Rollover 401(k) in Westwood, MO
Rollover 401(k) in Westwood, MO. Moving to a new job in Westwood, MO can lead to new opportunities, but it can also create uncertainty about the best way to manage your 401(k) account with your previous employer. Many Westwood, MO residents have found that seeking the help of qualified financial advisors is the best way to manage a 401(k) rollover. At Correct Capital, our experienced team of 401(k) experts and retirement planners will help you understand your options. For rollover 401(k) counseling in Westwood, MO, give us a call at 877-930-4015 or contact us online.
Rollover 401(k) Options in Westwood, MO
In general, you have four options when considering whether to roll over your 401(k). A knowledgeable Westwood, MO financial advisor like those at Correct Capital will analyze your assets, savings, and 401(k) plan and guide you towards your preferred option. Depending on your current financial health and your time horizon, we may recommend to:
- Leave the savings in your former employer's 401(k) plan;
- Roll over your 401(k) to your new employer's 401(k);
- 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 required to withhold 20% of the funds in order to pay taxes on it. You may also face a 10% early withdrawal penalty from the IRS, 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 businesses in Westwood, MO are allowed to make you move the money if your account has less than $5,000 in it. Additionally, 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 Westwood, MO
Your Westwood, 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:
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 original value and market value of shares of employer 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 other funds to an IRA. The advantage of this is that you may pay long term capital gains tax on your company stock — which caps out at 20% for the highest earners — 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 be able to choose your preferred custodian based on stability, trading technology, and financial services.
More Diverse of Investment Options
While some Westwood, MO companies offer 401(k) plans that permit a wide range 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:
- Stocks
- Bonds
- Certificates of deposit
- Mutual funds
- ETFs
- Real estate investment trusts
- Annuities
Combine Your 401(k) Plans
If you change jobs frequently, it could be incredibly helpful to combine the entirety of your retirement funds into one place. That will make it easier to follow how your investments are growing and you will be able to manage them more efficiently. You could also see greater long-term gains.
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. By rolling over the funds into an IRA, 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 advising both individuals and business owners in Westwood, MO with a variety of 401(k) services. When you meet with us, we'll guide you through special considerations, such as what type of account makes the most sense for your time horizon.
Why to Avoid a 401(k) Rollover in Westwood, MO
Every person's finances vary, and your Westwood, MO retirement planners at Correct Capital may recommend that your savings are better off in a 401(k) account; either your previous employer's or your new one. Some of the advantages of a 401(k) plan instead of an IRA are:
- If your current 401(k) plan works for you. If the fees aren't exorbitant and the return on investment is good, it may make the most sense to keep your savings where they are. If the account doesn't perform as well 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 penalties if you are 55. While you can begin taking out savings without a penalty from both a 401(k) or IRA at 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 advisable, if you are in a situation where you need to take out a loan from your retirement savings, it is important to note that you cannot take a loan out of either a Traditional or Roth IRA.
- Your employer can pay matching contributions into your 401(k) plan. 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 Westwood, MO:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
Rollover 401(k) in Westwood, MO | Correct Capital
At Correct Capital, we treat each client individually and get to know them so we can help them achieve their objectives. Our team of retirement consultants, portfolio managers, and financial planners have nearly a century of combined experience aiding Westwood, 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 obligation to manage your account in a way that benefits you and only you. As an independent firm, we will always be direct and unbiased, and there are no limitations to the services or investment options we can recommend.
Call us today at 877-930-4015 or contact us online to schedule an appointment with one of our qualified 401(k) experts and financial advisors today.
