See what you need to know when you leave your job and you’re thinking of moving money to an IRA.

You may have the opportunity to roll funds from your 401(k) plan to an IRA that you control. There are several advantages to doing so (like potentially lower fees, more investment choices, and better control over distributions and beneficiaries).

But there may also be disadvantages to making the move. For example, if you leave your job after age 55 or you plan to do Roth conversions, it could make sense to leave your money in your former employer’s 401(k)—at least temporarily.

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We cover some of the pros and cons of a 401k to IRA rollover here. While there may be other aspects to consider, you’ll learn about some of the biggies, and you’ll be off to a decent start.

Remember that you don’t need to roll the money over immediately. If it makes sense to wait and do it later, that’s often an option. Just verify with your former employer to see what’s available to you.

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Timestamps:
00:00 Does it Make Sense to Roll Now or Later?
00:36 More Control Over Costs and Investments
02:21 More Tax Withholding Options
02:51 Easier Withdrawals and Money Transfers
04:33 Other Advantages: Beneficiary Setup, Frozen Plans, Flexibility
06:16 RMD Advantages (Required Minimum Distributions)
07:46 Disadvantages of Rolling Over: Age 55
08:42 Other Disadvantages: Lower Costs? Creditor Protection
09:54: Roth Conversion ProRata Rule: Disadvantage of Rolling Over
11:00 How to Roll From Your 401(k) to an IRA
12:24 Avoid Potential Problems With Rollovers (Logistics of Payee)


Be sure to research issues on creditor protection. This might be a good start in your journey as it relates to IRAs: https://www.irahelp.com/slottreport/y.... Another topic that we don't dig into here is Net Unrealized Appreciation (NUA). If you work for a company that offers or provides stock, that may be a complicating factor deserving more attention, but most people I speak with don't have that issue.

Justin Pritchard, CFP® is a feeonly fiduciary advisor who can work with clients in Colorado and most other states.

IMPORTANT:
It's impossible to cover every detail and topic in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.