A 401K is a pension plan that a worker can use to save for retirement. Retirement planning is so important, perhaps now more than ever before. Especially with the state of the economy today, it is so important to make sure your finances are under control and in particular savings for something as important as retirement. With that as a backdrop here is my bit of 401k rollover advice.
Most people are familiar with the term 401K rollover but who are unsure of whether or not it is a good idea. There are some great benefits that can come from initiating a rollover but of course, you need to know how to go about it first.
You basically have three general options for a 401K rollover. One option is to roll your account into a brokerage IRA. If you are looking to gain more control over your account and have more flexibility with your retirement savings this would be a great idea. Brokerage IRAs offer the most flexibility and control and yet there are some downfalls to consider as well.
There will be a charge with brokerage IRAs that will need to be taken into consideration, as every time you place a trade with most brokers you will be charged a fee. This may not sound too bad initially but these fees can add up over time so you need to be careful.
Another option for rolling over your 401K is to roll it over into another employer’s plan. You benefit by not having to worry about investment minimums but then at the same time you have to worry about the new plan’s rules and what this is going to mean for you and your retirement planning.
The third most basic option for rolling your 401K over is to put it through a mutual fund company. The advantage of doing this would be that you will minimize your fees if you have any at all but then the downside is that you have much less flexibility. This is an ideal choice if you do not mind losing your flexibility and options with investing.
With any rollover option, there are pros as there are cons. Before making a move, it is vital to take all of these into consideration. Playing around with your retirement saving is serious business and you want to make sure not to make any mistakes. It all depends on what your goals and objectives are for saving for retirement, what is important to you.
The best idea, and this is especially true if you have little to no financial planning experience, is to talk to a financial advisor. This is a professional in the field who can assess your situation and work with you to come up with the most effective and intelligent idea for your retirement planning and 401K.
