If you’ve had many job changes, several types of careers, or relocated and have any old 401(k)’s from prior employers (not current ones), consider a little financial “spring cleaning” and roll it over into an IRA. There are several advantages to doing so rather than letting your money sit forgotten. Here are the six reasons for tidying up your roster of IRA accounts.

Why Rollover to an IRA?

There are several advantages to rolling over a 401(k) to an IRA.

  1. Increased access to the selection of investment options in your portfolio rather than those offered by your former employer’s plan, which often has limited options. We’ve seen plans with less than ten investment options.
  2. More control over the fee structure. When moving to an IRA, you decide on the fee structure assessed. Not all employer-sponsored retirement plans offer clear visibility of the fees associated with your account. By transferring funds to your advisor of choice, you likely receive pricing discounts by leveraging your relationship with other investment accounts within a brokerage brand or advisory team.
  3. Your investment advisor can help you reduce redundancies or identify missing elements to match your desired portfolio holding allocation. With too many accounts scattered across the universe, either self-managed or advisor-managed, your portfolio can quickly shift out of alignment with your overall investment objectives.
  4. Beneficiary updates are faster. Get the itch to change beneficiaries on your IRA asset accounts? Again, a simplified structure reduces the effort. So, while you’re streamlining your accounts, be certain to give the beneficiary designations a fresh look.
  5. Required minimum distribution (RMD time): When it comes time to take RMD (required minimum distributions) from your consolidated retirement accounts, simplify the mental and administrative workload. By having fewer computations, fewer but larger bank deposits, and easier cash flow management in your retirement years, you’ll give yourself much-needed relief.
  6. Your estate planning attorney and beneficiaries will appreciate your simplified structure. It will reduce the paperwork for your executor with notifications and helps your future beneficiaries from inheriting an excessive number of accounts for them to manage.

You can’t combine a self-directed IRA (funds you contributed to an IRA), and the rollover of an employer-sponsored 401(K) into the same IRA. However, by moving the accounts to a single place you get a better vantage point—one online system to access, one monthly paperless statement, etc.

Don’t forget a ROTH-401(k) account too. These accounts can be rolled over just like traditional 401(k) accounts.

Do we have you inspired to tackle this dreaded task? We are here to both inspire you and provide forward momentum. By working alongside your trusted, qualified investment advisor, you’ll avoid common pitfalls of rollover activities, discuss your new investment selections, and ensure your rollover is completed correctly.

At Organized Instincts, our daily money managers will help you with your 401(k)-to-IRA rollovers. Schedule a call today and discuss how a daily money manager helps you tackle the dreaded task of consolidating 401(k) investments.

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