Rollover 401(k) in Madison County, IL
Professional, Honest, and Experienced Retirement Planners and Financial Advisors
Rollover 401(k) in Madison County, 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 Madison County, IL residents don't have the time, expertise, 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) experts and retirement consultants will help you determine what makes the most sense for you. For rollover 401(k) counseling in Madison County, IL, give us a call at 314-930-401K or contact us online.
How You Can Approach Your Rollover 401(k) in Madison County, IL
Generally speaking, you have four options when considering whether to roll over your 401(k). A qualified Madison County, IL financial advisor like those at Correct Capital will be able to look at your financial situation and guide you towards your preferred option. Depending on a variety of factors, it may be best 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;
- Cash out your 401(k).
The last option is not recommended unless you need money now. Your previous employer will have to withhold 20% of the savings for tax purposed. Depending on how close you are to retirement, the IRS may also take a 20% early withdrawal penalty, and you would potentially pay even more in federal, state, and local taxes. That means you might not even see 50% of your savings.
Another thing to note is that many companies in Madison County, IL obligate you to move the funds in your 401(k) if your plan 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 Madison County, IL
Your Madison County, IL 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 advantages 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 difference between the original value and market value of company stock in your 401(k) plan. If you won shares of your previous company in your 401(k), you can transfer that increase in value into a standard brokerage account, and roll the other funds to an IRA. By separating your 401(k) into two accounts, 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 may be significantly more.
The Custodian of Your Choice
When you opt to put your retirement funds in a 401(k), the money will be held by the 401(k) company your employer chooses. By rolling over to an IRA, you'll be able to choose your preferred custodian based on how secure they are and the range of services they offer.
A Wider Range of Investment Opportunities
While some Madison County, IL employers provide 401(k) plans that include a wide array 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
Combine Your Savings Accounts
If you have various 401(k) plans with previous employers, there are many advantages to merging the funds from all your accounts into one place. In doing so, it won't be nearly as much of a hassle to follow how your investments are performing and you will be able to manage them more efficiently. It may also be the better option for long-term growth.
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. If you roll the funds out of your old employer's plan, 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 over 20 years of experience assisting both individuals and families and business owners in Madison County, IL with numerous 401(k) services. When you hire Correct Capital, we'll walk you through important considerations, such as which type of savings plan fits best in your portfolio.
When to Avoid a 401(k) Rollover in Madison County, IL
Depending on your time horizon and other factors your Madison County, IL retirement planners at Correct Capital may recommend that your funds should be left in a 401(k) plan; whether that be your previous employer's or your new one. Some reasons to stick with a 401(k) plan over an IRA include:
- If you like the benefits of your current 401(k) plan. If the fees are fair and your savings are growing as you'd like them to, it may be your best option to keep your savings where they are. the fees change in the future 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 fees 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're considering early retirement.
- You cannot take a loan out of an IRA. 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 put 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 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 Madison County, 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 Madison County, IL | Correct Capital
At Correct Capital, we give all of our clients bespoke guidance and tailor our services and advice to their current financial status, goals, and time horizon. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience assisting Madison County, IL individuals and families with 401(k) rollovers along with a host of other wealth management services. As fiduciary advisors, we are legally and ethically obligated to act only in your best interested. As an independent firm, we will always be straightforward and unbiased, and we are not bound to only offer you limited investment opportunities.