by Tyler Curtis
When leaving a job, whether it’s due to being laid off, finding a better position with a different company, retiring, or starting a business, you have to decide what to do with the money you have accumulated in your 401(k) or 403(b) plan. Many people don’t realize they have choices and end up leaving the funds in the 401(k) at their previous employers. Why would anyone leave their 401(k) behind when they leave their job? In effect they are trusting that someone they probably don’t know, at a job they no longer work at, is going to have their best interest in mind as they manage their future. You are only allowed to take control of these funds when you leave your job. More often than not, the opportunity to roll these funds into an IRA is extremely beneficial.
While you are working for a company a 401(k) can be a terrific investment vehicle. The company match is such a strong benefit that the 401(k) simply can’t be ignored when putting together a financial plan. There are other minimal benefits such as company sponsored investment advice, but none are as advantageous as the “company match”. However, once you can no longer contribute (retirement, termination, or other separation), you lose that powerful benefit. Instead, you are left with an investment vehicle in which you have restricted control, limited investment options, and future investor relations nightmares.
We all like having control of our money. By leaving it with a former employer, you could have to jump through hoops to get full access to the funds if you needed it. With some companies this can be a hindrance, but in small to mid-size companies, this can be a painful process that could potentially drag on and on. The investment options in 401(k)’s characteristically don’t allow for much control either. They typically consist of a generic mix of funds which are chosen to accommodate the whole employment force, not the individual. By rolling your old 401(k) plan into a rollover IRA with the full array of investments available, you will have the opportunity to create a custom portfolio that best suits your individual needs.
Taking your 401(k) and rolling it into an IRA can allow you the opportunity to take full control of your money and invest it with whomever, whatever, and wherever you decide. Don’t be bothered with the nagging feeling that you left something behind at your old employer. Don’t let a stranger at a place you no longer work, manage your future. If you would like to review your 401(k) options, please feel free to give us a call at 1-888-676-4337 or email us at firstname.lastname@example.org.