Rollover Your 401k Into an IRA? Not Necessarily

Why all the fuss over 401ks and rollovers?

Due to the decline of traditional pension plans, 401ks now typically represent the bulk of retirement assets for most investors. So, making good decisions on what to do with those assets is very important.

Is rolling over your 401k account into an IRA a bad thing then?

It depends. In many cases it does make sense to rollover your 401k account. What doesn't make sense is to do anything without understanding what options you have, what costs are associated with those options and most importantly-having a financial plan which guides you in understanding what role that pot of money plays in your financial future.

Reasons to keep your 401k account with your employer

You are happy with the current investment options in the plan.The plan has a diverse menu of good performing and reasonably priced funds.
If you are 55 years or older, maintaining your 401k account gives you an option to take distributions without incurring the 10% penalty, as you would (with certain hardship exceptions) in an IRA.
I'm not a big fan of this. But you could also take out a loan against your 401k balance for short term needs.
Your 401k account is protected under ERISA, so there is general protection against creditors. IRA's are not necessarily shielded from creditor protection, depending on your state of residency.
You minimize the potential tax impact of the pro rata rule if you plan on doing a Roth IRA conversion using non-deductible IRA assets.
Reasons to rollover your 401k account into an IRA



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