#401K #retirement #yahoofinance
Yahoo Finance’s Kerry Hannon breaks down the findings in a new study that show how fees from rolling over 401(k) balances into IRA accounts can cost those planning for retirement.
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retirement planning is an important part of financial planning. Many people have 401(k)s from their previous employers, and when they change jobs, they have the option to roll over their 401(k) into an Individual retirement account (IRA). While this may seem like a good idea, it may not always be the best option.
The main benefit of rolling over a 401(k) to an IRA is that it gives you more control over your investments. An IRA gives you the freedom to choose from a wide range of investments, while a 401(k) is usually limited to the options offered by the employer. However, there are some downsides to rolling over a 401(k) to an IRA.
First, rolling over a 401(k) to an IRA can be complicated and time consuming. You will need to research the different types of IRAs and decide which one is best for your situation. You will also need to transfer the funds from your 401(k) to the new IRA, which can be a lengthy process.
Second, you may lose some of the benefits of your 401(k). Many employers offer matching contributions and other benefits that may not be available with an IRA. You may also lose access to free financial advice that was offered through your employer’s 401(k) plan.
Finally, rolling over a 401(k) to an IRA can be expensive. You may be charged fees for transferring the funds, as well as for managing the new IRA. The fees can add up quickly and can eat into your retirement savings.
In some cases, it may be best to keep your 401(k) with your former employer. This allows you to keep the benefits and access to free financial advice, and it can save you money in the long run. Before you decide to roll over your 401(k) to an IRA, make sure you understand the potential costs and benefits.
When retired there is an advantage. Withdrawal from 401-k has 20% withholding and with IRS slow refunds, it may be 18 months…by rolling over to an IRA and then withdrawal, no mandatory 20% withholding.
No. The fund fees are honestly the same. Except the 401k has maintenance fees. Rollover the 401k into an IRA. A Roth IRA if you can pay the taxes even better.
The other side of the coin is to not buy managed funds that charge high expense ratios and instead stick to indexed funds with low expense ratios. Don't be concerned about these fear mongers and do more research for yourself.