Why You Should Rollover

If you have a retirement account still with an old employer, you are not alone. There are over 5 million people in your same situation. Are you paying attention to your plan investments? Do you know what your plan is costing you in hidden expenses? Is your account being managed as part of your overall financial plan?

A rollover can help you take control of your retirement money and gain four potential benefits:

  • Greater choice of investments
  • Lower costs
  • Better access to advice
  • More options for contributing to, consolidating and converting accounts

Choice: Most employer retirement plans have 5 to 15 investment choices such as Large Cap Equity, Fixed Income and Stable Value. These are like mutual funds. After rolling over to an IRA, you can invest in similar mutual funds. Or you can choose from a wide variety of other investments, including individual stocks and bonds, exchange traded funds, even options and real estate

Lower costs: You may be able to rollover to an IRA with substantially lower account costs. You will start to pay fees for buying and selling investments. But you may be able to choose investments with no or low investment management expenses, such as low-cost mutual funds.

Advice: Employers are reluctant to offer financial advice to their employees and former employees. Most financial firms offering IRAs have advisors ready to help you. If you already work with a financial advisor, she or he should be considering your retirement account as part of your overall financial plan. However, many advisors don't pay as much attention to assets not directly under their control. If you manage your own investments, having greater choice and control over your retirement money can help with asset allocation and planning.

Options: After rolling over to an IRA, you will be able to contribute more money to your account. You will also have more options for consolidating your accounts, or converting your account to a Roth IRA.

There are few downsides to rollovers. IRAs have similar tax benefits to employer plans, and similar rules for withdrawals. One downside is that you may not be able to rollover your old plan to a new employer's retirement plan. Some people who worked for large employers with excellent retirement plans may not benefit from a rollover.

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