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 new opportunity, it can be hard to know what to do with your 401(k) account with your previous employer. Many Columbia, IL residents don't have the time, financial literacy, or interest to oversee multiple retirement accounts or to carefully weigh their best options when considering a 401(k) rollover. At Correct Capital, our dedicated team of 401(k) specialists and retirement consultants will help you get the most out of your savings. 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 different things you can do with your 401(k) plan with your old employer. A professional Columbia, IL financial advisor like those at Correct Capital will be able to look at your finances and guide you towards what will work best for you. Depending on your current financial health and your time horizon, we may advise 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).
The last option is only truly an option if you need funds quickly. Your previous employer would be required to withhold 20% of the funds for tax purposed. 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 your savings.
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. Additionally, they may be able to cash out your account if the balance is 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 recommend 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 difference between the original value 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 portion of your account into a standard brokerage account, and roll the remainder to an IRA. This way, you may pay long term capital gains tax on the shares — which is usually 15% but can go up to 20% for people with high-income — rather than income tax, which is often higher.
The Custodian of Your Choice
In a 401(k) plan, your employer will decide the 401(k) company holding your funds. By rolling over to an IRA, you'll have your pick of institutions based on stability, trading technology, and financial services.
A Wider Range of Investment Opportunities
While some Columbia, IL companies provide 401(k) plans that include a wide range of investment opportunities, most retirement planners find that IRAs offer more control and flexibility than employer-limited 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
Consolidate Your 401(k) Plans
If you change jobs frequently, there are many advantages to incorporating the entirety of your retirement funds into one account. That way, you much much more efficiently track how your savings are growing and managing them will be more streamlined. You could also see greater long-term gains.
Continue Adding Money to Your Accounts
While you will still see return on your investments 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 two decades of experience advising both individuals and families and business owners in Columbia, IL with numerous 401(k) services. When you retain our services, we'll help you navigate important considerations, for instance whether a traditional or Roth IRA is best for you.
When Not to Roll Over Your 401(k) into an IRA in Columbia, IL
Each of our client's financial situation is unique, and your Columbia, IL retirement planners at Correct Capital may recommend that your funds are better off in a 401(k) plan; either your previous employer's or your new one. Some of the advantages of a 401(k) plan over an IRA include:
- If you like the benefits of your current 401(k) plan. If the fees aren't too high and you're getting strong returns, it may make the most sense to keep your savings where they are. If the account stops giving you strong returns or you change your mind for a different reason, you retain the right to roll over the funds whenever you'd like.
- No early withdrawal penalties if you are 55. While both 401(k)s and IRAs allow for withdrawals when you are 59½, you will not face 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 need or want the money sooner.
- Loans from an IRA are not allowed. While taking a loan from retirement savings isn't recommended, you would only be able to do so if they are in a 401(k) plan.
- Your employer may match your 401(k) contributions. Employers may contribute a dollar-for-dollar or partial match into a 401(k), while you are the only contributor if you put your savings into an IRA.
Click on the links below to see some of the other services we offer in Columbia, 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
- Social Security Consultants Near Me
- Retirement Calculator
Rollover 401(k) in Columbia, IL | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them achieve their objectives. Our team of retirement consultants, portfolio managers, and financial planners have nearly a century of combined experience assisting Columbia, IL individuals and families with 401(k) rollovers as part of our comprehensive 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 unbiased, and there are no restrictions to the services or investment options we can offer you.