At Johnson Brunetti, we understand that a 401(k) is one of the most significant assets Americans have when planning for retirement. That’s why it’s essential to explore your options and ensure you’re making the most of your retirement savings. David Shapiro shares his insights on Better Money Boston.

What is a Rollover?

Once you reach the age of 59½, you have the option to roll over your 401(k) into an Individual Retirement Account (IRA), even if you’re still employed. If you’ve changed jobs, this option gives you greater control over your retirement savings.

Why Consider a Rollover?

1. Increased Investment Choices: Most 401(k) plans limit your investment options to a select few mutual funds. By rolling over to an IRA, you can choose from a broader range of investments, including individual stocks, bonds, mutual funds, and exchange-traded funds (ETFs). This flexibility can be crucial as you approach retirement and seek to optimize your portfolio for growth.

2. Lower Fees: Many people are surprised to discover the high fees associated with their 401(k) plans, including investment fees, plan fees, and administrative costs. By rolling over, you could potentially achieve the same investment performance while minimizing or eliminating these fees, thus maximizing your retirement savings.

3. Professional Management: When you call your 401(k) provider, you often get a call center representative who may not understand your unique financial situation. In contrast, an IRA can provide you with access to professional management that prioritizes your best interests, ensuring your investments are aligned with your financial goals.

4. Tax Advantages: Considering a Roth conversion may also be beneficial for some. Although you would pay taxes on the converted amount now, the money can grow tax-free, offering potential tax-free withdrawals in retirement. This strategy isn’t suitable for everyone, but it could be advantageous depending on your circumstances.

The Power of Regular Check-Ins

In conclusion, regularly visiting with your financial advisor is crucial for navigating these important financial decisions. Their guidance can help ensure that you’re well-informed and on track to meet your financial goals. Make it a priority to maintain that relationship for a brighter financial future.