Rollover 401(k) in Fairview Heights, IL
Professional, Honest, and Experienced Retirement Planners and Financial Advisors
Rollover 401(k) in Fairview Heights, 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 401(k) account with your previous employer. Many Fairview Heights, IL residents don't have the time, knowledge, or interest to manage multiple retirement accounts or to understand the best way to approach a 401(k) rollover. At Correct Capital, our dedicated team of 401(k) experts and financial planners will help you understand your options. For rollover 401(k) counseling in Fairview Heights, IL, reach out to us today at 314-930-401K or contact us online.
Rollover 401(k) Options in Fairview Heights, IL
In general, there are four ways to approach your 401(k) rollover. A professional Fairview Heights, IL financial advisor like those at Correct Capital will be able to look at your assets, savings, and 401(k) plan and guide you towards your preferred option. Depending on your specific circumstances, we may advise to:
- Leave the money 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;
- Cash out your 401(k).
Cashing out is only truly an option if you need funds quickly. Your previous employer would be obligated to take out 20% of the balance to prepay the taxes you would owe on it. You may also face a 10% early withdrawal penalty from the IRS, and you would would be subject to federal, state, and local taxes. Meaning, you could potentially lose more than 50% of your savings.
One last consideration to note is that many employers in Fairview Heights, IL require you to move the funds in your 401(k) if your plan has less than $5,000 in it. Lastly, 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 Fairview Heights, IL
Your Fairview Heights, 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:
Take Advantage of 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 market value of shares of employer stock in your 401(k) account. If you won shares of your previous company in your 401(k), you can transfer that portion of your account into a standard brokerage account, and roll the rest of your 401(k) savings to an IRA. This way, 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 — rather than income tax, which may be significantly more.
The Financial Institution of Your Choice
When you opt to put your savings in a 401(k), the money will be held by the 401(k) company your employer chooses. When you do a 401(k) rollover to a Traditional or Roth IRA, you'll have your pick of custodians based on how secure they are and the range of services they offer.
More Diverse of Investment Opportunities
While some Fairview Heights, IL businesses provide 401(k) plans with few limitations on your investment opportunities, most retirement planners find that IRAs offer more control and flexibility than employer-limited 401(k) plans. IRAs typically allow investment in almost any type of asset, including:
- Certificates of deposit
- Mutual funds
- Real estate investment trusts
Combine Your Savings Accounts
If you have various 401(k) plans with previous employers, it may make the most sense to incorporate all of your savings into one place. 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 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 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 Fairview Heights, IL with comprehensive 401(k) services. When you hire Correct Capital, we'll walk you through special considerations, such as how a 401(k) rollover will affect your tax planning.
Why to Avoid a 401(k) Rollover in Fairview Heights, IL
Every person's finances vary, and your Fairview Heights, IL retirement planners at Correct Capital may advise that your savings are best kept in a 401(k) plan; either your previous employer's or your new one. Some of the advantages of a 401(k) plan instead of an IRA are:
- If your current 401(k) plan works for you. If the fees aren't too high and you're getting strong returns, there may not be a great reason to roll over your 401(k). If the account stops performing or you change your mind for another reason, you can still roll over your 401(k) at any time.
- 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 have to pay a 10% early withdrawal fee taking money out of a 401(k) once you have turned 55. So, a 401(k) may be preferable if you would like to retire earlier.
- Loans from an IRA are not allowed. While taking a loan from retirement savings should only be considered in certain circumstances, it is important to note that you cannot take a loan out of either a Traditional or Roth 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 keep contributing to your 401(k) to receive an employer match and keep your retirement assets in one place.
See some of the other services we offer in Fairview Heights, 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 Fairview Heights, IL | Correct Capital
At Correct Capital, we give all of our clients bespoke guidance and tailor our services and advice to their current financial health, objectives, and time horizon. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience aiding Fairview Heights, IL individuals and families with 401(k) rollovers as part of our all-inclusive wealth management services. As fiduciary advisors, we are legally and ethically bound 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 we are not bound to only offer you limited investment opportunities.