What are 401k rollovers – What is a 401k rollover to an ira for retirement? 1-800-566-1002. What are the best types of 401k rollover plans for retirement and learn how you can avoid the most common mistakes that individuals have made when looking to rollover their 401k accounts into an ira.

There are several reasons an individual might consider rolling over 401k assets to an individual retirement account (IRA). Visiting a qualified financial advisor can help you wade through the options and restrictions of your plan and consider alternatives.

Consolidation of Assets – You may have worked for multiple employers during your career. If so, you may have multiple 401k accounts with different investment allocations. It may be beneficial to consolidate your accounts. Doing so might simplify the tracking of your assets and enable you to evaluate whether your retirement investments are suitable.

Increased Investment Options – Your employer-based 401k plan has limited investment options. Converting your 401k plan to an IRA will likely increase your investment options. This may enable you to meet your investment goals better as it will increase your access to a broader variety of asset classes and to different investment funds.

Your plan might also be limited to several proprietary funds and may not include top performing mutual funds. Understanding what investment options your 401k offers may be important for ascertaining your ability to build a suitable investment strategy within the plan or whether you would be better served elsewhere.

Understanding your investment options is particularly important when we are in “bear markets.” It takes more expertise and oversight to perform well in a bear market than it does in a bull market. Having more investment options and a broader pool of asset classes could make the difference in preserving and growing your resources.

Eliminate Restrictions on Selling Investments – Some 401k plans restrict the matching money in a 401k account. This is common with company stock. Participants cannot sell the company stock while it is in the 401k plan. Executing a direct rollover to an IRA when the company stock can be sent over in share form would solve the problem. Once the shares are in the IRA, you can decide on keeping or selling them. In addition, some companies limit the number of exchanges non-active employees can make. Rolling over to an IRA would eliminate these restrictions and limitations.

Separation from Former Employer – Leaving a job may not be a pleasant experience. You may be forced to retire or terminated. If your departure from your former employer was not on good terms, you may wish to take your retirement assets with you. Although your 401k cannot be “touched” by your former employer, the employer still remains in charge of the plan and can change it as they deem necessary. They can change providers, alter the fee schedule, or remove investment options. The employer retains indirect control over your account and will make decisions about the plan based on objectives that do not consider your goals.

IRAs do not operate that way. With an IRA, you can select from which funds withdraw, which enables you to take the withdrawal in a way that is most suitable to your goals and needs.

Improve Transfer of Resources to Non-spousal Beneficiaries – 401k plans do not transfer to non-spousal beneficiaries well. In many cases non-spousal beneficiaries have to take a lump sum distribution or take distributions over a five-year period. This does not allow non-spousal beneficiaries to “stretch” the use of this money over an extended period of time.
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