a standard 401(k) plan, offers tax-deferred savings. The tax-deferral strategy anticipates that withdrawals will be taxed at a lower rate once you are no longer in the workforce.
- Potential new investment options that were previously unavailable with your 401(k) plan.
- Tax-deferred account growth.
- Individualized investment guidance based on your retirement goals.
Rollover Multiple 401(k)s
The days of people staying with the same company throughout their careers are long gone. It is not unusual for investors to have funds in multiple 401(k)s. While that is certainly an option, it can be a tracking nightmare. Consolidating your old 401(k) accounts into a single IRA makes it easy to track your investment growth, earnings, and fees.
How to Transfer IRA
If you have left a job and are interested in moving your retirement funds from your previous employer’s 401(k) plan, we can help. Jacobs Financial is proud of our team of financial professionals who are passionate about setting clients up for their ideal retirement. They can explain what is a rollover IRA and make the process quick and straightforward. Schedule a meeting to discuss your vision for your retirement today.
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