Author: Frank Dodd
The average person switches jobs several times in their life. It is very rare that someone work for the same company the entire length of his/her career. Most companies offer a retirement plan in the form of a 401k, so the average person may come into ownership of several 401k accounts by the time they retire.
So what should you do when you switch jobs and move to another company with it’s own 401k offer? It would behoove you to consider a 401k rollover to IRA.
Transferring your 401K to an IRA fund comes with several benefits. I would like to talk now about a few of them.
To begin, if a person changes companies 3 times, they will own 4 401k policies (3 from the previous employers and 1 from the new one). Having multiple accounts can be difficult to manage. You would have to follow paper on all 4 accounts instead of just 1. And most people will get discouraged by the excess paperwork and stop taking the needed interest in their portfolio. This can create huge problems down the road.
By rolling your 401k into an IRA fund after each job change, you can consolidate that paperwork and make your retirement much easier to manage. And you can continue to add your 401k plans to a single IRA as often as necessary. That same person that changed jobs 3 times in their career would have now only 1 401k and 1 IRA. That would be worlds easier to handle.
Also, Leaving your retirement plans in the hands of your previous employers is a bit risky. If the company goes bankrupt you lose everything. Transferring and consolidating those accounts all into 1 IRA with a separate financial institution is much less risky.
And the best part of it is that you will put yourself in control of your own future. And who better to handle it that the person that cares most about it?
But the 401K is still a great investment as it offers 100% return of investment. You don’t find a deal like that every day. Contribute as much as your company will match and put any extra funds toward your IRA.
Learn more about a 401k rollover to ira