Why Should You Consolidate the Funds with a 401k Rollover to Roth IRA?
When most workers move from one job to the next, they forget one left in their old employer's retirement plans. Many employees will change work opportunities at least once in their life (in fact, the average variety of career changes has been said to be up to 7 times), this results in numerous 'abandoned' retirement savings balances. These dormant accounts may still be growing or may be losing value. It's your money - do you want to ignore it?
You're losing a significant number of advantages, the worst of which you may be losing money. What you need is a 401k rollover to Roth IRA! A 401k rollover to Roth IRA is is a process that has you convert your employer to sponsor 401(k) accounts into your own Roth IRA account that you control. You can combine accounts from several employers into one Roth IRA. Consolidating your money into a single 401k rollover to Roth IRA has a number of different benefits:
1. Easier Management. When you only have one Roth IRA as opposed to seven 401k accounts, the operations and reporting of your respective retirement savings becomes easier. Although most people are fairly passive about managing their retirement savings, the reality is some administration is critical in order to get the most out of the savings. For example, your own retirement portfolio must be regularly rebalanced in order to maintain an investment allocation that you desire. Without re-balancing, you not only sacrifice returns, but you increase the risk of your portfolio to investment losses. Having done the 401k rollover to Roth IRA gives you an opportunity to manage your funds you don't want to waste
2. Better Investment Results. Studies have shown that more staff participate in employer-sponsored retirement plans when fewer investment options are available. For that reason, most employers restrict their plans to a few fundamental options. These may not give you the flexibility you desire to maximize returns. Moving funds via a 401k rollover to Roth IRA into a brokerage firm will give you unlimited investment choices, or nearly so.
As you can tell, there are some pretty substantial advantages to consolidating your retirement savings by way of a 401k rollover to Roth IRA. To start off the 401k rollover to Roth IRA process, you'll must first open a Roth IRA (or use one you may already have) and then get in touch with the representatives of past employers to start the 401k rollover to Roth IRA transfer.
Lose a Fortune on Your 401k Rollover
If you do not do any of these correctly:
- Opt for a distribution rather than direct transfer
- Rollover company stock to an IRA
- Choose to rollover to a Roth IRA
- Rollover to your new employer’s 401k
- Rollover post-tax contributions