Why should I rollover my 401K?

There are a number of situations where it makes sense to roll your old 401(k) assets into an IRA.
• You recently left or lost a job and don’t know what to do with your old 401(k).
• You have multiple 401(k) plans from previous jobs.
• Your previous 401(k) isn’t performing to its potential.
• Your previous 401(k) is overly dependent on one company.

While it takes no effort to leave your old 401(k) where it is, every day you don’t roll it over into an IRA you are missing out on a number of benefits:

One of the benefits of a 401k retirement plan is that it can follow an employee throughout his or her career. When changing employers, the investor has four options:

1.) Leave his/her assets in the old employer’s 401k retirement plan
Many 401k plan administrators charge record keeping and other fees to manage your account, regardless of whether you are still with the company. These fees can take a significant bite out of your future net worth, especially if you have accounts maintained at several different employers.

The lifetime employment offered to our grandparents no longer exists in a competitive global economy. Whether you wanted to pursue new opportunities, were downsized, fired, or just couldn’t face the prospect of going to work anymore, the odds are good that at some point in your life, you will leave your current employer.

When that happens, you have a few options regarding the assets in your company retirement plan such as a 401(k). They are:

2.) Cash out and take the money, paying huge tax penalties to the IRS. This is ordinarily a huge mistake because you also lose the tax shelter from investing within a protected account (e.g., if you made $500 in dividends from stocks held in a retirement account, you likely won’t owe any taxes on that money for decades, if ever, whereas if you held the stock in a regular non-retirement account, you would get hit with taxes each year).

What is a Rollover IRA and How Do They Work?

Put simply, a Rollover IRA is an account that acts just like a regular brokerage account in all regards except that it is funded by transferring, or “rolling over” money from a retirement plan at an old employer. It is subject to the same restrictions (for instance, you can’t make a withdrawal unless you pay your full tax rate plus a 10% penalty), but for the most part, it is far more flexible.

If you receive the proceeds of your 401(k) to invest in a Rollover IRA it is extremely important that you complete the process within 60 days. If you miss this deadline, you will be subject to substantial taxes.

Donner’s Financial Services Inc. is a Registered Investment Advisor. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration as an Investment Advisor does not indicate that the advisor has attained a particular level of skill or ability.

William D. Donner Is an Investment Advisor Representative for Donner’s Financial Services Inc. based In Livonia Michigan. Donner’s Financial Services Inc. is organized as a Corporation under the CORPORATIONS, SECURITIES AND COMMERCIAL LICENSING BUREAU OF THE STATE OF MICHIGAN.

William Donner is also License to offer insurance products in Michigan.

The information included herein should not be considered a solicitation or an offer to sell products or Financial Services in any State besides those in which
Donner’s Financial Services Inc. or William D. Donner is properly licensed.