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Rollovers

You have choices for your 401k balance when you leave your employer. Below is a list of options and the benefits of each. Make sure you carefully evaluate the fees of each and consider low cost investment options.
 
1)      Rollover your balance to an IRA or Roth IRA (click here for calculator) – Benefits include no taxable event, virtually unlimited investment options, having everything in one place can make asset allocations easier and beneficiary forms current, and can simplify required minimum distributions. Make sure you make a direct rollover or you could be subject to withholding taxes. Click here to further explore this option, including low cost index fund options.
 
2)      Keeping the balance in a 401(k), whether it’s with your old employer (if they allow it) or your new employer – Benefits include stronger creditor protection and the ability to borrow from your account. Make sure you have access to adequate diversification and low fees. Check out Brightscope for how 401k plans compare.
 
3)      Cash out your account – This is usually the worst choice. You pay ordinary income tax, which could push you into a higher tax bracket, and potentially early-withdrawal penalties if you’re under 55, and the account no longer grows tax free.
 
If you own highly appreciated company stock, there may be special considerations that you need to discuss with a knowledgeable advisor. Click this link if you’d like to set up a complimentary consultation.
 

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  •  Tel: (970) 482-4418
  •  Fax: (970) 797-1360
  •  edward.spraberry@lpl.com
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Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: Arkansas, Colorado, Louisiana, New York, Texas, Wyoming, Alabama, Arizona, California, Oklahoma

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