Is an IRA Rollover Right for You?

October 30, 2014 // Bucket Strategy Investing

While often a positive long-term change, switching jobs can sometimes make your life a bit more stressful in the short term. Learning many new names, making all new friends, and getting all of the appropriate paperwork in order can be a bit daunting.

One choice you’re confronted with when switching jobs is whether to roll over your 401(k). You could potentially leave your money with your former employer’s plan, transfer assets to your new employer’s plan, roll over your assets into an IRA, or cash out your balance (which will likely result in an early withdrawal penalty if you are younger than age 59½). But which option is right for you? A recent article from FINRA lists ten important tips to help you decide.

Worried about taxes? Minimize taxes by rolling traditional to traditional and Roth to Roth.

If you decide to roll over your retirement plan assets to an IRA, you can choose either a traditional IRA or Roth IRA. No taxes are due if you roll over assets from a traditional plan to a traditional IRA, or if you roll over your contributions and earnings from a Roth plan to a Roth IRA. But if you decide to move from a traditional plan to a Roth IRA, you will have to pay taxes on the rollover amount you convert.

Have questions? Don’t be afraid to discuss your situation in detail with a financial or tax professional and get your questions answered.

Don’t be shy about raising issues such as tax implications, differences in services, and fees and expenses between retirement savings alternatives. If your financial professional recommends that you sell securities in your plan or purchase securities in a newly opened IRA, ask what makes the recommendation suitable for you. As with any investment, if you don’t understand it, don’t buy it

The decision of whether to relocate your retirement plan is an important one and shouldn’t be taken lightly. Make sure to check out the full article on FINRA’s website, get your questions answered, and fully understand your options before deciding what course of action is best for you.

Speak with an Advisor