Rollover 401(k) in Weldon Spring, MO
Rollover 401(k) in Weldon Spring, MO. While moving to a new job can be a welcome new opportunity, it can also lead to confusion about the best way to manage your 401(k) account with your previous employer. Many Weldon Spring, MO residents don't have the time, knowledge, or interest to oversee multiple retirement accounts or to understand the best way to approach a 401(k) rollover. At Correct Capital, our experienced team of 401(k) experts and financial planners will help you understand your options. For rollover 401(k) services in Weldon Spring, MO, reach out to us today at 877-930-4015 or contact us online.
How You Can Approach Your Rollover 401(k) in Weldon Spring, MO
Typically, you have four options when considering whether to roll over your 401(k). A experienced Weldon Spring, MO financial advisor like those at Correct Capital will consider your finances and guide you towards what will work best for you. 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;
- Take the cash value out of your 401(k).
Cashing out should only be considered if you need funds quickly. Your previous employer will have to take out 20% of the savings in order to pay taxes on it. 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 lose the majority of the account's value.
Another thing to note is that many employers in Weldon Spring, MO obligate you to move the funds in your 401(k) if your account has less than $5,000 in it. Additionally, 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 Weldon Spring, MO
Your Weldon Spring, 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. This is beneficial for several different reasons:
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 market value of company stock in your retirement 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 remainder to an IRA. In doing so, 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.
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 have your pick of custodians based on how secure they are and the range of services they offer.
A Wider Range of Investment Opportunities
While some Weldon Spring, MO businesses provide 401(k) plans with few limitations on your investment options, you will generally have much more flexibility in an IRA than you would in a 401(k) plan. 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 may make the most sense to combine all of your savings into one plan. In doing so, it won't be nearly as much of a hassle to track the performance of your funds and you will be able to manage them more directly. It may also be the better option for long-term growth.
Continue Adding Money to Your Accounts
While your money will still grow 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 will be able to supplement your savings.
The financial advisors of Correct Capital will help you determine if a 401(k) rollover is the best option for you. We have over 20 years of experience advising both individuals and families and business owners in Weldon Spring, MO with A-Z 401(k) services. When you hire Correct Capital, we'll help you navigate special considerations, such as how a 401(k) rollover will affect your tax planning.
When to Avoid a 401(k) Rollover in Weldon Spring, MO
Each of our client's financial situation is unique, and your Weldon Spring, MO retirement planners at Correct Capital may advise that your savings are best kept in a 401(k) account; whether that be your previous employer's or your new one. Some of the advantages of a 401(k) plan over an IRA include:
- If your current 401(k) plan works for you. If the fees are reasonable and you're getting strong returns, 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 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. So, a 401(k) may be preferable if you would like to retire a few years early.
- Loans from an IRA are not allowed. While taking a loan from retirement savings should only be considered in certain circumstances, you would only be able to do so if they are in a 401(k) plan.
- 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 while you are still working, 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.
Take a look at some of the other services we offer in Weldon Spring, MO:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
Rollover 401(k) in Weldon Spring, 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 helping Weldon Spring, MO individuals and families with 401(k) rollovers along with many other wealth management services. As fiduciary advisors, we are legally and ethically bound to act only in your best interested. As an independent firm, we will always be straightforward and objective, and there are no restrictions 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) specialists and financial planners today.
