Rollover 401(k) in O'Fallon, MO
Rollover 401(k) in O'Fallon, MO. While moving to a new job can be a welcome change, it can also lead to uncertainty about the best way to handle your existing 401(k). Many O'Fallon, MO residents have found that seeking the help of professional financial advisors is the best way to manage a 401(k) rollover. At Correct Capital, our experienced team of 401(k) specialists and retirement planners will help you get the most out of your savings. For rollover 401(k) services in O'Fallon, MO, reach out to us today at 877-930-4015 or contact us online.
Rollover 401(k) Options in O'Fallon, MO
Generally speaking, you have four options when considering whether to roll over your 401(k). A professional O'Fallon, MO financial advisor like those at Correct Capital will consider 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:
- 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).
Taking out the cash value is not recommended unless you need money now. Your previous employer would be obligated to take out 20% of the savings to prepay the taxes you would owe on it. Depending on your age, the IRS may also take a 20% early withdrawal penalty, and you would potentially pay even more in federal, state, and local taxes. Meaning, you could lose the majority of your savings.
It is important to note that many employers in O'Fallon, MO obligate you to roll over the funds to an IRA or new 401(k) if your account has less than $5,000 in it. Furthermore, they may be able to cash out your account if it has less than $1,000.
Benefits to Rolling Over a 401(k) into an IRA in O'Fallon, MO
Your O'Fallon, MO financial advisors at Correct Capital may suggest 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 company stock in your retirement plan. If you won shares of your previous company in your 401(k), you can put that increase in value into a standard brokerage account, and roll the remainder to an IRA. By separating your 401(k) into two accounts, you may pay long term capital gains tax on the shares — which is 0%, 15%, or 20%, depending on your income — rather than income tax, which may be significantly more.
The Financial Institution of Your Choice
In a 401(k) plan, the money will be held by the 401(k) company your employer chooses. By rolling over to an IRA, you'll have your pick of institutions based on how secure they are, the ease of their digital platforms, and the other services they offer.
More Diverse of Investment Options
While some O'Fallon, MO businesses provide 401(k) plans with few limitations on your investment opportunities, IRAs typically offer an individual investor many more options than 401(k) plans. IRAs typically allow investment in almost any type of asset, including:
- Stocks
- Bonds
- Certificates of deposit
- Mutual funds
- ETFs
- Real estate investment trusts
- Annuities
Combine Your Savings Accounts
If you have several 401(k) plans spread across multiple former employers, there are many advantages to merging the funds from all your accounts into one plan. That will make it easier to track the growth of your funds and managing them will be more streamlined. Sustained long-term growth may also be more attainable.
Keep Contributing 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 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 two decades of experience assisting both individuals and families and business owners in O'Fallon, MO with a variety of 401(k) services. When you retain our services, we'll help you navigate special considerations, such as required minimum distribution model makes the most sense for you.
When Not to Roll Over Your 401(k) into an IRA in O'Fallon, MO
Every person's finances vary, and your O'Fallon, MO retirement planners at Correct Capital may recommend that your savings are best kept in a 401(k) plan; whether that be your previous employer's or your new one. Some reasons to choose a 401(k) plan rather than an IRA include:
- If your current 401(k) plan works for you. If the fees are reasonable and your savings are growing as you'd like them to, there may not be a great reason to roll over your 401(k). If the account stops giving you strong returns or you change your mind for a different reason, you can still roll over your 401(k) at any time.
- Avoid early withdrawal penalties if you are 55. While you can begin taking out savings without a fee from both a 401(k) or IRA at 59½, a 401(k) does not include a 10% early withdrawal fee if you are 55. So, a 401(k) may be preferable if you would like to retire a few years early.
- You cannot take a loan out of an IRA. While taking a loan from retirement savings isn't advisable, it is important to know that you cannot take a loan out of an IRA.
- Your employer may match your 401(k) contributions. Employers may contribute a full 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 O'Fallon, 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 O'Fallon, MO | Correct Capital
At Correct Capital, we give all of our clients bespoke attention 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 seven decades of combined experience aiding O'Fallon, MO 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 oversee your account in a way that benefits you and only you. As an independent firm, we are free to be honest and objective, and we are not bound to only offer you limited investment opportunities.
Reach out to us today at 877-930-4015 or contact us online to schedule an appointment with one of our professional 401(k) experts and retirement planners today.
