401K and Pension Rollover in Denver
Pursuing a Successful Retirement
If you have a 401(k) or some other retirement plan with a previous employer, you should strongly consider the benefits of transferring your retirement assets into a Rollover IRA or a Traditional IRA. A Rollover IRA or Traditional IRA is a tax advantaged IRA account designed to receive retirement funds rolled over from an ex-employer’s retirement plan. The IRA rollover allows funds to be transferred over tax free and penalty free from other retirement plans and allows retirement funds already set aside to continue to grow tax deferred until retirement. When leaving an employer whether voluntary or involuntary, many experts believe there are advantages to rolling over your retirement plan into a new IRA versus leaving your money in your old employer’s retirement plan or transferring it into your new employer’s plan.
Key advantages of an IRA Rollover/Traditional IRA
- Control – When the rollover process is complete, your retirement plan assets from your previous employer will be transferred to an IRA. Since you are the owner of an IRA, you have complete control versus being dependent upon the rules and policies of your former employer’s retirement plan including partial or full distributions.
- Investment Flexibility – Your previous employer’s 401k probably had a limited number of investment options funds to choose from and in some cases had a certain percentage of your investments in their company stock. A rollover to an IRA will increase your investment options and will improve your investment flexibility. We believe that over the long term, greater investment flexibility may lead to improved performance through better diversification and increased investment selection.
- Investment Guidance – Are you receiving guidance from a financial professional with selecting the appropriate investments in your qualified retirement plan? This is perhaps the greatest advantage of a rollover to an IRA. If you opened an IRA rollover account, a Townsend financial advisor will help you select a diversified investment portfolio based on your age, time horizon and risk tolerance.
- Sound Investment Philosophy and Investment Selection – Our active investment philosophy is designed with an objective to participate in market gains and limit losses in declining markets while seeking a rate of return consistent with one’s investment objectives and risk tolerance. Our investment selection is based on not only competitive advantages they may have, but for investments that we believe will stay competitive. Our investment committee researches, tests and scrutinizes everything from strategies, costs, risk, management stewardship and long-term performance. We are focused on fundamentals and are more patient with short-term underperformance. It has been our experience that if you concentrate solely on short-term performance one would constantly be chasing returns which often leads to being whipsawed back and forth, in other words buying high and selling low.
Disadvantages of an IRA Rollover/Traditional IRA
- Potential tax consequences if the rollover isn’t executed properly.
- Company sponsor plans may have provisions which all you to take a loan instead of having to take a withdrawal in an IRA only if employed or while employed.
- Company sponsor plans allow you to take a distribution after you reach age 55 and are no longer employed without incurring a 10% penalty as with an IRA. An IRA can be set up to take a distribution before age 59½ without a penalty however you need to take a distribution from your accounts for 5 years in equal payments.
- Might not have access to investments inside your retirement plan such as company stock purchasing plans.
Take charge of your future, call us for a complimentary consultation at 303.452.5986.
Disclosures This material is for general information purposes only and should not be considered a recommendation to buy or sell any security, or of a specific investment strategy. Each investor’s portfolio must be constructed based on the individual’s financial resources, investment goals, risk tolerance, investing time horizon, tax situation and other relevant factors. Please consult a financial advisor regarding your specific situation prior to implementing an investment plan. There is no guarantee that any financial plan or investment strategy will achieve its stated objectives.
Investing involves risk, including loss of principal. An investor’s shares, when redeemed, may be worth more or less than original investment amount. Past performance does not guarantee future results.
Securities America and its representative do not provide tax or legal advice. Tax and legal services are coordinated with independent, third-party tax and legal professionals.