Rollover 401(k) in Warson Woods, MO
Rollover 401(k) in Warson Woods, MO. Starting a new job in Warson Woods, MO is exciting, but it can also lead to uncertainty about the best way to handle the savings you have in your 401(k) account with your previous employer. Many Warson Woods, MO residents have found that seeking the help of professional financial advisors is the best way to go about handling a 401(k) rollover. At Correct Capital, our experienced team of 401(k) specialists and retirement planners will help you understand your options. For rollover 401(k) advice in Warson Woods, MO, give us a call at 877-930-4015 or contact us online.
Rollover 401(k) Options in Warson Woods, MO
In general, there are four ways to approach your 401(k) rollover. A professional Warson Woods, MO financial advisor like those at Correct Capital will analyze your finances and help you decide which option is best for you. Depending on your specific circumstances, 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;
- Take the cash value out of your 401(k).
Taking out the cash value is not advisable unless you need money now. Your previous employer will have to take out 20% of the balance for tax purposed. Depending on how close you are to retirement, the IRS may also withhold a 20% early withdrawal penalty, and you would also have to pay federal, state, and local taxes. That means you might not even see 50% of the funds.
It is important to note that many businesses in Warson Woods, MO require you to roll over the funds to an IRA or new 401(k) if your account has less than $5,000 in it. Furthermore, you may be required to cash out your plan if the balance is less than $1,000.
Benefits to Rolling Over a 401(k) into an IRA in Warson Woods, MO
Your Warson Woods, MO 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:
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 cost basis and current 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 difference 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 usually 15% but can go up to 20% for people with high-income — rather than income tax, which may be considerably more.
The Financial Institution of Your Choice
In a 401(k) plan, you will not have any control over the 401(k) company that holds your savings. By rolling over to an IRA, you'll have your pick of institutions based on stability, trading technology, and financial services.
More Diverse of Investment Opportunities
While some Warson Woods, MO employers offer 401(k) plans that include a wide array of investment opportunities, IRAs typically offer an individual investor many more options than 401(k) plans. In an IRA, you can invest in any number of assets, including:
- Shares
- Bonds
- Certificates of deposit
- Mutual funds
- Exchange-traded funds
- Real estate investment trusts
- Annuities
Combine Your Savings Accounts
If you have various 401(k) plans with previous employers, it may make the most sense to combine all of your savings 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 directly. 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. 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 guide you in your decision of what to do during a 401(k) rollover. We have over 20 years of experience helping both individuals and business owners in Warson Woods, MO with numerous 401(k) services. When you retain our services, we'll walk you through important considerations, for instance which type of savings plan fits best in your portfolio.
When Not to Roll Over Your 401(k) into an IRA in Warson Woods, MO
Depending on how close you are to retirement and other considerations your Warson Woods, MO retirement planners at Correct Capital may recommend that your savings 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 rather than an IRA are:
- If you like the benefits of your current 401(k) plan. If the fees are reasonable and the return on investment is good, there may not be a great 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.
- Avoid early withdrawal fees if you are 55. While you can begin taking out money without a fee from both a 401(k) or IRA at 59½, you will not have to pay 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.
- You cannot take a loan out of an IRA. While taking a loan from retirement savings isn't advisable, it is important to note that you cannot take a loan out of either a Traditional or Roth IRA.
- 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 keep contributing to your 401(k) your employer will match your contributions.
Take a look at some of the other services we offer in Warson Woods, MO:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
Rollover 401(k) in Warson Woods, MO | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them realize their objectives. Our team of retirement consultants, portfolio managers, and financial planners have over 75 years of combined experience aiding Warson Woods, MO individuals and families with 401(k) rollovers as part of our comprehensive wealth management services. As fiduciary advisors, we have a legal and moral obligation to oversee your account in a way that benefits you and only you. As an independent firm, we will always be straightforward 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 consultants today.
