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IRA and 401k Rollovers

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At long last, after all these years of working and saving toward retirement, you can finally see the light at the end of the tunnel. Before that dream of retirement becomes reality, however, you need to think seriously about how to best handle your retirement savings so you can be comfortable financially throughout your golden years.

Options for Your Retirement Savings

Once you retire, there are four options you can generally take with the savings in your employer-sponsored retirement plan. These options include the following:

  1. Leave the money in the retirement plan. This is a viable option if your home is already paid off, you have few expenses, and you have adequate savings elsewhere that will allow you to live comfortably. When you leave your money in the employer-sponsored retirement plan, your money can continue growing tax-deferred until you decide to take out any distributions.
  2. Withdraw the money from the employee-sponsored retirement plan. This is a wise plan if you need the money to pay your regular expenses each month, plan to pay off your home, travel or otherwise spend the money. Keep in mind that if you are younger than 59 years and 6 months, you must pay taxes on the money you receive. You may also have to pay an additional 10 percent in federal taxes, depending on your age.
  3. Transfer the money to another employer plan. Some people retire from their jobs only to begin another career in their senior years. This may be a job that they have dreamed of doing all their life and it is a way to live out their passions, or the new job may just provide them with a creative outlet and a delightful change of pace. Regardless, you can transfer the money to another employer-sponsored retirement plan if the new plan allows it.
  4. Put the money in a rollover IRA. Some retirees choose to put some of their 401k money into an IRA, and leave the remainder in their employer-sponsored retirement plan. Others roll over the entire amount into an IRA. If you think that you might want to borrow from your IRA, choose a Roth IRA, which allows this feature. Since brokers are often eager for you to roll over your retirement savings, they may "sweeten the pot" by giving you a cash incentive to do so. An IRA can provide you with more investment options than your employer-sponsored retirement plan, such as international bond funds or certificates of deposit. Another wise reason to roll over your retirement savings to an IRA is because upon your death, it is most likely that your beneficiaries will receive the distribution in one lump sum. With an IRA, the beneficiaries have different options on how they want to receive the distributions.

When retirement is near, it is important to talk with an investment advisor. Not only can they help you decide what option to take with your retirement savings, but they can also assist you in preparing an estate plan, discuss how taxes will affect your cash flow, and help you achieve your long-term financial goals.

An experienced investment advisor can offer advice to their clients on how best to achieve their financial goals. This helps ensure that their retirement savings will last as long as they do. Contact Ross Wealth Advisors today!

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Your investment advisor is not permitted to offer, and no statement contained herein shall constitute tax or legal advice. You should consult a legal or tax professional on any such matters.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of ROSS WEALTH ADVISORS and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.
All information and ideas should be discussed in detail with your individual adviser prior to implementation. Fee-based financial planning and investment advisory services are offered by TOUNJIAN ADVISORY GROUP, LLC, a Registered Investment Advisor in the State of Florida. Insurance products and services are offered through ROSS WEALTH ADVISORS, and TOUNJIAN ADVISORY GROUP, LLC are unaffiliated companies. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Ohio or where otherwise legally permitted.

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