Rolling over an old 401(k) into a new IRA is a great way to diversify your retirement portfolio since you’ll have the option to invest in alternative assets.
Fort Myers, FL (PRWEB) April 22, 2014
Many jobs offer retirement savings accounts such as 403(b)s and 401(k)s but many employees are unsure of what to do with those funds if they change employment. AdvantaIRA Trust is hosting a nationwide webinar on April 29th to fully educate these plan owners on several different options that offer continued benefits for retirement when they move from one place of employment to another.
Maintaining employer-sponsored retirement plan when changing jobs is sometimes easier than making the transition from one job to another. There are several ways to keep retirement funds working during and after this process:
- Keep the funds inside the old employer’s retirement plan,
- Roll 401(k) funds into a self-directed IRA,
- Move the funds to a retirement plan at the new place of employment if eligible,
- Cash out and withdraw the funds
There are pros and cons to each option that should be taken into consideration to decide which option is best. The following information will be discussed in great detail in Advanta IRA’s webinar.
Maintaining the previous 401(k) with the former employer requires review of the rules for that retirement account. Pros include the fact that the plan may be eligible for penalty-free withdrawals if the account owner is over the age of 55, it may have unique investment options, and under the federal law it may have more protection than other savings accounts. Some cons of choosing this option: fewer investment options than a self-directed IRA, limited withdrawal options, and transaction limitations. Additionally, there is typically a minimum balance of $5000 that the plan must have to keep the plan at the old employer. Most importantly, account owners are unable to make any more contributions to the retirement account.
Rolling a 401(k) into a self-directed IRA allows account owners to choose alternative investment options, such as real estate. Other benefits of doing a 401(k) to IRA rollover are penalty-free withdrawals after 59 ½, tax-free withdrawals if the old plan is transferred to a Roth IRA, and all funds inside the IRA are tax sheltered. Things to take into consideration when choosing this option is a 10 percent withdrawal penalty if under 59 ½ and required minimum distributions after age 70 ½ unless a Roth IRA is used. Managing Partner of AdvantaIRA Trust, Dave Owens says, “Rolling over an old 401(k) into a new IRA is a great way to diversify your retirement portfolio since you’ll have the option to invest in alternative assets. Why let your money sit in a savings account that is not generating any profit and that doesn’t allow for additional contributions when there is an option to reinvest and build up your retirement account.”
The other two options are moving the old retirement account to a new employer’s plan or cashing out funds. When moving the old plan to a new employer’s plan, check with the plan administrator to see if this option is available. If the above options are not something of interest, the retirement account can be cashed out. This should be the last resort since there are consequences depending on the tax situation and age of the account owner. There is a 10 percent early withdrawal penalty for people under 59 ½, as well as taxes on the money that’s being cashed out. Consult with a tax advisor or CPA to see which option works best for the situation, and to see what penalties you might face.
“During the webinar attendees will be able to ask questions to our Director of IRA Operations, Brandon Hall while learning about the different options available,” says Owens.
Event: Webinar-What to do with your old 401(k)
Date: April 29, 2014
Time: 2:00-3:00 p.m. EST.
Register: Please email Brenda Whetsell at Brenda(at)advantatrust(dot)com with your name and email address.
About AdvantaIRA Trust
AdvantaIRA Trust is a self-directed IRA administrator that provides tax-deferred and tax-free investment opportunities, superior customer service, and educational tools to assist investors in realizing the maximum benefits possible within IRAs. AdvantaIRA makes it easy to use self-directed retirement plans to invest in assets that the individual investor knows, understands, and can control.
About Dave Owens
Dave Owens is the managing partner at AdvantaIRA Trust in Fort Myers, Miami, Gainesville, New England, and the Florida Panhandle. Owens opened the AdvantaIRA Trust headquarters in Fort Myers, FL in 2003. His background as a certified public accountant, combined with a long history of personal retirement self-direction, provides his audiences and clients with solid advice and practical solutions to their IRA investment questions. Dave holds a BS in accounting from Purdue University. He also earned the prestigious Certified Exchange Specialist designation through the Federation of Exchange Accommodators.