Rollover 401(k) in Millstadt, IL
Rollover 401(k) in Millstadt, IL. Starting a new job in Millstadt, IL can lead to new opportunities, but it can also create confusion about the best way to manage the savings you have in your 401(k) account with your previous employer. Many Millstadt, IL residents have found that seeking the help of qualified financial advisors is the best way to manage a 401(k) rollover. At Correct Capital, our dedicated team of 401(k) specialists and financial planners will help you understand your options. For rollover 401(k) consulting in Millstadt, IL, call us today at 877-930-4015 or contact us online.
Rollover 401(k) Options in Millstadt, IL
Typically, there are four different things you can do with your 401(k) plan with your old employer. A knowledgeable Millstadt, IL financial advisor like those at Correct Capital will consider your financial situation and guide you towards your preferred option. Depending on your current financial health and your time horizon, we may recommend to:
- Keep your 401(k) with your old employer;
- Roll over your 401(k) to a plan with your new employer;
- Roll over your 401(k) into a Traditional IRA or Roth IRA;
- Take the cash value out of your 401(k).
Taking out the cash value is not recommended unless you need money now. Your previous employer would be obligated to withhold 20% of the funds to prepay the taxes you would owe on it. Depending on your age, the IRS may also take a 20% early withdrawal penalty, and you would also have to pay federal, state, and local taxes. Meaning, you could lose the majority of the account's value.
Another thing to note is that employers in Millstadt, IL are allowed to make you move the money if your plan has less than $5,000 in it. Lastly, they may be able to cash out your account if it has less than $1,000.
Benefits to Rolling Over a 401(k) into an IRA in Millstadt, IL
Your Millstadt, IL financial advisors at Correct Capital may advise rolling over your 401(k) into an Individual Retirement Account (IRA). This is beneficial for several different reasons:
Take Advantage of Special Rules if You Have Publicly Traded Company Stock in Your 401(k)
Net unrealized appreciation (NUA) is the difference between the cost basis and market value of shares of employer stock in your 401(k) plan. If part of your 401(k) includes company stock, you can put that difference into a standard brokerage account, and roll the remainder to an IRA. The advantage of this is that you may pay long term capital gains tax on your company stock — which caps out at 20% for the highest earners — rather than income tax, which is often higher.
Pick Your Own Custodian
In a 401(k) plan, the money will be held by the 401(k) company your employer chooses. By rolling over to an IRA, you'll have your pick of custodians based on how secure they are, the ease of their digital platforms, and the other services they offer.
More of Investment Options
While some Millstadt, IL companies offer 401(k) plans that permit a wide array of investment options, you will generally have much more flexibility in an IRA than you would in a 401(k) plan. In an IRA, you can invest in any number of assets, including:
- Stocks
- Bonds
- Certificates of deposit
- Mutual funds
- Exchange-traded funds
- Real estate investment trusts
- Annuities
Consolidate Your 401(k) Plans
If you have several 401(k) plans spread across multiple former employers, it may make the most sense to incorporate the funds from all your accounts into one place. That will make it easier to track how your investments are performing and you will be able to manage them more directly. You could also see greater long-term gains.
Keep Contributing to Your Accounts
While you can still reap the benefits of the investments and savings that are already there, you won't be able to add funds to a 401(k) plan with your previous employer. By rolling over the funds into an IRA, you may be eligible to keep contributing to the plan you've picked out.
The financial advisors of Correct Capital will help you decide if a 401(k) rollover is the best option for you. We have over two decades of experience advising both individuals and families and business owners in Millstadt, IL with comprehensive 401(k) services. When you retain our services, we'll guide you through special considerations, such as required minimum distribution model makes the most sense for you.
Why to Avoid a 401(k) Rollover in Millstadt, IL
Each of our client's financial situation is unique, and your Millstadt, IL retirement planners at Correct Capital may advise that your funds are best kept in a 401(k) account; whether that be your previous employer's or your new one. Some reasons to choose a 401(k) plan rather than an IRA include:
- If your current 401(k) plan works for you. If the fees are reasonable and you're getting strong returns, it may be your best option to keep your savings where they are. You are not required to roll over a 401(k) immediately, so you are free to change your mind and transfer the funds at a later date.
- No early withdrawal fees if you are 55. While you can begin taking out money without a fee from both a 401(k) or IRA at 59½, a 401(k) does not include a 10% early withdrawal fee if you are 55. So, a 401(k) may be preferable if you would like to retire earlier.
- You cannot take a loan out of an IRA. While taking a loan from retirement savings isn't advisable, it is important to know that you cannot take a loan out of an IRA.
- Your employer may match your 401(k) contributions. While some employers will allow you to roll money out of your 401(k) to an IRA before retirement, it may make more sense to stick with a 401(k) to receive an employer match and keep your retirement assets in one place.
Click on the links below to see some of the other services we offer in Millstadt, IL:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
Rollover 401(k) in Millstadt, IL | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them realize their goals. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience aiding Millstadt, IL individuals and families with 401(k) rollovers in addition to several other wealth management services. As fiduciary advisors, we are legally and ethically bound to act only in your best interested. As an independent firm, we will always be direct and unbiased, and there are no restrictions to the services or investment opportunities we can offer you.
Reach out to us today at 877-930-4015 or contact us online to schedule an appointment with one of our professional 401(k) experts and financial planners today.
