What IRA Should I Roll My 401k Into?
Young baby boomers tend to switch jobs frequently, which can leave your workplace retirement accounts scattered with multiple investments that overlap. You can simplify this by rolling over that money into an IRA.
Banks, brokerage firms and online investment platforms all offer Individual Retirement Accounts (IRAs). Compare management fees and educational resources available to find one that best matches your investment style.
Betterment is an online investing service with an impressive track record for providing solid returns at reduced costs, along with offering tax loss harvesting capabilities and fiduciary registration with the SEC. Furthermore, Betterment boasts multiple security measures in place.
Betterment provides more than a diversified portfolio; they also offer three socially responsible investment portfolios designed to reduce carbon emissions, fund green projects and divest from fossil fuels. Furthermore, Betterment allows you to link external accounts for personalized advice (though it won’t manage them directly).
Your 401k can be converted to an IRA at any financial institution that accepts them; however, some offer special incentives for new customers, such as one-time bonuses such as free stock trades. Of course promotions shouldn’t be the sole factor when selecting an IRA provider, but they may help get things rolling quickly and smoothly.
Wealthfront can help you convert your 401(k) into an online investment account without breaking the bank. Their robo-advisor provides traditional, Roth and SEP IRAs; in addition to offering tax-deferred investment accounts and 529 education savings plans.
The robo-advisor uses an algorithm to assess your risk tolerance, then selects an ETF portfolio based on this evaluation. It offers various strategies – including Smart Beta – designed to increase returns while decreasing volatility, as well as offering you up to 30% of your current account balance as loanable funds.
Other advantages include lower management fees, higher cash account yields and various tax-saving strategies. You can open an account with as little as $500 but bear in mind that certain services require a larger account balance for optimal use; such as the robo-advisor’s smart beta service, daily threshold rebalancing or tax loss harvesting.
Fidelity offers an impressive array of low-cost investment options on its user-friendly platform, mobile deposits and friendly customer service – but they do charge higher fees for money market mutual funds than some competitors.
IRAs often provide more investment options than 401(k)s, giving you greater diversification options for your retirement portfolio. Furthermore, these accounts often allow multiple beneficiaries to be chosen simultaneously–an option not available with some 401(k) plans.
Rolling your 401k into an IRA allows you to consolidate multiple retirement accounts from various employers into a single account and can simplify your investment strategy and gain access to more options. Some brokerage firms even provide cash incentives based on how much of your 401k you roll over – for instance TD Ameritrade offers bonuses of up to $2,500 when rolling over your 401k into an IRA – an attractive proposition for those planning retirement soon or who have frequently changed jobs.
Many brokerage firms offer Individual Retirement Accounts (IRAs). You may also find a financial advisor in your area who can guide you through the options and help select an IRA that best meets your needs. Direct rollovers provide the safest method of moving funds, enabling you to move them from an old employer’s 401(k) directly into an IRA without incurring taxes; in contrast, indirect rollovers could expose you to heavy penalties if it takes over 60 days before being back in an IRA account.
TD Ameritrade provides an array of account types, such as traditional and Roth IRA accounts, custodial accounts, education savings accounts, SEP, SIMPLE and solo 401(k) accounts as well as business retirement accounts. You can also open taxable brokerage accounts, revocable trusts and charitable donation accounts.
Rolling your IRA over into an account with a financial firm can give you access to thousands of mutual fund options – much more than what is offered through your 401(k). Some IRA providers even offer cash incentives for new customers who move assets over.
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