The start of a new year presents a great opportunity to review your portfolio for efficiency. This feedback allows you to implement a plan for the new year with potential consolidation of accounts in mind.
Many of our newer clients come to us with old 401(k), 403(b), 457 and Simple IRA accounts from previous employers. Some even have multiple IRA accounts, often from past rollover situations. This when the value of qualified professionals can pay off. Helping you decide on what to do with your inactive qualified plan and multiple IRA accounts relieves stress. Whether you are changing jobs, entering retirement or simply wanting to consolidate your accounts, it’s vital to assure each step of the rollover process is completed accurately.
There are a few options for dealing with an inactive qualified plan including:
- Rollover the account into a self-directed IRA account, such as a traditional IRA.
- Rollover the account into a new employer-sponsored plan, if allowed under your current plan’s rules.
- Rollover the account into a self-directed IRA account, then convert all or a portion of the funds to a Roth IRA account (after careful tax analysis).
- Leave the account at the current custodian and bring your investment options in line with a comprehensive portfolio strategy.
Why a Rollover is Not Always Best
Despite popular belief, it is not always best to rollover an old employer plan. Certain custodians offer favorable investment options or have special tax provisions (the North Carolina employees’ Bailey provision, for example), meaning it could benefit you to leave your account at the current institution rather than combining the funds into another account.
Working with a qualified financial advisor assures you don’t miss steps in this process. You often have to deal with many different custodians during the rollover process. The process involves pages of paperwork and delivery of checks that can take weeks to complete. Monitoring the rollover process is essential to assure things are done correctly.
A financial advisor will research the best approach for your individual situation and determine if a rollover is the best choice for you. From help expedite the process while helping you avoid extra taxation due to errors.
Not yet a client and unsure if a rollover is right for you? Contact us to schedule an appointment to review your financial picture and develop a plan that will help provide the answer.
