Rolling over to an IRA vs. retaining an employer retirement plan

What’s your motivation?

For many people, gaining clarity is the overriding factor in choosing a rollover IRA. Keeping track of multiple employer finance and making sure they’re rebalanced thus can get complicated. Putting all your retirement savings in one place makes it easier to manage your finance and monitor your progress.

This can be expressly true as you near retirement and the onset of required minimum distributions (RMDs), which kick in at age 72. For each 401(k) worth you hold, you’ll need to summate and withdraw the RMD separately. However, if you’re still working, you won’t need to take RMDs from your employer’s plan.

Pro tip: If you’re planning to work past age 72 (and you don’t own 5% or increasingly of your company), you may want to consolidate finance into your current employer retirement plan and stave RMDs until you officially retire.

With an IRA, you’ll need to take RMDs at 72, plane if you’re still working, but you can segregate to take them from any or all your traditional IRAs.

If you have a Roth in your 401(k), pension in mind those finance are subject to RMDs, whereas Roth IRAs are not. You may want to move any Roth worth out of your 401(k) and into a Roth IRA. 

Lobel’s overall translating is to ask yourself, what’s the driving motivation for you? “Are you trying to well-spoken up your financial life—consolidate 5 plans into 1—to make things increasingly manageable? Or are you OK having increasingly than one plan?”

If you still have questions, talking with a qualified financial counselor can help you understand your options and make the weightier choice. Whatever you decide, you’ll finger largest knowing you’ve washed-up your homework.

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