The Benefits of Rolling Over Your 401(k)
If you’ve recently changed jobs, you might be wondering what to do with your 401(k). A 401(k) rollover involves transferring your retirement savings from your old employer’s plan to a new one or to an Individual Retirement Account (IRA). It’s an important step in managing your financial future, and it comes with some fantastic benefits!
1. More Investment Options
One of the biggest perks of rolling over your 401(k) into an IRA is the freedom to choose from a broader range of investments. Unlike many 401(k) plans that limit you to a handful of mutual funds, an IRA opens a world of possibilities—stocks, bonds, ETFs, and even real estate. This means you can customize your investment strategy to better align with your financial goals.
2. Lower Fees, More Savings
Let’s face it: high fees can eat away at your retirement savings. According to the U.S. Securities and Exchange Commission (SEC), many IRAs have lower expense ratios compared to 401(k) plans. By rolling over your funds, you might save more in fees, allowing your money to grow more efficiently over time.
3. Easier Account Management
Have you ever juggled multiple 401(k) accounts from different jobs? It can be a headache! Rolling them into a single IRA makes it easier to manage your investments and stay on top of your retirement planning. Simplicity is key!
4. Better Growth Potential
Research indicates that IRAs often outperform 401(k) plans over the long haul, especially when you consider the flexibility in investment options (Fidelity Investments). By rolling over your funds, you might find better opportunities for growth.
5. Greater Control Over Your Future
When you roll over your 401(k) to an IRA, you’re in the driver’s seat. You can set your own contribution limits, choose your investment strategy, and withdraw funds according to your needs.
With broader investment options, lower fees, and improved growth potential, a 401(k) rollover is worth considering. At Denton & Associates, we’ll work with you to keep your finances current, simplified, and secure in the hands of a professional. Click here to connect with our office today.
A plan participant leaving an employer typically has four options (and may engage in a combination of these options), each choice offering advantages and disadvantages: (1) Leave the money in his/her former employer’s plan, if permitted; (2) Roll over the assets to his/her new employer’s plan, if one is available and rollovers are permitted; (3) Roll over to an IRA; or (4) Cash out the account value.