Rollover 401(k) in Shrewsbury, MO
Rollover 401(k) in Shrewsbury, MO. While moving to a new job can be a welcome new opportunity, it can be hard to know what to do with your existing 401(k). Many Shrewsbury, MO residents have found that enlisting the services of professional financial advisors is the best way to go about handling a 401(k) rollover. At Correct Capital, our dedicated team of 401(k) specialists and financial advisors will help you get the most out of your savings. For rollover 401(k) consulting in Shrewsbury, MO, call us today at 877-930-4015 or contact us online.
Rollover 401(k) Options in Shrewsbury, MO
Typically, there are four ways to approach your 401(k) rollover. A experienced Shrewsbury, MO financial advisor like those at Correct Capital will analyze your assets, savings, and 401(k) plan and help you determine which option is best for you. Depending on a variety of factors, it may be best 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 will have to take out 20% of the funds for tax purposed. Depending on how close you are to retirement, the IRS may also withhold a 20% early withdrawal penalty, and you would potentially pay even more in federal, state, and local taxes. Meaning, you could potentially lose more than half of your savings.
One last consideration to mention is that many employers in Shrewsbury, MO obligate you to move the funds in your 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 Shrewsbury, MO
Your Shrewsbury, MO financial advisors at Correct Capital may recommend rolling over your 401(k) into an Individual Retirement Account (IRA). This is beneficial for several different reasons:
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 cost basis and current value of shares of employer stock in your retirement plan. 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. 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.
Pick Your Own Financial Institution
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 be able to choose your preferred custodian based on how secure they are and the range of services they offer.
More Diverse of Investment Options
While some Shrewsbury, MO businesses offer 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:
- Stocks
- Bonds
- Certificates of deposit
- Mutual funds
- ETFs
- Real estate investment trusts
- Annuities
Consolidate Your 401(k) Plans
If you change jobs frequently, it could be incredibly helpful to incorporate the funds from all your accounts into one account. That will make it easier to follow how your investments are performing and managing them will be more streamlined. It may also be the better option for long-term growth.
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. If you roll the funds out of your old employer's plan, 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 helping both individuals and business owners in Shrewsbury, MO with numerous 401(k) services. When you meet with us, we'll help you navigate special considerations, for instance what type of account makes the most sense for your time horizon.
When Not to Roll Over Your 401(k) into an IRA in Shrewsbury, MO
Every person's finances vary, and your Shrewsbury, MO retirement planners at Correct Capital may recommend that your funds are best kept in a 401(k) plan; whether that be your previous employer's or your new one. Some of the advantages of a 401(k) plan over an IRA are:
- If you like the benefits of your current 401(k) plan. If the fees aren't exorbitant and the return on investment is good, there may not be a good reason to roll over your 401(k). You are not required to roll over a 401(k) immediately, so you are free to change your mind and transfer the funds at a later date.
- No early withdrawal penalties 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. A 401(k) may be best if you need or want the money sooner.
- Loans from an IRA are not allowed. 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) plan. Employers may contribute a dollar-for-dollar or partial match into a 401(k), while an IRA would only include the money you put into it.
Take a look at some of the other services we offer in Shrewsbury, 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
Rollover 401(k) in Shrewsbury, MO | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them realize their goals. Our team of retirement consultants, portfolio managers, and financial planners have over seven decades of combined experience helping Shrewsbury, MO individuals and families with 401(k) rollovers along with a host of other wealth management services. As fiduciary advisors, we have a legal and ethical imperative to act only in your best interested. As an independent firm, we will always be direct and unbiased, and there are no limitations to the services or investment opportunities we can recommend.
Reach out to us today at 877-930-4015 or contact us online to schedule an appointment with one of our knowledgeable 401(k) experts and retirement consultants today.
