Consolidate 401(k)s with a Rollover IRA

Rolling retirement assets into an IRA can streamline your portfolio and reduce the paperwork hassle.

Like many people, you’ve probably changed jobs a few times during your career, leaving behind a messy tangle of 401(k) accounts. A rollover IRA lets you consolidate those accounts into an investment tool with some of these advantages:

  • All of your retirement savings are in one place.
  • You’ll have a better understanding of your investments.
  • An optimally designed streamlined portfolio helps eliminate overlap and better aligns your investments with your risk tolerance and retirement goals.

It’s about flexibility If you’d rather hold on to your existing assets or company stock, in certain cases you can transfer those securities “in kind” from a 401(k) to an IRA. Then, you can continue to hold or sell these assets and reinvest as you see fit.

You control your IRA assets and may have access to that money when needed. If distributed prior to age 59 1/2, money may be free of IRS penalty* if removed for certain circumstances such as first-time home purchase or higher education (subject to IRS limitations).

A way to consolidate

If you choose to roll over your assets, you can elect to:

  • Receive a check for the vested balance in your 401(k), and forward this to your IRA custodian.
  • Request a direct rollover.

Cashing out and receiving a check from your former employer leaves you open to federal income tax prepayment withholding of 20%. And when you cash the check, you may have only 60 days to roll it to an IRA. If you miss that deadline and you’re under age 591⁄2, you may be subject to an additional 10% penalty.

This money will also be considered taxable. Even if you roll it over within 60 days, you’ll also have to make up the 20% that was withheld by your plan sponsor. If you fail to roll over the full amount, the difference will be taxed as income and may be subject to an early withdrawal penalty.

You’ve spent your entire career working toward retirement. Isn’t it time your investments worked just as hard? To learn more about the benefits of a rollover IRA, contact us today.

* May be subject to federal and state income taxes.
*Other options may be available and the investor should thoroughly consider all their options.

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