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401(k) Rollovers

Do you know all of your options for your 401(k) rollover?

When it comes to rolling over your old 401(k) there are many options. Often people have far too many things on their mind to concern themselves with their old 401(k). We understand that this normally arises due to a life changing event like a recent layoff, starting a new job, or retirement. While change is often a challenging prospect for many of us your old 401(k) can give you a fresh start and great new opportunities for your retirement goals. If you have an old 401(k) contact us and we can enlighten you to the world of possibilities that exist.

We have included the following article by Peter Montoya a nationally syndicated writer on financial matters in which he discusses a few of your options. While this is not an exhaustive list we feel it is a good place to start. Contact us about your 401(k) in Phoenix/Glendale, Arizona at 623-255-5180 and we can help you explore all of your options.

The Big Rollover

What should you do with that old 401(k)?

Options, options, options...

There are many misconceptions about what must be done with a 401(k) when someone leaves a company. Some people think they have to cash out their 401(k) upon leaving a job. Others think they must "roll it over" into a new 401(k). Still others believe that they must leave the 401(k) where it is. None of these are true ... and none are false. These aren't "musts", they are options. The big question is, which option is the right option for YOU?

Leaving it where it is...

If you have enough money in your current 401(k) to meet the minimum requirement, you could leave your money where it is. Should you? Well, it depends. If you feel the plan has good investment choices and the annual fees are reasonable, leaving your money there to mature could be a good option for you.

Direct rollover into a new 401(k)...

If your new employer offers a 401(k), you could choose to "roll" your money into that plan, but then you will be limited to the new plan's investment options. So should you? Once again, it depends. You'll want to look into the structure of the new plan, the fees and the investment options.

Moving the money into an IRA rollover account...

If managing where your account is held and how it is invested is important to you, this option gives you a great deal of flexibility. It also offers you more distribution options, once you are eligible. Additionally, you could open a brokerage account or purchase a CD, provided the account is titled as your IRA Rollover Account.

Cashing out your 401(k)...

The temptation to get a lump sum of money can be too great for some, especially if they have just lost their job or feel that they are in some sort of financial bind. They may choose to cash out their 401(k) upon leaving a job. But what are they giving up? Well, 10% for starters. If they are younger than 59 1/2 years old and cash out their 401(k), most of them will incur a 10% penalty. Additionally, they will owe taxes on the amount they cash out. But here's what really hurts: they are giving up part of their retirement fund or (in many cases) starting over from zero.

Fighting temptation now could lead to big rewards later...

For example, let's say a 35-year-old leaves a job and rolls over $15,000 from a 401(k) into an IRA earning an average of 7% annually, letting the money mature over 30 years ... by the time of retirement, that money could potentially grow to over $100,000.

Making a decision...

If you're unsure which choice is best for you, or if you'd like to learn more about your options, I would recommend speaking with a qualified financial advisor. Additionally, you may want to consider working with a tax professional if you own company stock in your previous 401(k). You're likely to want some assistance in sorting through the IRS rules that may apply.

Contact us at Fortress Financial Strategies about your 401(k) in Phoenix/Glendale, Arizona at 623-255-5180 and we can help you explore all of your options.

These are the views of Peter Montoya Inc., not the presenting Representative nor First Allied Securities, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.