What is a 401a Rollover?
401a plans are retirement plans that are sponsored by US governmental entities and certain tax-exempt organizations. When you terminate your employment and have assets in a 401a plan, you can elect to transfer or rollover your 401a plan to a Rollover IRA.
Frequently a 401a plan is rolled over into a Rollover IRA via a direct rollover. The assets in your 401a plan can be transferred from your 401a directly to a Rollover IRA via a trustee-to-trustee transfer. A direct rollover from a 401a to a Rollover IRA is made tax-free and there is no tax liability. It is generally to your advantage to choose a direct rollover because your 401a plan administrator will not withhold taxes if you choose this option.
Many investors believe it is advantageous to do a 401a rollover versus leaving their 401a money in their ex-employer's 401a plan or transferring their assets into their new employer's retirement plan.
Advantages of a 401a Rollover to IRA
When the rollover process is complete, your retirement plan assets from your previous employer will be transferred to an IRA. Since you are the owner of an IRA, you have complete control versus being dependent upon the rules and policies of your former employer's retirement plan. By rolling over your account into an IRA will not have the potential problems seen with some 401k plans such as a limited number of investment options. Also, there are a number of other problems that can arise with your retirement plan should your employer have financial troubles and go into bankruptcy. Rolling over your retirement plan to an IRA eliminates these problems and puts you in a position to be in complete control of your retirement account.
- Investment Flexibility
Your previous employer’s 401k plan probably had between 10-15 mutual funds to choose from. A rollover to an IRA will increase your investment options and will improve your investment flexibility. Within an IRA managed by a BCM financial advisor you can invest in stocks, bonds and over 10,000 mutual funds. At Beacon Capital Management Advisors, we believe that over the long term greater investment flexibility may lead to improved performance through better diversification and increased investment selection.
- Investment Advice
Are you receiving guidance from a financial professional with selecting the appropriate investments in your 401k? Probably not. This is perhaps the greatest advantage of a rollover to an IRA. If you opened an IRA rollover account, a BCM financial advisor would help you select a diversified investment portfolio based on your age, time horizon and risk tolerance.
A significant advantage of a 401a rollover to a Rollover IRA is increased investment flexibility. A client with a BCM Rollover IRA can invest in stocks, bonds, institutional money managers and over 10,000 mutual funds. Contact us and we would be happy to help you with your 401a rollover.
Open a 401a Rollover.