Rollover 401(k) in Clayton, MO
Rollover 401(k) in Clayton, MO. While moving to a new job can be a welcome change, it can be hard to know what to do with the savings you have in your 401(k) account with your previous employer. Many Clayton, MO residents don't have the time, expertise, or interest to manage multiple retirement accounts or to understand the best way to approach a 401(k) rollover. At Correct Capital, our experienced team of 401(k) experts and retirement planners will help you understand your options. For rollover 401(k) counseling in Clayton, MO, give us a call at 877-930-4015 or contact us online.
Rollover 401(k) Options in Clayton, MO
In general, you have four options when considering whether to roll over your 401(k). A knowledgeable Clayton, MO financial advisor like those at Correct Capital will be able to look at your finances and help you decide which option is best for you. Depending on a variety of factors, we may advise to:
- Leave the funds in your former employer's 401(k) plan;
- Roll over your 401(k) to your new employer's 401(k);
- Roll over your 401(k) into a Traditional IRA or Roth IRA;
- Cash out your 401(k).
Taking out the cash value is not advisable unless you need money now. Your previous employer would be obligated to take out 20% of the savings in order to pay taxes on it. You may also face a 10% early withdrawal penalty from the IRS, and you would also have to pay federal, state, and local taxes. Meaning, you could lose the majority of the account's value.
One last consideration to note is that businesses in Clayton, MO are allowed to make you move the money if your plan has less than $5,000 in it. Lastly, you may be required to cash out your plan if the balance is less than $1,000.
Benefits to Rolling Over a 401(k) into an IRA in Clayton, MO
Your Clayton, MO financial advisors at Correct Capital may counsel that rolling over your 401(k) funds into a Traditional or Roth IRA is your best option. There are a variety of benefits to this strategy:
Pay Less in Taxes With 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 company stock in your retirement account. If part of your 401(k) includes company stock, you can put that portion of your account into a standard brokerage account, and roll the other funds to an IRA. In doing so, you may pay long term capital gains tax on the shares — which is 0%, 15%, or 20%, depending on your income — instead of income tax, which may be substantially more.
The Custodian of Your Choice
When you opt to put your retirement funds in a 401(k), your employer will decide the 401(k) company holding your funds. By rolling over to an IRA, you'll be able to choose your preferred custodian based on how secure they are, the ease of their digital platforms, and the other services they offer.
A Wider Range of Investment Opportunities
While some Clayton, MO companies provide 401(k) plans that permit a wide range of investment options, you will generally have much more flexibility in an IRA than you would in a 401(k) plan. IRAs typically allow investment in almost any type of asset, including:
- Stocks
- Bonds
- Certificates of deposit
- Mutual funds
- ETFs
- Real estate investment trusts
- Annuities
Consolidate Your Savings Accounts
If you change jobs frequently, it could be incredibly helpful to combine the funds from all your accounts into one plan. In doing so, it won't be nearly as much of a hassle to follow how your investments are growing and managing them will be more streamlined. Sustained long-term growth may also be more attainable.
Continue Adding Money 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 continue adding more money over time.
The financial advisors of Correct Capital will help you understand if rolling over a 401(k) is right for you, and which type of rollover is preferred. We have more than 20 years of experience helping both individuals and families and business owners in Clayton, MO with A-Z 401(k) services. When you hire Correct Capital, we'll walk you through special considerations, for instance which type of savings plan fits best in your portfolio.
When Not to Roll Over Your 401(k) into an IRA in Clayton, MO
Depending on how close you are to retirement and other considerations your Clayton, MO retirement planners at Correct Capital may recommend that your savings are better off in a 401(k) account; either your previous employer's or your new one. Some reasons to choose a 401(k) plan over an IRA include:
- If your current 401(k) plan works for you. If the fees aren't exorbitant and your savings are growing as you'd like them to, there may not be a good reason to roll over your 401(k). 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.
- Avoid early withdrawal fees if you are 55. While you can begin taking out money without a penalty from both a 401(k) or IRA at 59½, you will not have to pay a 10% early withdrawal fee taking money out of a 401(k) once you have turned 55. A 401(k) may be best if you're considering early retirement.
- Loans from an IRA are not allowed. While typically not recommended, if you are in a situation where you need to take out a loan from your retirement savings, you would only be able to do so if they are in a 401(k) plan.
- Your employer can pay matching contributions into your 401(k) plan. While some employers will allow you to roll money out of your 401(k) to an IRA while you are still working, it may make more sense to stick with a 401(k) your employer will match your contributions.
Click on the links below to see some of the other services we offer in Clayton, MO:
- 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
- Social Security Consultants Near Me
Rollover 401(k) in Clayton, MO | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them reach their objectives. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience assisting Clayton, MO individuals and families with 401(k) rollovers as part of our all-inclusive wealth management services. As fiduciary advisors, we have a legal and ethical imperative to do what's best for you and disclose any potential conflicts of interest. As an independent firm, we will always be direct and objective, and we are not bound to only offer you limited investment options.
Give us a call today at 877-930-4015 or contact us online to schedule an appointment with one of our qualified 401(k) experts and retirement planners today.
