Retirement planning involves several decisions. For many retirement savers, an important question is what to do with their 401(k) retirement account. As they near retirement, investors must decide whether to leave the money within their account or choose another option, such as an IRA rollover.
The good news is Americans typically have six options for moving 401(k) assets around or leaving them alone. But not all of these possibilities may be appropriate, depending on the merits and downsides of a particular rollover option for your personal situation. It’s also not unusual for an investor to have the lion’s share, or even a large bulk, of their retirement assets in a 401(k) plan account. So, whatever they do with these retirement savings, it’s a decision that will have tremendous implications for the future.
If you are mulling over 401(k) rollover options, be sure whoever you work with understands all the ins-and-outs of different rollover outcomes. Your financial professional should clearly explain the positives, negatives, and details of each rollover option to you, and go over how it may help or hurt your personal situation. After all, this is your future at stake – one mistake can be costly, and once made, some 401(k) rollover errors are irreversible. Make sure you choose wisely and you are well-informed of each possibility before you decide.
In the meantime, if the question of “what are my 401(k) rollover options?” is a pressing matter for you, here’s a quick post which goes over some important factors to consider. Read on for some 401(k) rollover basics to start with making an informed decision. And as we emphasized before, make sure to work with a qualified professional for any 401(k) rollover considerations.
A Quick Note about the DOL Fiduciary Rule and Its Impact
Before discussing the various 401(k) rollover options, it would be remiss not to mention the DOL fiduciary rule and its coming impact on retirement investment advice.
You may have heard about the DOL (Department of Labor) fiduciary rule and how it’s coming into force on April 10, 2017. When it takes effect, this ruling will elevate investment advice given on retirement accounts to a fiduciary standard. Financial professionals of almost all stripes – advisors, brokers, licensed insurance agents, planners, and so on – will be required to act in their clients’ “best interest” and without regard to their own interests or their company’s interests when offering investment advice. Be sure to choose carefully which financial professional with whom you will be working.
You may ask, how does this apply to our current subject matter? Under the DOL rule, investment advice includes recommendations to roll over 401(k) funds into an IRA or for another 401(k) rollover option. So, these sorts of recommendations would be subject to the fiduciary standard; now it’s clear why this is important.
Ed Slott, nationally recognized as “America’s IRA Expert,” has some great insights on retirement planning.