Rollover that Rogue Retirement Account without Stress
- Sam Lush
More than likely, you’re familiar with this scenario: you leave a job and a retirement account to which you no longer actively contribute. It sits there for months (or maybe even years) because you’re not exactly sure what the process entails to roll it over or to where you want to move it. Of course you realize that money could probably be invested more wisely, but moving accounts seems intimidating…and so there it continues to sit.
It’s common for people to be nervous or hesitant about transferring retirement accounts like IRAs and 401(k)s. But moving accounts shouldn’t be something you fear or put off because you expect it to be too complicated.
In working with our clients at C&N, we’ve found there are three main causes for such concern: potential tax implications, incurring fees and process complexity. However, these concerns are often based on preconceived misconceptions. Let’s finally set the record straight and empower you to take control of your rogue retirement accounts and the financial security of your future.
Potential Tax Implications
Many people worry about potential tax concerns when moving their retirement accounts. They’ve heard those stories about high penalties for early withdrawal and assume the best way to avoid them is to let the account stay put.
A rollover is not equivalent to a withdrawal. When you transfer retirement accounts through the appropriate processes, you’re still keeping it in the same category. It just now lives in a different place.
A rollover can also give you better control of your money. For example, if you roll over an old 401(k) into an IRA account, you are no longer limited to the investment options selected by your employer. This freedom of choice allows you to make customized investment decisions based on your personal goals and risk tolerance. Of course, it’s important to remember that investing in non-FDIC insured securities always involves some level of risk and the potential to lose value.
A rollover is simply the process of closing an old account and opening a new one, which can mean incurring fees that are unique to each provider. Many people worry about the potential cost, which causes them to leave accounts untouched.
Always know what fees you’re paying and the return you’re getting on your investment. Before selecting a new financial institution for your retirement savings, research local institutions and firms, the experience of their advisors and, possibly most reliable, talk to your family and friends – who do they trust to help them make the best use of their money? In the end, the improved return on your investment and the added value that your advisor brings to the table should far surpass any fees.
People tend to equate the pain of rolling over a retirement account to a visit to the dentist. They know it’s important but usually not urgent, so they tend to put it off.
What’s more, people are intimidated by the thought of the paperwork, lengthy forms and seemingly complex steps, so they delay rollovers. Working with a local, trusted advisor makes moving accounts much easier than most people think, and in fact, many people regret not doing it sooner.
In summary, you should carefully consider whether a rollover is right for your own personal situation, including the specific fees and services associated with your 401(k) and who you have by your side to coach you through the process. Visit me in our Old Lycoming office to learn more about the factors to consider when deciding whether a rollover might be right for you.
Some products are not FDIC insured or guaranteed, not a deposit or other obligation of the bank, not guaranteed by the bank and are subject to investment risk, including the possible loss of the principal amount invested and are not insured by any other federal government agency.
Sam has been with C&N since 2011 and is currently the South Regional Manager of Financial Services. Prior to joining C&N, Sam was a Wealth Manager at Wienken Wealth Management in State College. Sam graduated with honors in business administration from the Whittemore School of Business and Economics at the University of New Hampshire. Sam holds a Series 7 and 66 securities license as well as his insurance license.