Rollover 401(k) in Columbia, IL
Professional, Honest, and Experienced Retirement Planners and Financial Advisors
Rollover 401(k) in Columbia, IL. 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 existing 401(k). Many Columbia, IL residents have found that seeking the help of professional financial advisors is the best way to go about handling a 401(k) rollover. At Correct Capital, our experienced team of 401(k) specialists and financial planners will help you navigate your rollover and optimize your 401(k) account. For rollover 401(k) services in Columbia, IL, give us a call at 314-930-401K or contact us online.
Rollover 401(k) Options in Columbia, IL
Generally speaking, there are four ways to approach your 401(k) rollover. A professional Columbia, IL financial advisor like those at Correct Capital will analyze your finances and guide you towards your preferred option. Depending on a variety of factors, it may be best to:
- Leave the savings in your former employer's 401(k) plan;
- 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).
Cashing out is only truly an option if you need funds quickly. Your previous employer would be obligated to withhold 20% of the savings in order to pay taxes on it. Depending on how close you are to retirement, 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.
It is important to mention that many companies in Columbia, IL require you to roll over the funds to an IRA or new 401(k) if your account has less than $5,000 in it. Furthermore, you may be required to cash out your plan if it has less than $1,000.
Benefits to Rolling Over a 401(k) into an IRA in Columbia, IL
Your Columbia, IL financial advisors at Correct Capital may advise rolling over your 401(k) into an Individual Retirement Account (IRA). 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 increase in value between the cost basis and current value of shares of employer stock in your retirement plan. 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 rest of your 401(k) savings to an IRA. The advantage of this is that you may pay long term capital gains tax on your company stock — which is usually 15% but can go up to 20% for people with high-income — instead of income tax, which is often higher.
Pick Your Own Custodian
In a 401(k) plan, you will not have any control over the 401(k) company that holds your funds. When you do a 401(k) rollover to a Traditional or Roth IRA, you'll be able to choose your preferred institution based on how secure they are and the range of services they offer.
A Wider Array of Investment Options
While some Columbia, IL businesses provide 401(k) plans that include a wide range of investment options, IRAs typically offer an individual investor many more options than 401(k) plans. In an IRA, you can invest in any number of assets, including:
- Certificates of deposit
- Mutual funds
- Exchange-traded funds
- Real estate investment trusts
Combine Your 401(k) Plans
If you have several 401(k) plans spread across multiple former employers, it may make the most sense to incorporate all of your savings into one place. In doing so, it won't be nearly as much of a hassle to track how your investments are performing and managing them will be more streamlined. Sustained long-term growth may also be more attainable.
Continue Adding Money to Your Accounts
While your money will still grow in you old 401(k) plan, you will no longer be able to contribute more savings to it. By rolling over the funds into an IRA, you will be able to supplement your savings.
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 advising both individuals and business owners in Columbia, IL with numerous 401(k) services. When you hire Correct Capital, we'll help you navigate important considerations, for instance required minimum distribution model makes the most sense for you.
When Not to Roll Over Your 401(k) into an IRA in Columbia, IL
Depending on your time horizon and other considerations your Columbia, IL retirement planners at Correct Capital may recommend that your savings are best kept in a 401(k) plan; either your previous employer's or your new one. Some reasons to choose a 401(k) plan instead of an IRA are:
- If you like the benefits of your current 401(k) plan. If the fees are reasonable and the return on investment is good, there may not be a great reason to roll over your 401(k). If the account stops performing or you change your mind for a different reason, you can still roll over your 401(k) at any time.
- No early withdrawal fees if you are 55. While both 401(k)s and IRAs allow for withdrawals when you are 59½, the threshold in a 401(k) for a 10% early withdrawal fee is 55. So, a 401(k) may be preferable if you would like to retire a few years early.
- Loans from an IRA are not allowed. While taking a loan from retirement savings should only be considered in certain circumstances, 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) account. 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 keep contributing to your 401(k) your employer will match your contributions.
Click on the links below to see some of the other services we offer in Columbia, IL:
- Wealth Management
- 401k Companies
- Financial Advisor
- Asset Management
- Retirement Consultant
- Financial Portfolio Management
- 401(k) Rollover
- Financial Advice
- Retirement Planning Services
Rollover 401(k) in Columbia, IL | Correct Capital
At Correct Capital, we give all of our clients personalized attention and tailor our services and advice to their current financial status, objectives, and time horizon. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience helping Columbia, IL 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 are free to be straightforward and unbiased, and there are no restrictions to the services or investment opportunities we can recommend.