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401(K) ROLLOVER

For 401(k), 403(b), TSP, or Other Tax-deferred Accounts

Thinking about rolling over your 401(k) into an IRA? We help our clients navigate this process and offer recommendations on how to re-position these assets within the structure of a sound retirement income strategy.   


For the most part, there is really only one good reason to contribute to a 401(k) plan, and that is the free money you get from the employer match. Some companies will match up to 100% of your contributions.


When you retire, this benefit is lost, and all you’re left with are the limitations that a 401(k) imposes, including:

  • Restricted access to your funds

  • Limited investment options

  • Risk to principal by way of market exposure

  • Limited distribution flexibility in regards to beneficiaries

The Better Option: IRA Rollover

Using a tax-free rollover, you can transfer your funds into your own individual retirement account, or IRA.  Benefits include:


  • Continued tax-deferred growth

  • Control where the money is invested without the restrictions of the previous plan

  • Protect your money from market corrections

  • Provides an opportunity for a non-spouse beneficiary to take withdrawals based on the beneficiary's age rather than the age of the donor (stretch option)

  • Direct rollover from your current custodian to a new custodian avoids the 20% mandatory withholding


If you’re still working and have a tax-deferred account with your current employer, you can diversify by executing an in-service rollover.  With this strategy, you can move a portion of the balance to an IRA. This will allow you to keep the current employer-sponsored account active and make regular contributions, while enjoying the advantages of an IRA sooner - essentially, the best of both worlds.