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Roll On Over That 401K

Guidant Financial Group

by Brad Zimmerman

It�s no secret that the average American will switch jobs a number times throughout their professional career and while your transition may get easier, your 401K�s most definitely won�t. With so much turmoil for your poor retirement account it may be time to think about rolling it on over to an IRA and enjoying it along with the perks of your company sponsored 401K.

Many employers will put restrictions on the 401K�s they sponsor, giving you few investment options for your hard earned retirement dollars, making the freedom of holding an IRA that much more desirable. In fact, those with a few old 401K�s laying around can roll them all over into IRA account, simplifying the equation to growing a retirement nest egg, according to the Motley Fool, an investment Web site.

Unfortunately simply having the sudden urge to rollover to an IRA is not good enough. You must have a trigger event in order to withdraw assets from your 401K, which are: attaining retirement age (anywhere from 59 and a half to 65), termination of employment, death, disability, or employer termination of the 401K plan. Only then can you proceed to transfer those assets into the appropriate IRA account, according to Investorpedia.com.

One thing that is important to remember when moving that 401K into an IRA is a direct transfer of your funds from your employer to your brokerage firm in order to avoid the hefty 20 percent that may be taxed should the funds pass through your hands first, according to CNN Money.

Rolling over to an IRA can be a very simple process, as most brokerages offer the service, and with just a few phone calls and a form or two completed, and presto! You are done. Just remember after the initial rollover, you must make regular contributions to the account, and always take advantage of your company�s 401K matching, according to the Motley Fool.

With your IRA off to a healthy start, not only are investments options at a premium, but you may also borrow from your IRA, depending on the type of account, as long as you repay the entire amount within 60 days, according to Smart Money.

An IRA may seem like a relatively easy process and it can be, with the right advisor and a diligence to get the job done, however there are some pitfalls many experience that you should be weary of before beginning the process.

Anyone holding highly appreciated company stock within their 401K could find themselves with a hefty tax bill upon rolling over their retirement account, according to Fox News. Instead, the investor should place the shares in a taxable account which will only asses tax based on the stock price at acquisition.

Other�s may simply wish to stay within their current plan or transfer their old 401K to their new companies plan, most likely saving money on financial services, and potentially savings themselves a tax induced headache. No matter your choice, playing it smart with your retirement accounts will prove valuable years down the road when it is time for that money to be put to good use.

Provided by www.guidantfinancial.com