Rollover 401(k) in Westwood, MO
Rollover 401(k) in Westwood, MO. While moving to a new job can be a welcome new opportunity, it can be hard to know what to do with the savings you have in your 401(k) account with your previous employer. Many Westwood, MO residents have found that enlisting the services of professional financial advisors is the best way to manage a 401(k) rollover. At Correct Capital, our dedicated team of 401(k) experts and financial planners will help you understand your options. For rollover 401(k) counseling in Westwood, MO, give us a call at 314-930-401K or contact us online.
What You Can Do With Your Rollover 401(k) in Westwood, MO
Generally speaking, you have four options when considering whether to roll over your 401(k). A experienced Westwood, MO financial advisor like those at Correct Capital will analyze your finances and help you determine which option is best for you. Depending on your specific circumstances, it may be best to:
- Keep your 401(k) with your old employer;
- Roll over your 401(k) to your new employer's 401(k);
- Roll over your 401(k) into a Traditional IRA or Roth IRA;
- Cash out your 401(k).
Taking out the cash value should only be considered if you need funds quickly. Your previous employer will have to take out 20% of the funds to prepay the taxes you would owe on it. You may also face a 10% early withdrawal penalty from the IRS, and you would also have to pay federal, state, and local taxes. That means you might not even see 50% of your savings.
One last consideration to note is that many employers in Westwood, 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, 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 Westwood, MO
Your Westwood, MO financial advisors at Correct Capital may suggest 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 difference between the original value and market value of shares of employer stock in your 401(k) plan. If part of your 401(k) includes company stock, you can transfer that difference 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 caps out at 20% for the highest earners — rather than income tax, which is often higher.
The Financial Institution of Your Choice
In a 401(k) plan, your employer will decide the 401(k) company holding your funds. By rolling over to an IRA, you'll have your pick of custodians based on stability, trading technology, and financial services.
A Wider Array of Investment Opportunities
While some Westwood, MO companies provide 401(k) plans with few limitations on your investment options, IRAs typically offer an individual investor many more options than 401(k) plans. IRAs typically allow investment in almost any type of asset, including:
- Shares
- Bonds
- Certificates of deposit
- Mutual funds
- ETFs
- Real estate investment trusts
- Annuities
Combine Your 401(k) Plans
If you change jobs frequently, it may make the most sense to merge the funds from all your accounts into one account. That way, you much much more efficiently track the performance of your funds and managing them will be more streamlined. You could also see greater long-term gains.
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. By rolling over the funds into an IRA, you may be eligible to keep contributing to the plan you've picked out.
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 Westwood, MO with numerous 401(k) services. When you meet with us, we'll guide you through 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 Westwood, MO
Each of our client's financial situation is unique, and your Westwood, MO retirement planners at Correct Capital may advise that your funds are better off in a 401(k) plan; either your previous employer's or your new one. Some reasons to choose 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 be advisable to keep your savings where they are. 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 penalty from either a 401(k) or IRA at 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 isn't advisable, it is important to know 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.
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
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
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 realize their goals. Our team of retirement consultants, portfolio managers, and financial planners have over seven decades of combined experience assisting Westwood, MO individuals and families with 401(k) rollovers along with many other wealth management services. As fiduciary advisors, we have a legal and moral obligation to act only in your best interested. As an independent firm, we will always be honest and unbiased, and there are no restrictions to the services or investment opportunities we can recommend.
Give us a call today at 314-930-401K or contact us online to schedule an appointment with one of our professional 401(k) experts and financial planners today.
